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PROJECT TOPIC: ASSESSMENT OF VALUE FOR MONEY AUDIT AS A TOOL FOR FRAUD CONTROL IN THE PUBLIC SECTOR

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CHAPTER ONE

INTRODUCTION

  • Background of the study

The Nigerian economy is characterized with stories of malpractice such as stories of ghost workers on the pay roll of Ministries, Extra-ministerial Departments and Parastatals, frauds, embezzlements and setting ablaze of offices housing sensitive documents and corruption among the public servants (Okwoli, 2004). According to Bello (2001), huge amount of Naira is lost through one financial malpractice or the other in Nigeria, which to say the least, drains the nation’s meager resources through fraudulent means with far-reaching and attendant consequences on the development or even socio-economic or political programs of the nation. Billions of Naira is lost in the public sector every year through fraudulent means. This represents only the amount that is ferreted out and made public. Indeed much more substantial or huge sums are lost in undetected frauds or those that are for one reason or the hushed up. Appah and Appiah (2010) argues that cases of fraud is prevalent in the Nigerian public sector that every segment of the public service, could seem to be involved in one way or the other in some of these nasty acts. The shapes of these sectors have sometimes made it clear for the executors to exercise personal and first hand supervision and operation. It is in this light that the value for money audit established by the management is initiated for any organization to carry out it’s business efficiently and effectively, there must be some factors that must be put in place for the smooth running of any organization like materials, machines, human labor and money etc.

There has been a dramatic change in the field of public sector management throughout the world The pursuit of Value for Money (VfM) has become the holy grail of public sector management worldwide Within the context of public procurement, VfM is now an essential test against which procuring and disposing entities (PDEs) must justify procurement outcomes. Public service providers too are expected to demonstrate to their communities that they are delivering better value for money addressing not only efficiency but effectiveness in delivery. Central to the concept of VfM in the public sector organizations is the principle that public funds should be put to the best possible use and that those who conduct public business should be accountable for the economical, efficient and effective management of the resources entrusted to them. Public sector managers have an obligation to demonstrate that resources such as people, goods and money, are used as productively as possible, that is with due regard for VfM, in achieving the intended results. The advent of the new public management (NPM) and managerialism approach to public sector governance, the traditional public sector audit role has also began to change, and VfM auditing is now a main requirement when assessing the performance of government systems. Consequently public procurement audits (and the resulting reports) should include a VfM analysis in relation to the entity’s performance.

Therefore fraud control has become increasingly important to the managers of various governments in an organization hence the need for VFM audit.

  • Statement of the problem

Financial irregularities and malpractice has engulfed the activities of the public and private sector in Nigeria. Even though the public sector is not created for profit making, they engaged in revenue generating activities and fund management for the provision of social amenities. The internal auditors who ought to act as a watch dog to some of this political appointee most time become a partaker in the crime.   In the public sector, the value for money audit reports are mostly unquantified opinion in the midst of all the financial foul play, even in a glaring situation or cases of corrupt practice by the managers that means that auditors especially those in the public establishment compromise their duties or their duties are being influenced or threaten by the forces that be. So lack of transparency and adequate method of accountability is a major factor that hinders the growth and progress in the public sectors; it is on this backdrop that the researcher intends to the impact of value for money audit as a tool for fraud control in public sector.

  • Objectives of the study

The main objective of the study is the assessment of value for money audit as a tool for fraud control in the public sector. However for the successful completion of the study, the following sub objectives were put forward by the researcher:

  1. To ascertain the role of value for money audit in fraud control.
  2. To investigate the relationship between value for money audit and fraud control
  • To investigate the impact of fraud control in curtailing financial irregularities.
  1. To ascertain the role of value for money audit in attaining accountability in public sector.

1.4 Research question

For the successful completion of the study, the following research questions were formulated:

  1. Is there any significant effect of value for money audit in fraud detection and control in the public sector?
  2. Is there any relationship between internal control and fraud detection?
  • To what extent is the value for money audit relevant to the effectiveness and control of an organization?
  1. What are the causes of lack of transparency and inadequate method of accountability?

1.5 Significance of the study

There is need to inform the management in the business organization on the value for money audit as regards to fraud control, detection and prevention in order that the auditor would be giving a maximum co-operation in the performance of the study.

It will also encourage the interest groups in the organization eg. potential investors, creditors etc.

It will also enlighten the public on the topic and provide further literature in the field of auditing and investigation.

Also the research work will be handy and also serve as a reference for further researches concerning auditors and fraud control and it will add to our knowledge generally.

  • Scope and limitation of the study

The scope of the study is the assessment of value for money audit as a tool for fraud control in the public sector. However, the study has some constrained and limitations which are:

(a)Availability of research material: The research material available to the researcher is insufficient, thereby limiting the study.

(b)Time: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

(c)Finance: The finance available for the research work does not allow for wider coverage as resources are very limited as the researcher has other academic bills to cover.

  • Definition of terms

Assessment

Assessment is the process of gathering and discussing information from multiple and diverse sources in order to develop a deep understanding of what students know understand and can do with their knowledge as a result of their educational experiences.

Value The regard that something is held to deserve; the importance, worth or usefulness of something.

Money

A current medium of exchange in the form of coins and banknotes, coins and banknotes collectively.

 Auditing

It is the systematic examination and verification of a firm’s books of account, transaction records and other relevant documents.

Tool

It is a device or implement especially one held in the hand, used to carry out a particular function.

Fraud control

Fraud control occurs when a trusted person in a high position of responsibility in a company, corporation or state subverts the organization and engages in extensive fraud for personal gain.

Public sector

A public sector is that portion of an economic system that is controlled by national, state or provincial and local governments.

Economy

An organized scientific study of the problem by which scarce resources which have alternative uses are allocated among competing wants with the objective of maximizing welfare.

Public sector

The portion of an economy in which the activities are under the controland direction of the state.

Private sector

That portion of the economy in which the activities are under the control and direction of a non-governmental economic unit.

The federal ministry of finance

The federal ministry of finance is the government body that manages the finances of the Federal Government of Nigeria including managing, controlling and monitoring federal revenues and expenditures.


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