AUDITING AS AN AID TO ACCOUNTABILITY IN THE PUBLIC SECTORS (A CASE STUDY OF FEDERAL MINISTRY OF FINANCE AND ECONOMIC DEVELOPMENT)

AUDITING AS AN AID TO ACCOUNTABILITY IN THE PUBLIC SECTORS (A CASE STUDY OF FEDERAL MINISTRY OF FINANCE AND ECONOMIC DEVELOPMENT)

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Background Of The Study

This is now a national issue. The increasing incidence of fraud and misappropriation of funds and property by Accounting officers and chief executive in the public sector of the Nigeria economy pose pertinent question as to whether auditing plays any significant role towards ensuring proper accountability and judicious use of fund set aside for various purposes and corporate objectives(Ejerel, 2012).

Some programmers and activities organized by these individuals are assumed to be done on behalf of   the people therefore deserted to be assured the resources which they put at the disposal of these accounting officers are efficiently, effectively and economically managed, since it is known, that not all of us are judicious in the in the management of our private affairs and much less, the public affairs entrusted to us(Halachmi, 2002) A case in point is about distressed banks like continental marchant bank and Nigeria marchant bank. Poor management was the problem with these banks, if these banks hard carried out proper audit and made use of the recommendation, the directors would have reduced proper accounts of their deeds(Mulgan, 2000).

Accountability has clearly manifested itself as a principle to be pursued if the status quo is not to be perpetrated. Several past leader have pledged to introduce a more responsible system of government with accountability but their subsequent conduct or governance have show that they have little or no understanding of the definition and application of accountability, hence the question of what then is accountability arises(Obazee, 2006).

Accountability as it is contained in long man dictionary of contemporary English is the condition or quality of being able (that is having) to give an explanation for ones actions. Accountability is also defined as the management of funds and other assets of which individuals or institutions had been custodians(Chai, 2009).

Auditing is regarded as one of the more recently established professions born out of the complexity of modern business world. It became relevant so as to discourage men from erring and to expose those who erred when they give account of how they managed the funds and property entrusted to them. This account or report is usually done by means of financial statement in order to verify the true and fairness of this report, an independent person- an auditor will audits the account(Okafor, 2011).

An audit is an investigation by an auditor into the evidence form which the final revenue accounts and balance sheet or other statements of an organization have been prepared in order to ascertain that they present true and fair view of the summarized transactions for the organization at the end date, so enabling the auditor to report thereon. There are more involved definitions such as; that issued by the consultancy council of accountancy of accountancy bodies (CCAB), which defined an audit as the independent examination of and expression of opinion. On the financial statements of an enterprise by an appointed author in pursuance of that appointment and incompliance with any relevant statutory obligations(Okaro, 2011). The law also makes provisions for the establishment of audit department as seen from the above definition, SEC 357 of companies and allied matters act auditors that will audit the financial statement of the company at the annual general meeting.

The question now is that in spite of all these provisions and safeguards one still experience the alarming rate of fraud and misappropriation of public funds and property by those entrusted with their safe guards. It is not surprising that great emphasis is being laid on proper auditing as means to enhance accountability in the  public sector of the nations.

1.2 Statement Of The Problem

There has been an out-cry of poor accountability in the public sector of Nigeria. The effectiveness of an independent audit is not however limited to the added statement of creditability derived from the audit itself(Halachmi, 2000). There is the statutory effect of the prospective audit on employer who may be tempted to defraud their employers and or management that may find it expedient to endeavour to deceive third party users by preparation of misleading financial statements(Obazee, 2006).

The problem is that the funds and property of the organizations are entrusted to certain individual workers in the organization and in most cases; these individual employees are not brought under through surveillance(Obazee, 2006). The result is that most of the funds and for property are distorted to personal use. Another Problem is the identification of the reasons for this ugly situation and why despite the fact that the accounts of these public organizations are said to be audited, there’s still an increase in fraud and misappropriation of fund and property.

1.3 Objectives Of The Study

The overall aim of this study is to critically examine auditing as an aid to accountability in the public sectors. Hence, the study will be channeled to the following specific objectives;

1. Find out whether auditing is an effective tool for accountability in the public sector.
2. Determine the effectiveness of auditing in presenting true and fair reports in public sector.
3. Determine whether auditing practices in public sectors are inline with the standards of auditing.
4. Ascertain whether auditing has helped  minimize misappropriation, embezzlement, and defalcation of fund in public sector.
5. Ascertain whether statutory effect of top officials influences the effectiveness and independence of auditors in public sector.

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