STRATEGIES FOR MINIMIZATION OF FINANCIAL AUDIT PROBLEMS IN PUBLIC SECTOR

1.0 Introduction

Auditors in the public sector have a lot of problems in Auditing Government Accounts. The researcher embarks on this study for the purpose of identifying these problems as well as the strategies for the minimization of those audit problems in the public sectors and government accounts, using Power Holding Company of Nigeria as a case study. He will also address such problems that may arise from the statement of the problems of this work. The researcher will make use of both primary and secondary data, which means, that research method will be chosen because the researcher consider them to e simple to use and easy to understand and that the results from them are more reliable.

At the end of the study, the researcher intends to have helped in identifying the problems associated with government audit; how to minimize them, how efficiency it will be introduced into government accounting and auditing and how the users of government financial statement will benefit from the improved auditing standards and practices.

The researcher will in this chapter give the Background of the study, Statement of Problem, Purpose of the Study, Research Question, Hypothesis, Limitations of the Study and Definition of Terms.

1.1 Background Of The Study

The account system (including the system of auditing) in Nigeria was patterned to the system of auditing obtainable from Britain. According to Atlan Burns (1980), Britain was Nigeria’s colonial master prior to her independence on 1st October, 1960. Hence there is no significant difference between the civil service operational from the British government.

In view of the historical background, various ministries and parastatals were established by the government at both federal and state levels. In each ministry, account units were created which handle all accounting problems and system of the ministries to ensure that the public funds committed to these parastatals are judiciously accounted for. The Federal/State Audit Department was established. This department is headed by the Auditor General of the Federation. The Audit Act of 1956 directs the Auditor General of the Federation to, “prepare and transmit a special report to the National Assembly where necessary as it concern other issues such as programme, project, activities, function or transaction concerning fraud or misappropriation of public funds and property in the office. Recently, there have been several changes in the civil service structure and operation in the country which have brought about a lot of problems in the Audit of Government Accounts. Though the changes were affect with reasonable objectives in view, but still have given rise to such problems as far as the Auditors handling the public sector and government accounts are concerned.

Multiplicity of fund is an element on government financial report which have powerful influence on audit procedures. These are the problems which have made the researcher to look into the study of the strategies for the minimization of Audit problems in the public sector of the Federation using Power Holding Company of Nigeria as a case study.

1.2 Statement Of Problem

The researcher addressed the following problems in the process of the research work.

1. The public sector is plagued with inefficiency which needed to be improved. This inefficiency is one of Audit problems in the public sector of the economy.
2. A review of the system of Internal Control generally referred to as the Interim Audit. For Auditors to be able to perform on effective Audit of public sector, the auditor has to carryout the necessary control in the organization he wants to perform audit work. The researcher therefore dived into finding the following;
3. If the Auditors in the public sectors often give audit report?
4. If there is a necessary co-operation required between the audit department and treasury department in the area of investigations and monitoring of the required accounts.

If the public sector auditors are skillful enough to cope with the present computerization of government accounts.

1.3 Purpose Of The Study

This work sought to determine the purpose of expressing lapses associated in auditing of Government Accounts vis-à-vis that of Power Holding Company of Nigeria. Other objectives of the study which the researcher intends to achieve are listed as follows:

1. To ascertain how often public sector auditors give audit report
2. To assess and test if the internal auditors in Power Holding Company of Nigeria are effective.
3. To ascertain and explain the need for co-operation between the Audit department and the financial department in the area of fraud prevention.
4. To ascertain the skill of public auditors in coping with the ongoing computerization.

1.4 Research Questions

1. Are the internal control auditors in the public sector very effective?
2. Does the treasury department in the public sector co-operate with auditor?
3. Are the public sectors auditors skilled enough to cope with the present computerization?
4. Do auditors often give audit reports in public sector?

1.5 Research Hypothesis

1. Ho: There are no effective internal auditors in the public sector
   Hi: There are effective internal auditors in the public sector.
2. Ho: Treasury department in public sectors do not co-operate with auditors.
   Hi: Treasury department in public sectors co-operate with auditors.
3. Ho: Auditors in the public sector are not skilled enough to cope with the present computerization of public sector.
4. Ho: Auditors is public sector does not give audit reports often
   Hi: Auditors is public sector give audit reports often.

1.6 Limitation To The Study

This study is designed to deal thoroughly with the public sector accounting and auditing in all areas of the government parastatals. However, the researcher during the cause of carrying out this assignment stumbled into services of constraints such as pressure of work.

In the case of the financial constraint; the researcher on her status as a student had not enough money at her disposal and this coupled with the hard times provoked by this period of galloping inflation and austerity posed too great a problem.

The researcher also had in her schedule to attend to other equally pressing obligation, which she cannot inevitably evade. She therefore had no option than to make do with the smallest possible time in bringing out this work. Most of the respondents chosen by the researcher developed lukewarm and non-challant attitude towards answering the questionnaires, culminating in returning them late for the researcher’s use. However, the researcher got all the questionnaires from all the respondents from which she made conclusions.

The collection of material for this project topic was by no means an easy task. This was more so because of the singular fact that these materials are not found on the same place. To get at these materials, the researcher had to run from one place to the other which often times because futile and the cost of transportation is high.

The researcher as at the time of this project work had to grapple with some other academic oriented problems. Since these other works must have to be attended to, common sense would demand that the time appointed to these problem is definitely not adequate. The splitting of this small time and resource among these, reduces the extent of perfection of this research work to the barest minimum.

1.7 Significance Of The Study

The researcher became inspired to delve into this topic based on her belief that the workers will be of immense benefit to the following category of the people in Nigerian society.

(i) Government:

The government will benefit from the place by enjoying the improved auditing standard that will arise from the identification and solution of the audit problems which will result to audit efficiency.

(ii) Private Auditing Firms (external audit):

The research will be significant to the external auditors in that they will now learn how to audit government account in accordance with the relevant auditing standards.

(iii) Student:

This study will be significant to student in higher institutions of learning for reference and academic purposes.

(iv) Subsequent Researcher:

The subsequent researchers will value this piece of work since they can easily pick more research topics from the research questions and research further on them.

1.8 Definition Of Terms

(i) Auditing:

Auditing is the independent examination in order to ensure that they have been properly kept, reflect the transactions of the organization and that these transactions are in accordance with the laid down rules and regulations.

(ii) CAAT:

Is an auditing term which simply means “Computer Assisted Auditing Techniques” quantity and quality are acquired at the lost cost.

(iii) Efficiency:

Efficiency is the production of as higher output using the same resources or in the production of the same level of output using a lower input.

(iv) Effectiveness:

Means the extent to which objective or goals are achieved.

(v) Co-Operation:

The act of doing something together or working together towards a share aim.

(vi) Computerize:

To provide a computer or computer to do the work of something.

(vii) Constraint:

A thing that limits or restricts something or your freedom to do something.

(viii) Culminate:

To end with a particular result or at a particular point.

(ix) Investigate:

An official group of inspectors who work together on the same objects.

(x) Internal Control:

Is a measure used by management to regulate and control the affairs of business.

(xi) Non-Challant:

Behaving in a calm and relaxed ways that gives the impression that you are not feeling any anxiety.

(xii) Multiplicity:

Means a great number and variety of something.