THE IMPACT OF AUDITING ON ACCOUNTABILITY AND EFFICIENCY IN THE MANAGEMENT OF THE PUBLIC SECTOR


CHAPTER ONE
INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Every business has Accounting system by which transactions are processed and records of those transactions are maintained. Business decisions of many kinds are based on, at least in part, on accounting data. These accounting data are further drawn and presented in some forms of financial statements which are required by many users for decision making.
Decisions may be made for various purpose and they vary from one business to another. Internal control provides assurance and dependability of the financial statements used in making decision, hence, there is need for auditing of financial statement, Auditing therefore is made to determine whether persons in positions of fiscal responsibility in government and commerce are acting and reporting in an honest manner.

Auditing is one of the many services provided by the accounting profession and may be performed for different purposes. According to “Attwood and Stein” (2000 p. 21) “Audit is defined as an independent examination of an expression of opinion on the financial statement of an enterprise by an appointed auditor in pursuance of that appointment and in compliance with the relevant statutory obligations”.

Also “Ganakar and Bar” (2002:67) defined audit as “a critical investigation to arrive at sound conclusion about the financial and operating aspect of an economic entity.” It is further explained that a critical investigation implies on orderly accumulation of evidence and sound conclusions imply understanding and interpretation of the financial statement presented.

Again auditing is concerned with the independent verification of the results of operations of an entity. Given, the above definitions and explanation, it could be inferred that auditing is an independent appraisal activity of an organization for the review of accounting finance and other operations as a basis for managerial control.
There are basically four types of audit namely:
(i) Statutory audit
(ii) Private audit
(iii) Internal audit
(iv) Management audit

The ministry of finance plays a vital role in the overall planning, controlling and disbursement of government funds, for the day to day running of the state administration. Basically, these functions are carried out by various departments in the ministry the departments: personnel, finance and supplies, planning, research and statistics, office of the Accountant general. The personnel department is headed by a director and its functions include appointment, promotion and discipline of staff and other staff welfare matters. The department of finance and supplies is headed by director, whose functions include provision of finance management information to the ministry of decision making.

Planning, research and statistics department is headed by a deputy director research into various aspects of government finances and economy while executive director is in charge of ministry of finance incorporated.

The office of the Accountant general is headed by Accountant general whose functions include provision of efficient Accounting services to the government and advising on financial matters. At the helm of affairs in the ministry is the Chief Executive called Honourable Commissioner for Finance while the Chief Accounting Officer is the Permanent Secretary.

In general, this ministry takes charge to disbursement of funds to ministries, departments, boards and parastatals for payment of staff salaries and wages, pensions and statistics.
The main focus of this research state, it is the intention of the researcher to study the impact audit could create on public sector accounting system in Akwa Ibom State.

1.2 STATEMENT OF THE PROBLEM

State ministries are characterized by colossal waste and inefficient application of financial resources inspite of built in controls system and the existence office the State Auditor – General whose responsibility is to review the operations of ministries and report to public Accounts Committee of the State House of Assembly.

This study focuses on the ministry of finance which is the clearing house for all financial and accounting matters in the state. The department of audit was also brought into focus being a statutory unit with powers to appraise the financial operation periodically.

1.3 OBJECTIVE OF THE STUDY
The following are the objective of the study:
(i) To find out whether auditing function in the public sector is effectively carried out.
(ii) To evaluate the effectiveness or otherwise of the internal controls system in the ministries.
(iii) To find out whether proper works of accounts are being maintained in the ministries.
(iv) To examine whether actions are taken on Audit Reports submitted by the office of Auditor-General of State.

1.4 RESEARCH QUESTION
The following research questions were formulated to guide the researcher.
1) Does auditor examine accounting records kept in your ministry?
2) Is there any internal Audit unit in your establishment?
3) Does Auditors play their roles effectively in ministry of Uyo?
4) How often are financial records audited in your ministry?

1.5 RESEARCH HYPOTHESES
H0: Auditing does not have significant impact on government establishment.
H1: Auditing has significant impact on government establishments.
H0: Auditors do not play their roles in government organization effectively.
H1: Auditors play their roles in government organizations effectively.

1.6 SIGNIFICANCE OF THE STUDY
This study was undertaken with the hope that the findings and recommendations would be of benefits to:
(i) The ministry of finance in Akwa Ibom State being the custodian of Government funds.
(ii) Heads of other ministries and staff.
(iii) The department of audit in particular, by assessing and evaluating the performance of their functions as required their accounting system of government.
(iv) Government of Akwa Ibom State in the overall management of funds.

1.7 SCOPE OF THE STUDY
The scope of the study was limited to the ministry of finance Uyo, Akwa Ibom State. The researcher would have extended the data source to other ministries but for the financial and time constraints. The study focuses mainly on the impact of auditing on accountability and efficiency management in the public sector.

1.8 LIMITATION OF THE STUDY
Certain factors impose limitations on the conduct of this study. The respondent’s attitude, bureaucratic processes in getting data from the ministry couple with inadequate funds in making surveys were some of limitations which the researcher encountered.

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