The Effectiveness Of Auditing And Accountability In The Public Sector

Project and Seminar Material for Accountancy / Accounting

The Effectiveness Of Auditing And Accountability In The Public Sector


The study dealt on the effectiveness of auditing and accountability – in the public sector. The rapid development financial management initiative in public sector and financial control has led to the need for improved performance measurement, reporting and individual accountability. The researcher tested five hypotheses which stability results mat states that. An audited work must be independently examined, opinions must be expressed by a qualified and appointed auditor in pursuance/ compliance with the relevant statutory obligations; that an auditor must possess the expected qualities the auditor-generals office is a watchdog of public fund and as such, government must be appropriately configured . based on this findings the researcher recommended that government should at all level; employ professional accountants to ensure that funds are expanded in accordance with the terms by which they are appropriated while auditors should conduct their activity independently in order to protect the interest of the public. Thus, with integrity and in full compliance with the law guiding their profession.

Chapter One


1.0 Background of the Study

The term audit is derived from the Latin verb “audire”, which means “to hear” the origin of audit allowed tenant formers to work on their land while the land owners themselves, did not become involved in the business of farming. The landowners relied upon an overseer who “listened” to the accounts of stewardship given by the tenants. During this period till data, and with reference to the companies and allied matters act of 2004, the word “audit” is described as:

The independent examination of, and expression of opinion on the financial statements of an enterprise :y an appointed auditor in pursuance of that appointment and in compliance with any relevant statutory.

In order to form an opinion as to the accuracy, truth and fairness of such account.

The business world prior to industrial revolution in the 19th century till present day, has witnessed a lot of changes and developments. In the early economic Developments, the mode of recording and analyzing of accounting dates was by manual means. Auditing during this time was done orally because the business of writing was get to develop. The modernization of in the business world led to the areas where writing and receding analysis evolved with the use of some electro mechanicals. Accountability on the other hand is the obligation to answer for a responsibility that been concerned, (the 2006). During the era when accounting system evolved, the business transitions which took place – = d to be recorded, analysis and based on the principles, methods and procedures laid down by the accounting profession. Also certain development

which occurred, gave rise to the right to examine the books and to obtain all the information and explanation necessary for giving a report on the truth and correctness of the business’s (company) balance sheet. In view of this auditing was redefined according to (CAMA 2004) as an exercise whose objective is to enable auditors express on opinion on whether the financial statement gives a true and fair view of the entities affairs at the period and; of it’s profit and loss for the period then ended and have been properly prepared in accordance with the applicable reporting frame work, ,with greater emphasis placed on the information value of the business balance sheet and prospective investors becoming increasing conscious of the need for the rejection of error and fraud was regarded as the province of the business management. These development further gave rise to the restructuring accounting function of the owners of the business which in turn led to the emergence of the financial statement legislation and recognisition of auditors. As required by the company’s act, the audited(s) is meant to provide a written report, expressing their opinion regarding the freeness’ and “fairness’ of words, auditing both in the past and at present is fanned at enquiring that the stewardship account being centered to owners of business is a time representation of the event that took place. Also development • in the business coupled with technological breakthrough led to the advent of electronic data processing (computer) as a means of processing business dates. This, in the world of business implies the computerization of accounting system which still demands that auditor should perform their role as opinionist.

Based on this, the question that strike one’s mind is, could effective auditing lead to proper accountability In recent times, the concept of accountability has it’s origin in stewardship accounting (especially in the state government system). The function which accounting serves in the earliest times of our society is providing owners of wealth, the means of safe- guarding it from embezzlement. As noted by smith (2007).Accountability and it twin brother auditing were ushered in when owners were no longer managers of their resources and as such managers should look over such business with utmost care to avoid negligence and confusion of management in the affairs of the company, Furthermore auditing and accountability in the public sector otherwise called “public sector auditing and accounting”, comprises of the auditor- general of the “federation, auditor-general of the state and auditor general of local government that serves as external a.: tors to the three tiers of government in Nigeria. Their approaches and techniques are similar to that of various firms of chartered accountants bat different occurs in their method of appointment to those of firms of chartered accountants. Regardless of this fact, (differences) and in recognition of the former, a committee called the public account committee (Pac) was formed with duty to consider the auditor, general’s report submitted to the assembly with functions as follows.

  1. To deliberate on the auditor- general’s report.
  2. To summon accounting officer to appear before them
  3. To examine any offer on oath if need to be
  4. To recommend to the president any action to be taken on the offending officer.
  5. To enforce the auditor section as required by decree 43.
  6. To report to the president the recommendation’s
  7. To carryout any duty as required by the national assembly.

In conclusion, the effectiveness of auditing and accountability in the public sector which refers to ‘all organizations which are not privately owned and operated but which are operated and established as this effectiveness has brought about good internal and external control and checks, minimized fraud; defalcations Enhanced effectives policy and implementation and management while non-effective auditing and accountability would result to regulates lack of there and fair representation and reporting of financial statement alongside, poor policy implementation.

