Analysis of audit procedure in a public sector organization (a case study of kaduna state water board)

Thesis Overview

<p> <b></b></p><p><b><b>INTRODUCTION</b></b></p><p><b><b></b></b></p><b><b><p><b>1.1<br>&nbsp; BACKGROUND TO THE STUDY</b></p><p><b></b></p><b><p>As it will be practically impossible to<br>talk of a building without a foundation, so also it will be professionally<br>imbalance to talk of Audit procedure in a public sector organization” without<br>actually bringing to time light what public sector organization portrays.</p><p>Public sector organization refers to those<br>organizations set up by government for the purpose of providing social services<br>with profit motive if any, at the background.</p><p>“organization” in the eyes of the law is<br>an actual being. It is an intangible person with many of legal rights, powers<br>and obligations of an individual. It may take contracts, hold and sell<br>property, sue and be sued in its own name. Organizations therefore, owe their<br>births to creation and they are owned and managed differently precisely because<br>of their unique artificial legal make up. Such organizations include Kaduna<br>State Water Board, National Electric Power Authority, to mention but few.</p><p>Every human organization, however,<br>simply require written records which the management or administration needs to<br>keep decisions formulation of general rules, the making of policies and the<br>legal validation of the organization status, procedures and relationships with<br>other organizations or individuals.</p><p>Every civilization, ancient or modern<br>that had a commercial background or that which had any difficult problems of<br>governmental organization or administration to solve had to have financial or<br>at least numerical records of some sort.</p><p>Auditing being the exercise aimed at<br>ensuring that the accounts being reported on show the auditor’s opinion, a true<br>and fair view of the financial position as at the balance sheet data and of the<br>profit and loss for the period ended the date, it is suffix to say that as<br>erroneously being carried about, it is not the objective of an audit to detect<br>fraud, although fraud or defalcation may surface during audit.</p><p>The auditing of an organization<br>financial statements involves the verification of the balance sheet and the<br>income and expenditure accounts and the examination of the underlying records<br>to test their reliability and the basis from which these statements had been prepared.<br>It means going through financial transaction which had given rise to the<br>records.</p><p>In a public sector like Kaduna State<br>Water Board, auditing, and audit programme<br>has to be drawn up and this will be a guide for the audit work. The audit programme will seek to verify<br>the efficient working of internal control system with particular reference to<br>the internal check, division of duties and managerial supervision.</p><p>The proper working of the system of book<br>keeping and accounting with particular reference to the accuracy, completeness<br>and reliability of the records being compiled and the extent of the true and<br>fair view of the financial statement as produced there from.</p><p>In analyzing an audit, it involves a set<br>of procedures which include: general financial control procedure, cash controls<br>and the procedures involving receipt and payment, salaries and wages control,<br>sales and trade debtors control procedure contract award procedure and fixed<br>asset and investment control.</p><p><b>1.2 &nbsp; STATEMENT OF PROBLEMS</b></p><p><b></b></p><b><p>This research work is set out to examine<br>effective analysis of Audit procedure in a public sector organization so as to<br>have an insight into how it affect individual, and government as well as how<br>proper analysis of audit procedure helps in attracting and retaining the<br>financial position in public sector.</p><p>The following are the statement of<br>problems:</p><p>i. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br>To what extent do the auditors exercise<br>procedures in a public sector organization.</p><p>ii. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>What constraints are there that inhibit<br>auditors procedure on internal control.</p><p>iii. &nbsp; &nbsp; &nbsp; &nbsp;<br>What is the relationship between the<br>company’s auditing process and the level of accountability.</p><p><b>1.3 &nbsp; AIMS AND OBJECTIVES OF THE STUDY</b></p><p><b></b></p><b><p>Auditing in the public sector<br>organization especially those in public corporations like Water Board, have<br>been so neglected by government these days. Most of the relevant books<br>consulted so far in the field of auditing, little or nothing have been said<br>about auditing of public corporation. Major concern has been towards the audit<br>of limited liability companies.</p><p>This research however, is designed to<br>enable the readers understand the procedure in the auditing process in the<br>public sector organizations with reference to Kaduna State Water Board and<br>also, to know the role of auditors of public sector organization.</p><p><b>1.4 &nbsp; STATEMENT OF HYPOTHESIS</b></p><p><b></b></p><b><p>In order to have a bearing for this<br>study, formulation of hypotheses is necessary which is an opinion statement on<br>research question and data to be obtained during the research work will be used<br>to test the hypothesis.</p><p>Nnadozie and Akuzuito (1995 P.32) “The<br>research hypothesis is a tentative answer to a research problem/question. It is<br>an educated or intelligent guess of an answer to the problem of the research<br>under investigation. It is however, an answer which has no evidence supporting<br>it until a full investigation is carried out. The research hypothesis may<br>therefore be seen as an opinion statement”.</p><p>Considering the problems already stated<br>data gathered during this study will be used to test the following hypothesis:</p><p><b>Hi</b>:<br>&nbsp; &nbsp; Auditing process has a positive and<br>significant relationship with the level of accountability in a public sector<br>organization.