FINANCE AND AUDIT PERFORMANCE IN PUBLIC ORGANISATIONS

Introduction

1.1 Background Of The Study

Both internal and external auditing is important every organization for the control and check of employee fraud and other irregularities. Auditing is a Latin word but when interpreted into English, it means “He hears According to International Audit and Assurance Standards Board (IAASB), a sub-committee of the International Federation of Accountant (IFAC) from the above defines an audit “as an independent examination of and expression of opinion on the financial statements of a business enterprises by an appointed auditor in accordance with his terms of “appointment and in compliance with relevant statutory and professional requirements”. Auditing IS also “An integrated process of accumulating ad evaluating evidence by a competent independent person about quantifiable information of a specific economic entity for the purpose of determining and reporting upon the degree of correspondence between the quantifiable information and established criteria. External auditor is a member of a certified or chartered accountant firm whose responsibility is to form and express a professional opinion on the accounts to be present by directors to shareholders, while internal audit is an independent appraisal activity within an organization for the review of operation as a service to management. It is a managerial control which functions by measuring and evaluating the effectiveness of other control.

Internal check has been defined as the check on the auditing or auditor’s incidental function to check and control employee. Although, there is the management of the organization that is responsible for installing and maintain sound internal control system which include internal auditors and external auditors who review the system force and audit financial statement, fraud and mismanagement are still often reported. There have been cases of fraud arising from deliberate action in materially misrepresenting financial result either to cover up deteriorating state of affairs in the organization or secure an advantage for several members of management.

The importance of reliable information and the consequence of fraudulent representation in financial statement are: Economic decision in every society must be based upon information available at the time, the decision is made. For example, the decision of a bank to make a loan to a business is based upon previous financial condition of the company as reflected by its financial statement and other factors. If the decision is to be consistent with the intention of the decision-makers, the information used in the decision process must be reliable. Unreliable information can cause inefficient use of resources to the detriment of society and the decision makers themselves. As society becomes more complex, there is increased like hood that un-reliable information will be provided to decision makers.

The very first audits were detailed review of records designed to determine whether each transaction was recorded in the proper account and in the correct amounts. The primary purpose being the detection of defalcation and the determination of whether person in influential position were acting and reporting responsibly.

After the industrial revolution, the scope and complexity of business expanded greatly. As organization increased in size, they employed large number of peoples, and the accounting system becomes more highly developed. With an expanded accounting system and more people involved, it was possible to segregate duties within and organization. Due to the segregation, the function of asset custody and record keeping were separated, and other effective internal controls were developed to protect assets, prevent and detect defalcations. Internal auditors also become a major part of internal control system. It was then realized that the objectives of fraud detection could be accomplished more effectively than rough adequate system of internal control.

1.2 Statement Of The Problems

The essence of auditing and finance system in public establishment like in the Nigeria Police Force is to complement each other in the effective control and check of fraud, mismanagement and other irregularities in the organization. But the fact is that even at the utilization of both the Nigeria Police Force, there still remain one of such public establishment that witness a lot of fraud, mismanagement and other irregularities. It becomes important to investigate in this study, the effectiveness and efficiency of both internal and external auditing system in the establishment in achieving the set objectives or the extent each has complemented each other in the effective control and check of fraud and other irregularities in the organization.

1.3 Research Questions

In this study then, the answers to these relevant questions become important.

1. How effective and efficient has been the role of both internal and external auditing for the control and check of fraud, mismanagement and other irregularities in Nigeria Police Force?
2. As internal and external auditing system enhance the achievement of the organization through control and check of irregularities in Nigeria Police Force?
3. To what extent has the inefficiency in the role of both internal and external auditing negatively affected the information from the organization’s decision making?
4. To what extent does efficiency of auditing depend on the independence of the auditors?
5. What are the ways through which the internal and external auditing system could be improved?

