INTERNAL AUDITING AS AN INSTRUMENT FOR EFFECTIVE MANAGEMENT AND ACCOUNTABILITY OF FINANCIAL RESOURCES IN THE PUBLIC SCROD A CASE STUDY OF UDI LOCAL GOVERNMENT COUNCIL

(Accounting)

INTERNAL AUDITING AS AN INSTRUMENT FOR EFFECTIVE MANAGEMENT AND ACCOUNTABILITY OF FINANCIAL RESOURCES IN THE PUBLIC SCROD

A CASE STUDY OF UDI LOCAL GOVERNMENT COUNCIL

ABSTRACT

 Transparency and accountability in the rummage of affairs of public and private establishment is one thing that management of difference organizations especially the government owned enterprises and extra ministerial department have been finding difficult to encore in their operations.Even government reform programmes have failed abysmally to address the issue.  Public sector business is seen as a conduct pipe to Syphon and embezzle funds by its regulators and operators to the determent of our national economy.

Incidentally internal auditing is one of the instrument used in accomplishing this all improatnt objective of ensuring effective management and accountability in different going concerns this research is carried out to find out and evaluate the role played by auditing in sanitizing the system.The introductory  part of the resaerch work examines the need for an appointing an independent person called “Auditor” to look into the financial statement and transactions for the purpose of examining them. The history of auditing was traced and its objective highlighted.The staff of Udi local government council in Udi L.G.A formed the population of the study. In the last chapter recommendations where made to suggest ways and means of ensuring effective management and accountability in the running of government business             

TABLE OF CONTENT

CHAPTER ONE

INTRODUCTION   

1.1              Background of the study

1.2              Statement of the problem

1.3              Purpose of study

1.4              Research question

1.5              Hypothesis

1.6              The scope of the study

1.7              The significance of the study

1.8              The definition of terms

CHAPTER TWO

LITERATURE REVIEW

2.1              The origin of auditing and its purpose

2.2              The meaning of internal auditing

2.3              The concept of internal auditing

2.4              The purpose of internal auditing

2.5              Establishment of auditing committee

2.6              The meaning of management

2.7              The functions of management

2.8              The concept of accountability

2.9              Detection of errors and fraud 

2.10          Auditing report and relevance

CHAPTER THREE

RESAERCH METHODOLOGY 

3.1              The design of the study

3.2              Area of study

3.3              The population of study

3.4              Staple and sampling technique

3.5              Instrument of data collection

3.6              Validation of instrument

3.7              Reliability of instrument

3.8              Method of data collection

3.9              Method of data analysis

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS         

4.1              Data presentation

4.2              Data analysis

4.3              Summary of finding

CHAPTER FIVE

DISCUSSION AND CONCLUSION OF RESULTS.

5.1              Discussion of finding

5.2              Conclusion of the study

5.3              Recommendation

5.4              Implication of the finding

5.5              Suggestion for the further studies

5.6              Limitation of the study

Reference

Appendices      

CHAPTER ONE

INTRODUCTION

1.1              BACKGROUND OF THE STUDY

 Recently effective management and accountability of financial resources vike cash in the public  sector has begun to receive much emphasis primarily in response to increase in fraud and high inflations rate that devalue idle or unaccounted cash and most especially defeat of aims of establishing such emprises and extra ministerial   department most government establishments are tightening their internal control system to ensure strategic management planning and transparency in the affairs of the department  

 

This duty call made imperative due to the near collapse of government institutions occasioned by misuse of cash and its vulnerability to corrupt official who are ever at work to defraud and Erich themselves from the orgnaization. In order to protect its financial resources from being plundered an organization must know exactly its income and expenditure vouching system accounting system and basis authorization procedure cash control system etc.  with respect to cash inflows and outflows.  This explains the geometric rise in the embezzlement of public funds by official and government technocrats who are supposed to secure such funds.

It is patients to recall that cash and other near-money resources either real or financial is the most improvement current asset for the smooth running of her machineries.  It is input needed to keep the business on continuous basis such resources are needed for payment of salaries payment for contacts  and other infrastructural development need to make for a good standard of living.

