The Role Of Auditing In Controlling Fraud In Government Establishment A Case Study Of Federal Pay Office, Enugu.

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This research work was designed to achieve a specific purpose on the role played by Auditors in protection of public funds in the government establishments, ministries or government parastatals. The research goes into providing a systematic financial accountability that will promote proper stewardship of asset, deter wastes, dishonesty and promote effectiveness at reasonable cost. However, the literature review helps to ascertain other writers view concerning the subject of the study which explains how government establishment is so organized in a way that fraud could be detected easily and on time. The data used for this work was collected from primary and secondary source. Questionnaires were also used; 200 in number, 120 were retained unfilled while 20 missed on transit and total of 60 were used. Against the background, invaluable and reliable discoveries were made. Finally, the researcher recommends that the legislative arm of government should make it mandatory for the accountant general to submit financial statement of government account to audit department for audit work within six (6) months and auditors to be given power to execute or enforce its findings after its work has been reviewed by the Public Account Committee (P.A.C).







Title page…                                             i

Approval page…                                        ii

Dedication                                              iii

Acknowledgement …                                   iv

Abstract                                               vi

Table content                                          vii



1.1      Background of the study ..                        1

1.2      Statement of the problem …                      7

1.3      Objective of the study ……                         8

1.4      Research question …                              9

1.5      Significant of the study …                                 10

1.6      Scope of the study …                              11

1.7      Limitation of the study                            11


2.1  Review of related literature                        15

2.2  Auditors’ responsibilities in fraud detection        18

2.3  Auditors’ roles in controlling frauds                      22

2.4  Control of fraud through vouching payment       24  

2.5  Control of fraud through comparism of figures …25

2.6  Control over payment into banks                  26

2.7  Control over payment out of bank…               27

2.8  Auditor and his contribution toward efficient management of government of establishment…          28




3.0      Research design and methodology                       33

3.1 Research design                                     33

3.2      Area of study  ...                                 33

3.3      Population                                         34

3.4 Sources of data collection                     ...    34

3.5       Sampling method …                               36

3.6         Research instrumentation                      38

3.7     Validity and reliability of research instrument     39

3.8      Method data collection …                         40

3.9       Method of data analysis                           41


4.1 Data presentation and analysis…                    42


Finding, Conclusion and Recommendation ……          53

Bibliography                                       57

Questionnaires..                                   59






The role of auditing in fraud and corruption management is essential. Damages done to public institutions by fraud and corruption can be enormous ranging from financial loss, damage to organizational performance, reputation and credibility loss. In many occasions if the case makes the headlines in the media, it permanently harms public confidence and undermines the legitimacy for administration and spending of taxpayer’s money by this institution. Therefore, good risk management as well as prevention detection and well designed control systems should be considered by every public sector authority as a must. Despite many initiatives, strategies and tools, there is a constant need for more effective control instruments, reporting mechanisms, investigation method and best practices.

Auditors often have the best access to detailed information on financial transactions, project management, procurement procedures and use of finding and grants in their institutions. As a person responsible for risk management and internal audit in an institution, the auditor is responsible for guarding the ethical standards and being a good example by ensuring adherence to rules, procedures and recommended practices. Therefore, the auditor needs to be fully prepared for implementing innovative prevention methods and tools for an organization to be efficient and effective and be able to achieve its desired objectives, it needs to have amongst others good leadership, competent manpower, adequate resources and good measures of internal control. Connor (1979) said that internal control is considered important in an organization because today’s economic environment requires that management of every organization weather public or private should take adequate steps considered necessary to establish and sustain an effective internal control system with a view to ensuring effectiveness, efficiency and economical operations. It also ensures the accuracy and the completeness of accounting information as well as compliance with the rules and procedures. The system of internal control is seen as the integrated collection of control mechanisms used to achieve desired results, among which is the internal audit, which is an essential element of the internal control system. Many organizations lack mechanisms for adequate monitoring of activities and operations, thereby not giving room for easy achievement of the business goals (Adeniji, 2004).

Flaws and loopholes may still exist in an organization despite the existence of internal control system, which can easily be circumvented by individuals who are inclined towards fraudulent activities. Therefore, measures have to be put in place to checkmate such fraudsters. One best way of curbing and/or minimizing the menace of fraud is through the institutionalization of a vibrant and effective internal audit. The presence of an effective internal audit in an organization is not only to checkmate fraudsters, but also serves as a managerial control which function by measuring and evaluating the effectiveness of other controls (Dandago, 2002). The primary function of an auditor is to evaluate processes that are in place to identify any weaknesses in internal controls that might lead to undetected fraud. When any such weaknesses are identified, they are reported to management for corrective action. The internal audit is expected to anticipate problems, visualize improvements and propose preventive actions (Effiok, 2003). The auditor has the responsibility to appraise the activities of other departments in an organization, and provides management with information that is useful in assessing operational effectiveness.