1.0.1 Auditing and Accountability as Statutory Obligations

during which the accounting carried out by suitable qualified auditors during which the accounting records and financial statements of an organization B-e subjected to examination by independent auditors with the main objective of expressing an opinion in accountancy with relevant terms of appointment purpose, (the, 2006).

1.1 Historical Background of the Study

The historical background of the office of the state’s auditor general dates back to the creation of states, specifically Imo state from the former east central in 1976 which was then headed by Sir. S.C. Okorieafor, who haiked from Oguta from then to present date, there has been series of appointment c” auditor generals, employment of staff and other changes. After the creation of states, most staff of the office of the auditor general of east central which was formerly at Umuahia, relocated to Imo state to the office of the Auditor-general now in Owerri. It’s capital, as required by law. The present auditor-general is by name, sir. E.A. Ugunwa.

1.1.1 Department in the Office of the Auditor-General (State)

The office of the state’s auditor-general is made up of six (6) departments namely.

  1. General service department (GSD):- this department is in change of the general administration of the state auditor-general office.
  2. Project monitoring and evaluation department (promade):- As the name suggests, its duty is to take care of the evaluating in and monitoring of all government project and also, audits, government parastatals.
  3. Government accounts department (GAD):- this department is in charge of the audit of government ministries,
  4. Revenue department (RD):- this department is in charge of the audit of government revenues.
  5. Finance and supply department (FASD): this department is vested with the duty of critical monitoring of the expenditures of the office itself, i.e (the office of the AG in particular). These departments are headed by 3 directors/3 acting directors for effective operation of the office of the AG.
1.1.2 The Responsibility of the State Auditor-General

(section 125 c2) of the constitution of Nigeria, 1999 amended) authorized the auditor-general- to carry out of all co-operations, government ministries, government parastates and local government councils through out the country regardless of it being either the primary or secondary responsibility, and this is periodically, according to the activities ofsuch organization.

1.1.3 Organization of Reports From the State Auditor-General’s Office

The reports from the office of the auditor-general is organized base on the type of opinion in recognition to the evidence he given. This opinion could be qualified, unqualified, subject to etc.

1.1.4 Problem Encountered in the Office of the State (Imo) Auditor-General

Problem encountered in the state AG’s office are numerous but specifically, the problem of misapplication of audit reports towards management decision, poor collection of owners recourse towards organizational administration, Non- segregation of functional duties and financial impropriety in the public sector caused by inefficient lauding and accountability arises due to:

  1. The selfish interest of the managers and undue influence which doesn’t allow the business to grow.
  2. Inadequate availability of resource or available resource being tampered by staff or managers of such business dues to their unwillingness.
  3. Inadequate internal control measures,
  4. Failure of the application of the expected auditing standards towards audit exercise, ie if wrong information is communicated to the investors.

The above listed could be solved if managers and staff would be fair in their duties towards the activities of the basins. This calls for motivation, willingness etc as auditing which starts where accounting stop is a sacred duty.

1.2 Statement of the Problem

The concept “auditing and accountability” has been relegated to the background in the public sector, in spite of it’s importance. The future of the public sector lies in it’s auditing and accounting. Auditors perform important function in those aspects of government that are crucial for promoting credibility, equity and appropriate behaviors of government officials which reduces the risk of public corruption. In spite of these important roles auditing and accountability plays, some problems are still left unsolved and new one have been created by the audit activities itself- hence problem like:

  1. Misapplication of audit report towards management decision.
  2. Poor allocation of owners resources and organizational administration
  3. Non segregation of functional duties
  4. Financial impropriety in the public sector as a result of inefficient auditing and accounting system.

These and many more problem are faces by the Nigeria public sector and enterprises. Investment are cost in non-profitable ventures and the nations resource wasted. It is the above back chop that further promoted the research to probe into the problem assistance from the study of the rank and file of the auditor-general office of Imo state

1.3 Objectives of the Study

The general objective of the study is to evaluate the effect of auditing and accountability in the public sector specifically,, it tends: to determine the cause of poor allocation of owners resources and organizational administration. To determine the factors that result to non-segregation of functional duties To being to light the financial impropriety lines) in the public sector which is due to inefficient auditing and accounting system.

1.4 Research Question

For this study, it is pertinent to ask some question, such as,

  1. Is there any significant relationship between auditing, accountability and the public sector?
  2. Is there any significant effect between misapplication of audit report towards management decision?
  3. What possible effect could poor allocation of owners resource cause towards organization administration?
  4. Is there any reason for non- segregation of functional duties?
  5. Is there are significant reason why financial improperly in the public sector should occur with emphasis on inefficient auditing and accounting system.

1.5 Research Hypothesis

In order to successfully find solution to the problem of the study some tentative statement known as” research hypothesis” have been framed. The hypothesis will be empirically tested later while the tentative statement will be hypothesized into Null

(Ho) and Alternative (HA)hypothesis.

Hoi: There is no significant relationship between auditing, accountability and the public sector.

Ho2: There is no significant effect between misapplication of audit report towards management decision.
HA2: There is a significant effect between misapplication of audit report toward management decision.