An integral part of real and fiancnail assets administration is concerned with  the effective utilization  of corporate fund.  The planning and control of such activity is made possible by stringent internal auditing which embodies strict internal controls observation of accounting standards and principle vouching and authorization procedure.  This is made necessary by the fact that business is cyclical in nature with dwindling government revenue and a considerable amount of time during which factors inputs must be purchased and wages paid elapses between the receipt of an order its shipment and the banking of cash. An investment in cash and real assets is required in order to meet with pressing operational demand the uneven flow in the receipt and disbursement of fund  causes seasonal fluctuations and so on moreover the receipt and disbursement of fund is useable in daily basis and within the month with a strong cash management and control system (models) recognize the uncertainty inherent in forecasting both cash inflows and outflows.

An effective cash management and accountability is necessary for the overall performance of an organization one is surprised at the complete lack of legal cash control and other real asset management  system in many public sector organization in Nigeria especially those ones owned by government and the state.

While some organizations prepare cash budget at the beginning of their financial year without any follow up authorization and control process others just more cash control to monthly basis in the form of bank reconciliation statement which are doctored to clan up their augean stables unfortunately, it is only when cash problem arises that management starts to look  for the immediate and remote causes and possible remedies while they are the problem themselves.

According to Stever  (1994page1) auditing in all its ramification whether internal or external in nature provides a unique platform and tool for accountability as no manager would like himself or herself to be found wanting for failure to give an accurate account of the fund entrusted to him or her. It therefore saves as a determent to managers of public funds from perpetrating frauds. More importantly internal auditing which is an independent appraisal of activity within an organization for the review of the accounting financial and other operations as a basis for protective and constructive  services to management is a type of control which functions by  measuring and evaluating the effectiveness of other types of control.

The researcher intends to look into the nature of internal auditing as a probable tool for effective management and accountability of financial instrument with particular reference to the public sector the third tier of government using Udi local government council  as a case study and to evaluate the internal control system in line with approved international standard and principles. 

1.2              STATEMENT OF PROBLEM

Among the worst economic crimes prevalent in out economy today fraud and embezzlement of public funds stands out conspicuously.  This social use is common thin the government circle as the  people who are entrusted with the paraphernalia of government defy any from of internal audit  designed to check and detect frauds they usually maraud the system alongside the civil servants in the quest to each themselves the reason being that the appropriate internal control system is not in place or non-existent. And where it is rules and regulations guarding the system are battered and manipulated in order to perpetuate fraud and embezzlement is what the present research intends to examine in addition to establishing internal auditing in us true perspective as an instrument for effective management and accountability the statement of problems includes

1.                  Impact of various department towards the establishment of internal control in the planning and controlling of real and fiancnail assets of the public sector.

2.                  How effective is the controls for prevention and  detection of fraud and other financial inequalities

3.                  Effects of internal auditing and control in the public sector

4.                  Difficult that internal auditing ahs encountered towards achieving and activating organizational                      

1.3              PURPOSE OF THE STUDY

The cardinal objectives of the research study are:

1.                  To know the extent various departments have helped in the establishment of internal control in the planning and controlling of real and fiancnail as of the public sector.

2.                  To find out how effective is the control for prevention and detection of fraud and other financial irregularities.

3.                  To highlight the effects of internal auditing and control controls in the public sector.

4.                  To ascertain the difficulties institutionalization of internal auditing ahs encountered towards achieving and attaining organizational goals        

1.4              RESEARCH QUESTION

To guide this project work four research question were formulated to ensure clarity.

1.                  To what extent does various department helped in the establishment of internal controls in the planning and controlling of real and financial assets of the public sectors

2.                  To what extent does the controls being effective for the prevention and detection of fraud and other financial irregularities.

3.                  To what extent does internal auditing and controls have affected the public sector

4.                  To what extent does the difficulties institutionalization of internal auditing ahs encountered towards achieving and attaing organizational goals.         

1.5              RESEARCH HYPOTHESIS 

Towards verifying the subject matter of this work the following preposition were formulated and tested.

1.         Ho1:     There will be no significant difference (P<0.05) (at the probability level of .05) between the mean perception of finance dept and stores department on the impact of valued department towards the establishment of internal control in the planning and controlling of real and financial assets of the public sector.

            H1:      There is a  significant difference (P<0.05) (at the probability level of .05) between the mean perception of finance and stores department on the impact of various department towards the establishment of internal control in the planning and controlling of real and financial assets of the public sector.

