Accounting

The Relevance of Auditing in the Face of Increasing Fraudulent Practices in Nigerian Public Service

The Relevance of Auditing in the Face of Increasing Fraudulent Practices in Nigerian Public Service

ABSTRACT

Lack of understanding of the purpose of auditing among the society in general, especially the management ministry of health Enugu become the problem of the study. The objective was to examine the role of auditing in controlling fraud in Nigeria’s public service. The population variable was 360 with a sample size of 189, simple percentages were used to analyze the research questions. One of the major findings was that auditors should receive proper education and training. This factor will only enhance the general efficiency and effectiveness of the audit function. The researcher also concluded that the auditor in discharging his judiciary duties encounters difficulties in attempting to serve two major masters, which are our clients and the third parties. Finally, it has been recommended that the auditor should shift from an inspection style to advising and participating in a teamwork approach with management.

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The role of auditing in fraud and corruption management is essential. Damages done to public institutions by fraud and corruption can be enormous ranging from financial loss, damage to organizational performance, reputation, and credibility loss. On many occasions, if the case makes the headlines in the media, it permanently harms public confidence and undermines the legitimacy for administration and spending of taxpayer’s money by this institution. Therefore, good risk management, as well as prevention detection and well-designed control systems, should be considered by every public sector authority as a must. Despite many initiatives, strategies, and tools, there is a constant need for more effective control instruments, reporting mechanisms, investigation methods, and best practices.

Auditors often have the best access to detailed information on financial transactions, project management, procurement procedures, and the use of findings and grants in their institutions. As a person responsible for risk management and internal audit in an institution, the auditor is responsible for guarding the ethical standards and being a good example by ensuring adherence to rules, procedures, and recommended practices. Therefore, the auditor needs to be fully prepared for implementing innovative prevention methods and tools for an organization to be efficient and effective and be able to achieve its desired objectives, it needs to have amongst others good leadership, competent manpower, adequate resources, and good measures of internal control. Connor (1979) said that internal control is considered important in an organization because today’s economic environment requires that management of every organization whether public or private should take adequate steps considered necessary to establish and sustain an effective internal control system to ensure effectiveness, efficiency, and economical operations. It also ensures the accuracy and the completeness of accounting information as well as compliance with the rules and procedures. The system of internal control is seen as the integrated collection of control mechanisms used to achieve desired results, among which is the internal audit, which is an essential element of the internal control system. Many organizations lack mechanisms for adequate monitoring of activities and operations, thereby not giving room for easy achievement of the business goals (Adeniji, 2004).

Flaws and loopholes may still exist in an organization despite the existence of internal control system, which can easily be circumvented by individuals who are inclined towards fraudulent activities. Therefore, measures have to be put in place to checkmate such fraudsters. One best way of curbing and/or minimizing the menace of fraud is through the institutionalization of a vibrant and effective internal audit. The presence of an effective internal audit in an organization is not only to checkmate fraudsters but also serves as a managerial control that functions by measuring and evaluating the effectiveness of other controls (Dandago, 2002). The primary function of an auditor is to evaluate processes that are in place to identify any weaknesses in internal controls that might lead to undetected fraud. When any such weaknesses are identified, they are reported to management for corrective action. The internal audit is expected to anticipate problems, visualize improvements, and propose preventive actions (Effiok, 2003). The auditor has the responsibility to appraise the activities of other departments in an organization and provide management with information that is useful in assessing operational effectiveness.

That an auditor has the responsibility for the prevention, detection, and reporting of fraud, other illegal acts and errors are one of the most controversial issues in auditing and have been one of the most frequently debated areas amongst auditors, politicians, media, regulators, and the public (Gay et al 1997). This debate has been especially highlighted by the collapse of both small and big corporations across the globe. The auditing profession in Nigeria has caught the media’s attention following financial scandals in some of the Nigerian banks such as Intercontinental Bank, Oceanic Bank, Afribank, and PHB among others.

There seems present to be a misconception that auditors’ duties are largely the preventing, detecting, and reporting of fraud, for example, Idris (2009). This paper aims to identify financial report users, Perceptions of the extent of fraud in Nigeria, and to determine their perceptions of the auditor’s responsibilities in detecting fraud and the performance of related audit procedures. The paper also aimed at ascertaining whether the report users’ perceptions of auditors’ responsibilities on fraud are consistent with those of the auditing profession as expressed in auditing standards in Nigeria.

1.2 STATEMENT OF THE PROBLEM

Public embezzlement always create consciousness on the part of the supervisory authorities as to the quality and disagreement of protective management in government

1. Lack of understanding of the purpose of auditing among society in general.

2. Lack of well-defined goal-oriented policies aimed at building up a strong and sound financial system.

3. Inherent weakness in the existing Administrative arrangement for government establishment accounting function.

4. Improper supervision of overall officers under the authority entrusted with the receipts expenditure of public money.

5. Inability of the government established to maintain a sound system of internal control.

1.3 OBJECTIVE OF THE STUDY

This research work aims to evaluate the relevance of auditing in the face of increasing fraudulent practices in Nigerian public service with specific reference to the Ministry of health Enugu state. The general objectives of this research work include the following;

1.  Evaluate the rate of fraudulent practices in the Enugu state ministry of health.

2.  To examine the role of auditing in controlling fraud in Nigeria’s public service.

3.  To examine the effect of fraud on the growth and development of Nigerian public service.

4.  To identify the causes of fraud in the Enugu state ministry of health. And also suggest possible ways of detecting and controlling fraud in Nigerian public service and Enugu state ministry of health in particular.

1.4 SIGNIFICANCE OF THE STUDY

This research work will be of immense help to:

The Researcher: it will help the researcher to know more about the relevance of auditing in the face of increasing fraudulent practices in Nigerian public service.

Stake Holders: It will serve as an eye-opener to the stakeholders and management of public enterprises in the area of identifying the relevance of auditing in the face of increasing fraudulent practices in Nigerian public service as well as possible ways forward.

The country at large: This study will be of great importance to the country of Nigeria as it will help the policymakers to prorogate laws that will guide the activities of public organizations.

1.5 SCOPE OF THE STUDY

The study shall focus on the relevance of auditing in the face of increasing fraudulent practices in Nigerian public service with specific reference to the Enugu state ministry of health.

1.6 RESEARCH HYPOTHESES

The researcher formulated the following hypotheses to enable him to carry out an extensive study on the subject matter;

Ho: The rate of fraudulent practices in the Enugu state ministry of health is very low.

H1: The rate of fraudulent practices in the Enugu state ministry of health is very high.

Ho: Auditing does not play any role in controlling fraud in Nigeria’s public service.

H1: Auditing plays role in controlling fraud in Nigeria’s public service.

Ho: Fraudulent practices do not have any effect on the growth and development of Nigerian public service.

H1: Fraudulent practices have a significant effect on the growth and development of Nigerian public service.



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