1.4 Research Hypothesis

1. HI: Internal and external auditing systems significantly affect the control and check of fraud and other irregularities in the Nigeria Police Force.
   H0: Internal and external auditing systems do not significantly affect the control and check of fraud and other irregularities III the Nigeria Police Force.
2. HI: Transparency and accountability in the auditing process is the issue with the accounting system in Nigeria Police Force.
   H0: Transparency and accountability in the auditing process IS not the issue with the accounting system in Nigeria Police Force.
3. HI: Mismanagement of funds in the accounting system is the main problem that hinders the effectiveness of auditing system in Nigeria Police Force.
   H0: Mismanagement of funds in the accounting system is not the main problem that hinders the effectiveness of auditing system in Nigeria Police Force.

1.5 Purpose Of Study

The aim or purpose of this study or research is the following:

1. To determine the nature of relationship between the role of auditing and the control and check of fraud irregularities in Nigeria Police Force.
2. To appraise the effectiveness and efficiency of internal and external auditing system, in complementing each other in the control and check of fraud and other irregularities in the Police Force.
3. To determine whether there is a positive and significant relationship between proper auditing and organizational performance or achievement of the set objective in the Nigeria Police.
4. To know the extent, inefficiency in both internal and external auditing have negatively affected the information received in an organization, hence in decision making.
5. To recommend more ways of imposing the role of auditing in the control and check of fraud in Nigeria organization and ministries.

1.6 Significance Of The Study

Every now and then, we hear cases of fraud and other irregularities being reported in both private and public sector like the Nigeria Police Force. But no doubt, the effectiveness and efficiency of both internal and external auditing in there establishment could significantly control and check there irregularities in these organization. This study then becomes beneficial and relevant in the following ways:

1. This study would identify the efficiency of the role of internal and external auditing in many organizations including Nigeria Police Force.
2. It would also assist in determining the extent internal and external auditing systems in the Nigeria Police have complemented each other in enhancing the performance of the establishments.
3. This study would expose whether internal and external auditing systems have enhanced the quality of informational gotten from Nigeria Police Force.
4. This study will .also reveal whether lack of proper internal and external auditor’s moral is negatively and significantly hindering the efficiency of auditing in the organization.

1.7 Scope And Limitation Of The Study

This study will be restricted to the Nigeria Police Force. It embraces the impact of internal and external auditors in fraud detection.

This research work is not without some constraints and limitations. Gathering of the research materials in different libraries is one of the problems encounter by this constraint, the researcher could not travel to all the known avenues for research materials and information. Finally, some of the respondents made it difficult for certain information gathered through the administered questionnaire and oral interview. However, despite this constraining factor, this study is expected to accomplish its main objectives.

1.8 Definition Of Terms

Auditing:

The systematic investigation and appraisal of transactions, procedures operations and resulting.

Internal Auditing:

An Independent appraisal activity within an organization conducted by internal auditors for the review of financial and other operations to determine if they accurately and honestly reflect the condition of the organization.

External Auditor:

Is employee of a certified or chartered accountant firm whose responsibility is to form and express a professional opinion on the accounts to be presented by directors to the shareholders.

Fraud:

Is defined as an acts committed with intent to deceive involving either misappropriation of assets or misrepresentation of financial statement either to conceal misappropriation of assets or for other purpose, by such means as:

1. Manipulation, falsification or alteration of documents
2. Suppression of information, transaction or document
3. Recording of transaction without substance
4. Misapplication of accounting principles.

Irregularities:

Financial irregularity takes place when a person engages in falsification of accounting records, circumvention of internal accounting control system or other deliberate acts resulting in inaccurate book and records.

Error:

Is an unintentional mistake in financial statement and includes mathematical or clerical mistake in the underlying records and accounting data from which the financial statements were prepared.

1.9 Organisation Of Study

Finance and Auditing are very important in public organization especially in Nigeria Police Force for the control and check of employee fraud and other irregularities. These irregularities if left unchecked could hamper the progress of any of our Public enterprises.

• Chapter One of this work introduced the background of this work, the significance of the study as well as the scope and limitations of auditing in the Nigeria Police Force.
• Chapter Two critically reviewed various literatures in both the internal and external auditing as applied in this work.
• Chapter Three discusses the research method and design as employed in this work.
• Chapter Four analyzed the data presented from the research questions while
• Chapter Five is the concluding chapter with some recommendation made.