CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND OF THE STUDY

        Organization  all  round  the  world  be  it  public or private or  otherwise  needs  auditing for  proper  assessment  of  their  financial  statements. Auditing is an independent examination of an expression of opinion on the financial statement of an enterprise or organization by an appointed auditor in pursuance of that appointment and in compliance with any relevant statutory obligation (Chamber, 2008). It aims at providing solution to the inevitable problem of credibility in report and accounts. It prevents and detects errors and frauds and also produces a report of the true and fairness of the financial statement (Coper, 2003).   They also obtain full understanding of the operations under review. The role of internal audit has grown tremendously in most organizations in the recent past. This can be attributed partly to the growth of the organizations, which entails widely extended operations and the need to ensure that the organizations policies and basic accounting controls are observed at every facet of the organization. Again, it can be observed as a measure by management to ensure that the government regulations concerning the operations of organizations, both public and private are duly complied with so as to guard against conflicts and inconsistence with the law.

        As the organization expands and supervisory responsibility broadens, the head can no longer have personal knowledge of every aspect of the organization. It becomes impossible for him to control or monitor the continuing effectiveness of all controls. This calls for the delegation of this responsibility to a separate department called the internal audit department. Internal Audit Department is a department set up by management, usually manned by a Chartered Accountant, as established in section 358 of the companies Act 1976, to receive the activities of other employees thereby enhancing controls in the organization.

        Decisions may be made for various purpose and they vary from one business to another. Internal control provides assurance and dependability of the financial statements used in making decision, hence, there is need for auditing of financial statement, Auditing therefore is made to determine whether persons in positions of fiscal responsibility in government and commerce are acting and reporting in an honest manner.

        The ministry of finance plays a vital role in the overall planning, controlling and disbursement of government funds, for the day to day running of the state administration. Basically, these functions are carried out by various departments in the ministry, the departments; personnel, finance and supplies, planning, research and statistics, office of the Accountant general.

        The personnel department is headed by a director and its functions include appointment, promotion and discipline of staff and other staff welfare matters. The department of finance and supplies is headed by director, whose functions include provision of finance management information to the ministry of decision making.

        Planning, research and statistics department is headed by a deputy director research into various aspects of government finances and economy while executive director is in charge of ministry of finance incorporated.

        The office of the Accountant general is headed by Accountant general whose functions include provision of efficient Accounting services to the government and advising on financial matters. At the helm of affairs in the ministry is the Chief Executive called Honourable Commissioner for Finance while the Chief Accounting Officer is the Permanent Secretary.

        In general, this ministry takes charge to disbursement of funds to ministries, departments, boards and parastatals for payment of staff salaries and wages, pensions and statistics.

        The main focus of this research state the intention of the researcher to study the impact audit could create on public sector accounting system in Akwa Ibom State.

1.2   STATEMENT OF THE PROBLEM

        State ministries are characterized by colossal waste and inefficient application of financial resources inspite of built in controls system and the existence office the auditor whose responsibility is to review the operations of ministries and report to public Accounts Committee of the State House of Assembly.

        This study focuses on the ministry of finance which is the clearing house for all financial and accounting matters in the state. The department of audit was also brought into focus being a statutory unit with powers to appraise the financial operation periodically.

1.3   OBJECTIVES OF THE STUDY  

i)      To find out the role of internal auditing on the success of management control.

ii)      To find out whether auditing enhance accountability in public sector in Nigeria.

iii)     To determine whether internal auditing aids the growth and development in public sector.

iv)     To determine the factors militating against audit functions in an organization.

v)     To give suggestions for solving the factors affecting the of audit functions in an organization.

1.4   RESEARCH QUESTIONS

        The following research questions were stated to guide this study:

i)      What is the role of internal auditing on the success of management control?

ii)      Does auditing enhance accountability in public sector in Nigeria?

iii)     Does internal auditing aids the growth and development in public sector?

iv)     What are the factors militating against audit functions in an organization?

v)     What factors affecting the effect of audit functions in an organization?

1.5   RESEARCH HYPOTHESES

        The following research hypotheses were formulated to guide this study:

Hypothesis 1

H0:    There is no significant difference between internal auditing and the success of management control.

H1:    There is a significant difference between internal auditing and the success of management control.

Hypothesis 2

H0:    Auditing does not enhance accountability in public sector in Nigeria.

H1:    Auditing enhances accountability in public sector in Nigeria.

Hypothesis 3

H0:    There are no factors militating against internal audit and audit functions of an organization.

H1:    There are factors militating against internal audit and audit functions of an organization.

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