That an auditor has the responsibility for the prevention, detection and reporting of fraud, other illegal acts and errors is one of the most controversial issues in auditing, and has been one of the most frequently debated areas amongst auditors, politicians, media, regulators and the public (Gay et al 1997). This debate has been especially highlighted by the collapse of both small and big corporations across the globe. The auditing profession in Nigeria has caught the media’s attention following financial scandals in some of the Nigeria banks such as Intercontinental Bank, Oceanic Bank, Afribank, and PHB among others.

There seems presently to be a misconception that auditors’ duties are largely the preventing, detecting and reporting of fraud, for example, Idris (2009). The aim of this paper is to identify financial report users,Perceptions of the extent of fraud in Nigeria, and to determine their perceptions of the auditor’s responsibilities in detecting fraud and the performance of related audit procedures. The paper also aimed at ascertaining whether the report users’ perceptions of auditors’ responsibilities on fraud are consistent with those of the auditing profession as expressed in auditing standards in Nigeria.




Public embezzlement always create a consciousness on the part of the supervisory authorities as to the quality and disagreement of protective management in government

1.          Lack of understanding of the purpose of auditing among the society in general.

2.          Lack of a well-defined goal oriented policies aimed at building up a strong and sound financial system.

3.          Inherent weakness in the existing Administrative arrangement for government establishment accounting function.

4.          Improper supervision of over all officers under the authority entrusted with the receipts expenditure of public money.

5.          Inability of the government establishment to maintain a sound system of internal control.


The specific purpose which the project is designed to achieve is as follows:

1.          To find out roles played by the audit department in protection of public funds.

2.          To provide a system of financial accountability which will promote proper stewardship of assets, deter waste dishonesty and extravagancy and promote effectiveness at reasonable costs.

3.           To ensure efficient financial administration through the system of internal control and management information.

4.          To determine the extent to which fraud misappropriation and embezzlement of public funds have persisted in public services.

5.          To find out the delays in carrying out audit of account of government establishment.

1.10                RESEARCH QUESTION

The following research questions were formulated by the researcher for the conduct of this project.

1.          What aspect of the accounts of government policies hinders effective and efficient auditing of the account of government establishment?

2.          How can government establishment supervise the expenditure of government taking care that no payment were made which is not covered by proper authority?

3.          To what extent do fraud affect economic development of the country?

4.          What measures should be taken to ensure that objective of auditing are achieved in government establishment?

1.11                SIGNIFICANT OF THE STUDY

It is expected that the result of this study will help improve financial reporting by government establishment providing annual reports in accordance with the requirement of audit acts, 1990.

The significant of the study to society in general is to correct the wrong notion of the wealth of government which contrary to reality is usually regarded in position could cut his own share at will and get away with it.

The government is ensuing the standard that the ministry manual of responsibilities and procedure are maintained.

For the auditor to pin-point to them the risk that confronts the auditors in the excretes of his duties the legal action that could be taken against the auditor.

The study makes a provision for policy formulation on auditing guideline to government establishment.

Finally, it is expected that this study will serve as a work of reference to future researchers.

1.12                SCOPE OF THE STUDY

The study is a case study of federal pay office,Enugu.

1.13                LIMITATION OF THE STUDY

In this study the researcher only considered the ministerial accounting structure or accounting structure of selected government establishment on parastatals in the state because of the following limitations:

1.                 Time Constraints: The researcher as a student also engaged in other activities which limited the time used for the project. The research was deeply affected by the shortness of time as a result of the short semester being run by the school. The special time given for proper investigation is the constraints which left the researcher with little or no time to carry out this project.

2.                 Scope: Due to the vastness of the areas to be covered by the researcher, the researcher found it very difficult to obtain information from each of these areas. For instance there are many firms dealing with auditing and investigation and for the fact that it is very difficult for one to gather information or data from each of these firms, she was compelled to limit her study to federal pay office, Enugu.

3.                 Lack of Statistical Information: Facts were not easy to come about during the course of this project work. Even where the facts are available they were either out dated or the authorities concerned refused to bring it out or are subjected to necessary protocols at the expense of the limited time before they were made available.

4.                 Financial Constraints: The researcher lacked the necessary finance to carryout extensive research on this topic.

5.                 Non–Responses: Inadequate responses such as that of some ministries when interviewed were unable to help due to internal problem like staff or local government audit department of Enugu state.


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The Role Of Auditing In Controlling Fraud In Government Establishment A Case Study Of Federal Pay Office, Enugu.