2.         Ho:      There will no significant difference (P<0.05) (at the probability level of 0.05) on how effective is the control for prevention and detection of fraud and other financial irregularities.   

            H1:      There is a significant difference (P<0.05) (at the probability level of 0.05) on how effective is the control for prevention and detection of fraud and other financial irregularities.   

3.         Ho: There will be no significant difference (P<0.05) (at the probability level of 0.05) between the mean perception of finance and stores department on the effects of internal auditing and control in the public sector.

4.         Ho: There will be no significant difference (P<0.05) (at the probability level of 0.05) between the means perception of financial and stores department on the difficulties institutionalization of internal auditing ahs encountered towards achieving and attaing organizational goals.

            H1: There is a  significant difference (P<0.05) (at the probability level of 0.05) between the means perception of financial and stores department on the difficulties institutionalization of internal auditing ahs encountered towards achieving and attaining organizational goals.

1.6              THE SCOPE OF THE STUDY

This students engagement is meant to analyze the need for operators of the public sector to adopt and establish internal auditing and control as an instrument for effective management and accountability of financial resources no the public sector like real and fiancnail assets  with a reference to  Udi local government council in Enugu state. The study delved  extensively on the magnitude of looting plundering and embezzlement of public funds and stressed on the effectiveness of internal auditing towards curbing the ugly trend.     

1.7              THE SIGNIFICANCE OF THE STUDY

This research will be benefit to private and government establishment in that if the recommendations are implemented public funds currently being siphoned through avoidable embezzlement conduct peoples and fraud in many public enterprise and department will be conserved.

The staff of such organization will benefit because the conserved fund can be used to improve their condition of service and the provision of social amenities for the public.  When this is attained to works will be well motivated. This will have a positive impact on their level of productivity  and output.  As a result, better services will now be provided to the society and mankind through improved efficiency of management this study will equally help the management of public and private establishment in planning and control which are basic ingredients of strategic decision making.

The resaerch is also an attempt to finding solution to the disturbing problem posed to the corporate existence and growth of government establishment by office perpetrators of fraud and embezzlement that made the research to hose the topic.

This piece of work will equally be of immense benefit to:

a.         The general public.

b.         Practicing accountants

c.         Those in fiduciary positions

d.         Accounting officers in both private and public establishment and

e.         Students of accountancy and allied disciplines  since they can use it as a guide for carrying out future resaerch and to educate their minds generating.                          

1.8              DEFINITION OF TERMS

Real assets:     These are fixed assets in an organization which are used in the

production process it may be machines vehicles factories office blocks etc.

Financial assets:   These are inventible assets of an organization in the form of

cash and near money instruments like cheques bonds shares etc.  

Internal:  This simply means carrying out an activity or working within the

immediate environment   

Auditing:        This is defined according to the audit operational standard as the

independent examination of and expression of opinion on the financial statements of an enterprise by an appointed auditor in pursuance of the appointment and in compliance with any relevant statutory obligation   

Instrument:  Implement or apparatus used in performing an action a complex

administrative organization (Webster Encyclopaedia) dictionary OT 1993)  

Effective:  This means having the good quality of achieving or accomplishing

the goal management seeks to pursue.   

Management:  This is employment and application of both human and

material resources to achieve the objectives of an orgnaization in the most economic way 

accountability:           The act of giving explanation or reckoning for something

entrusted to one    

Fraud:  Intentional distortion of financial statements.

Embezzlement:  To man private the funds and fiancnail records of an

organization in order to enrich oneself

Public sector:  That part of the aggregate economy being owned and

controlled by the government state or the central government      

Fiduciary relationship:         Means that the management of funds  is not

completely and exhaustively in the hands of owner  but entreated by owner to somebody else.     

Control:          Any deliberate act to forestall the Mis.  Management of funds and

the perpetration of fraud in an organization   

System:  A group of things or parts working together as a whole

    TERMS AND CONDITIONS

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    Project Details

    Department Accounting
    Project ID ACC0308
    Price N3000 ($14)
    CHAPTERS 5 Chapters
    No of Pages 106 Pages
    Methodology T Test
    Reference YES
    Format Microsoft Word