Ho3: Poor allocation of owners resources has no possible effect towards organizational administration.
HA3: Poor allocation of owners recourse has a possible effect towards organization administration.

Ho4: There is no significant reason as to why financial impropriety in the public sector should occur with emphasis on inefficient auditing and accounting system.
HA4: There is a significant as to why financial impropriety in the public sector should occur with emphasis on inefficient auditing and accounting system. Ho5: There is no reason for non-segregation of functional duties.

HA4: There is a reason for non- segregation of financial duties.

1.6 Scope of the Study

The study would involve the rank and file in the auditor-general office of Imo state except gardeners and security men.

1.7 Significance Study

The problem and objectives foe which the study seeks to particular and specific terms the study is meant to achieve the following through its we by various users as follows:

For the researches:

It will ( form a focal point for the researcher to accept or project the hypothesis state.

For the management of institutions:

It will provide an extensive tool for proper management and administration of such institution or a state. For student: It is an avenue for student to acquire secondary information

For Government:

It helps to inform both the present and future government of the need to audit and account property for every transaction. To the public: When fully adopted it clearly states the concept of auditing and accountability to the public there by showing the need for it and it consequence.

1.8 Limitations of the Study

This study is limited to Imo State public sector with particular reference to the office of the auditor-general of the state due to the following contracts:


This is the first major problem encounter in the work and it is due a very short semester and the academic pressures emanating from lectures, assignments, project works, seminars etc.


This is the second major problem experienced during this work and it so, based on the Allowing reasons. Scarcity of fund

  • High cost of transportation infringed on the efforts of the research in pursing of relented information.
  • Increase in the cost of: photo copywriting materials typing and binding Internet browsing,
Respondent Attitude:

Many of the respondents refused to fill and return the questionnaire given to them, some wrongly filed the A’hile some deliberately refused to provide the researcher with certain information’s which they termed “official secrets” as it might constituted a :threat to their positions or that of the organization.

Distance of the supervision:

Due to the supervision imitated time and engrossment in other business of his a gap is being created between him supervisor) and the student (researcher) but with smear commitment on the side of the supervisor alongside the. persistence and patience of the •researcher, such gap will be eradicated.

Chapter Five

Summary Conclusion and Recommendations

5.1 Summary of Findings

In the research work carried out by the researcher, the primary aim was to examine the effectiveness of auditing and accountability in the public sector with particular reference to the office of the Auditor- General of Imo state. In the study the effectiveness of Auditing and accountability in the public sector had been presented, analyzed and tested to ascertain in problems around it, ways of tacking them and drawn conclusion. Never the less, a survey of the office of the state Auditor General was conducted in order to gain an insight into the practice of Auditing and accountability in the public sector.

Analysis of the result showed that the more Auditing and accountability is employed in the activities of government, the more the economy is expected to perform positively provided government is consistent in its support for public Audit. This will in turn increase the performance of public sector bodies. Tull. D.S and Hawkins D.I (2000)

The study also shows that government Audit activities must be configured appropriately to enable government fulfill there duty which is, to be accountable to the citizens while achieving their objectives effectively, efficiently and ethically. Based on the findings of the study as conducted with some staff of the office of the Auditor- General of Imo state. Audotor perform important functions in the activities of government that are crucial in the public sector for promoting credibility, equity and appropriate behavior of government officials while reducing the level of public corruption. Adeniyi. A Ademji (2000)

Finally, the study reviewed that government Auditing is a cornerstone for good public sector government., this implies that it help provide unbiased objective assessment of whether public resources are responsibly and effectively managed to achieve intended results such as helping government organization achieve effective and efficient accountability, integrity improved operations and instill confidence citizens and stake holders.

5.2 Conclusion

Throughout the analysis of the study, it was observer that auditing and accountability have a positive role to play in organizing management and account control; towards attaining the objectives of government. Although, auditors may be able to add value to any segment of the organization fpr which they can provide independent, objective assurance at a minimum. Every government require some form of independent audit activity that have authority to evaluate the full rage of the government activities.

Ultimately, government auditing strengthens public government by providing for accountability and protecting the care-value of government by ensuring that directors, and other staffs conduct public business transparently fairly and twisty with equity and probity.

Auditors provide direct link between transparency and credibility of government actions are ethical legal and that financial performance reporting accurately reflects the true measure of operation, according to Adeniyi.A. Adeniji (2000) and CAMA (2004)

5.3 Recommendation

The researcher wishes to recommend that the following measures be adopted to effect certain reforms in the public sector regarding auditing and accountability. Government should at all levels employ professional accountants to ensure that funds are expended in accordance with the terms by which they are appropriated and that accounts are properly prepared.

To protect the interest of the public, every government require independent audit activities, providing a range of assurance and advisory service from financial attestation to perform an operational efficiency whether with the use of internal or external audit services or a combination of the two. Government must establish protections to ensure that those involved in audit are empowered to report significant issues to appropriate authorities. More so auditors must maintain independence and objectivity in the discharge of their duties. Government auditors are also expected to laws and regulations guiding their profession especially the generally accepted Accounting principle (GAAP).

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