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INTRODUCTION 1.1 BACKGROUND OF THE STUDY  Recently effective management and accountability of financial resources vike cash in the public sector has begun to receive much emphasis primarily in response to increase in fraud and high inflations rate that devalue idle or unaccounted cash and most especially defeat of aims of establishing such emprises and extra ministerial department most government establishments are tightening their internal control system to ensure strategic management planning and transparency in the affairs of the department. This duty call made imperative due to the near collapse of government institutions occasioned by misuse of cash and its vulnerability to corrupt official who are ever at work to defraud and Erich themselves from the origination. In order to protect its financial resources from being plundered an organization must know exactly its income and expenditure vouching system accounting system and basis authorization procedure cash control system etc. with respect to cash inflows and outflows. This explains the geometric rise in the embezzlement of public funds by official and government technocrats who are supposed to secure such funds. It is patients to recall that cash and other near-money resources either real or financial is the most improvement current asset for the smooth running of her machineries. It is input needed to keep the business on continuous basis such resources are needed for payment of salaries payment for contacts and other infrastructural development need to make for a good standard of living. An integral part of real and financial assets administration is concerned with the effective utilization of corporate fund. The planning and control of such activity is made possible by stringent internal auditing which embodies strict internal controls observation of accounting standards and principle vouching and authorization procedure. This is made necessary by the fact that business is cyclical in nature with dwindling government revenue and a considerable amount of time during which factors inputs must be purchased and wages paid elapses between the receipt of an order its shipment and the banking of cash. An investment in cash and real assets is required in order to meet with pressing operational demand the uneven flow in the receipt and disbursement of fund causes seasonal fluctuations and so on moreover the receipt and disbursement of fund is useable in daily basis and within the month with a strong cash management and control system (models) recognize the uncertainty inherent in forecasting both cash inflows and outflows. An effective cash management and accountability is necessary for the overall performance of an organization one is surprised at the complete lack of legal cash control and other real asset management system in many public sector organization in Nigeria especially those ones owned by government and the state. While some organizations prepare cash budget at the beginning of their financial year without any follow up authorization and control process others just more cash control to monthly basis in the form of bank reconciliation statement which are doctored to clan up their augean stables unfortunately, it is only when cash problem arises that management starts to look for the immediate and remote causes and possible remedies while they are the problem themselves. According to Stever (1994 page1) auditing in all its ramification whether internal or external in nature provides a unique platform and tool for accountability as no manager would like himself or herself to be found wanting for failure to give an accurate account of the fund entrusted to him or her. It therefore saves as a determent to managers of public funds from perpetrating frauds. More importantly internal auditing which is an independent appraisal of activity within an organization for the review of the accounting financial and other operations as a basis for protective and constructive services to management is a type of control which functions by measuring and evaluating the effectiveness of other types of control. The researcher intends to look into the nature of internal auditing as a probable tool for effective management and accountability of financial instrument with particular reference to the public sector the third tier of government using Udi local government council as a case study and to evaluate the internal control system in line with approved international standard and principles.

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