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