</p><p><b>Ho</b>:<br>&nbsp; &nbsp; Auditing process has no positive and<br>significant relationship with the level of accountability in a public sector<br>organization.</p><p><b>Hi</b>:<br>&nbsp; &nbsp; Lack of effective and efficient<br>performance of internal control inhibit auditor’s procedures. &nbsp;</p><p><b>Ho:<br>&nbsp; &nbsp;</b>Lack of effective and<br>efficient performance of internal control does not affects auditor’s<br>procedures.</p><p><b>Hi:</b><br>&nbsp; &nbsp; Lack of independent mind of most<br>internal auditors does not affect effectiveness of internal control system.</p><p><b>Ho:</b><br>&nbsp; &nbsp; Lack of independent mind of internal<br>auditors affects the effectiveness of internal control system.</p><p><b>1.5 &nbsp; SIGNIFICANCE OF THE STUDY</b></p><p><b></b></p><b><p>With the rapid growing of economy crises<br>in the country, the effect of audit procedure can be highly detrimental to the<br>users of a company’s report if not properly carried out.</p><p>Kaduna State Water Board being one of<br>the public sector organization in Nigeria economy. It is necessary to work into<br>how the audit procedures is been carried out in such public organization.</p><p>The effect of this audit procedures to<br>individual investors, customers and other governmental agent are of paramount<br>importance. it is with the believe that the research work will bring about<br>relevant questions that will require further analytical investigation, thereby<br>increasing the existing knowledge on the subject matter.</p><p><b>1.6 &nbsp; SCOPE AND LIMITATIONS OF THE STUDY</b></p><p><b></b></p><b><p>The study has been basically limited to<br>areas that is concerned by Kaduna State Water Board that is, the analysis and<br>the procedure in a public sector organization. The process of this study covers<br>the control and procedure of expenditure of the Board as well as that of<br>receipts. it is also pertinent to mention that the project research is purely<br>an academic exercise.</p><p><b>Time<br>Constraint: </b>Time is an important factor in a<br>research work. For a researcher to exhaust all the requirements for a<br>particular study, a lot of time must be invested. However, the time allowed for<br>this research work is short coupled with other academic activities.</p><p><b>Financial<br>Constraint: </b>Closely following the above constraint<br>was finance. Research of this nature requires large fund, indequate fund does<br>not allow for a large scale research to include the organizations.</p><p><b>Respondent<br>Constraint: </b>Most of the audit and account staffs<br>confronted for information felt somehow skeptical to release them for fear of<br>leaking official secret, this actually make it difficult for the researcher to<br>obtain adequate information needed to the study.</p><p><b>1.7 &nbsp; DEFINITION OF TERMS</b></p><p><b></b></p><b><p>The following are some terms used in<br>this project work.</p><p><b>Audit<br>Programme: </b>Is a schedule of operation to be carried<br>out in the course of any particular audit exercise.</p><p><b>Audit<br>Planning: </b>Audit planning refers to the plan of work by a firm<br>of accountants or a government audit department to ensure that during a year it<br>covers the entire audit job it has at hand. &nbsp; </p><p><b>Audit<br>Evidence: </b>All information obtained by the auditor in arriving<br>at his conclusion on any matter within the scope of his audit.</p><p><b>V.F.M:<br></b>Means<br>value for money audit</p><p><b>Audit<br>Working Papers: </b>Working papers consit of file of<br>evidence obtained during audit work, the details of the methods and procedures<br>the auditor followed and the conclusion he has reached concerning the object of<br>the audit.</p><p><b>Testing:<br></b>Selecting<br>and examining representative items from a large set of similar items for the<br>purpose of drawing conclusions about the charactertics of the set.</p><p><b>Audit<br>Procedures: </b>The acts performed by the auditor in the<br>course of attaining the objectives of the examination.</p><p><b>1.8 &nbsp; HISTORICAL BACKGROUND OF KADUNA STATE WATER<br>BOARD</b></p><p><b></b></p><b><p>The Board was created by Kaduna State<br>(then North Control State of Nigeria) through Edict No. 2 of 1971. Since then<br>the Board is operating separate set of books of Accounts and treasury, for<br>payment of vouchers, time to time new set of procedures and accounting system<br>were introduced through circulars while sometime through instruction on the job<br>training, to bring the Board’s Accounting system on modern lines. However, all<br>these circulars and instructions are in lose form and some are unwritten too. The<br>introduction of commercial accounting system at Kaduna State Water Board is to<br>provide suitable, sufficient and authentic management information to help in<br>decision making and planning of operation.</p><p>This data falls under two categories<br>viz:</p><p>i. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br>Financial and management information</p><p>ii. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>Control and flow of financial data for<br>future planning.</p><p>Classification and coding of accounting<br>data is necessary to process the data speedily. In pursuance to this objectives<br>revenue and expenditure have been coded and classified.</p><p>The general managed/chief executive, is<br>the accounting officer of the Board. Any officer expending money within the<br>board does so on behalf of the chief executive. The limits of power of the<br>chief executive in this regard are stipulated in circulars issued from time to<br>time by the government and in conformity with the edict.</p><p><b>REFERENCES</b></p><p>Milichamp, A.H (2000) Auditing Continuum London and New<br>York. The Edition</p><p>Ekwere A. B. (1991) Contemporary Auditing, Fab Education<br>Book, Jers, Nigeria. AAT Study Pack Paper 14, Public Sector Accounting and Auditing/2<br>Published September.</p><p>Akuezuilo<br>E. O. And Nnadozie B. M. (1995) Research Methods and Statistics in Education,<br>Social and Management Sciences, Nuel Centi (Nig) Publishers Akwa.</p></b></b></b></b></b></b></b></b></b></b> <br><p></p>