Description
ABSTRACT
This research work deals with the challenges of internal audit function in the Nigerian public sector with reference to Kaduna state ministry of finance. Internal auditing is a process generally adopted towards ensuring and safeguarding of resources and promoting operational efficiency in organization. The objective of this study has been to evaluate the internal control system in the Nigerian public sectors, to ascertain the non- implementation of routine audit report and the lack of proper segregation and assignment of duties. In recent times, a combination of forces has led to a quiet revolution in the profession. Government moving towards democracy must demonstrate accountability in the use of public money and efficiency in the delivery of service. In many cases internal control system are weak, staffs are poorly paid making them unmotivated, coupled with non- implementation of routine audit report by appropriate authorities. The Responses from staffs were analyzed using relevant statistical tools from which three hypothesis were formulated and tested using Z-test statistics, while questionnaire were analyzed in tabular form using simple percentage. It was discovered that the internal audit is facing a lot of challenges which includes inadequate staffing, lack of independence, lack of facilities to carry out audit function and also poor funding. As a result of some of these challenges the effectiveness of the internal audit in the Nigerian public sectors, has been hindered as well as the organizational change it can bring to its environment. I recommend that for internal audit to be effective, it must be a completely independent group, adequately funded and equipped with qualified internal auditors as well as sufficient opportunities for internal auditors to become qualified.
TABLE OF CONTENTS
Approval page ii
Certification iii
Dedication iv
Acknowledgment v
Abstract vii
List of tables’ xi
CHAPTER ONE: INTRODUCTION
Background of the study 4
Statement of the study 5
Statement of the objectives 6
Research questions 6
Research hypotheses 7
Significance of the study 8
Scope of the study 9
Limitations of the study 9
Definition of terms 9
CHAPTER TWO: REVIEW OF RELATED LITERATURE
Introduction 12
Organizational structure of ministry of finance 14
Definition of auditing 15
Types of auditing 16
Meaning of internal audits 17
Meaning of internal control 18
Meaning of internal check 20
Objective and purpose of internal audit 21
Qualities required of an auditor 23
Elements of internal audit 25
Scope of internal audit 27
Duties and responsibilities 28
Role of internal audit in the Nigerian public sector 29
Challenges of internal audit 30
Factors responsible for the problem of internal 32
CHAPTER THREE: RESEARCH METHODLOGY
Research design 34
Sources of data 35
Area of the study 36
Population of the study 36
Determination of population size 37
Reliability Test 39
Validity test 39
Method of data collection 39
Techniques for data analysis 40
CHAPTER FOUR: PRESENTATION OF DATA, INTERPRETATION AND ANALYSIS OF DATA
Presentation of data 42
Test of hypotheses 55
Discussion of findings 68
CHAPTER FIVE: SUMMARY
RECOMMENDATIONS
OF
FINDINGS,
CONCLUSION
AND
5.1 Summary of findings
5.2 Conclusion
5.3 Recommendations
Bibliography
Appendix
LIST OF TABLES
Table 4.1Shows questionnaire administered
Table 4.1.2 Analysis to know if the internal auditunit exists in the ministry Table 4.1.3 Analysis to show the degree of independenceof the auditor.
Table 4.1.4 Analysis to show in impact of internal audit function in the ministry Table 4.1.5 Analysis to know the challenges internal audit unit faces
Table 4.1.6 Analysis to show that sound academic knowledge in accounting is essential for effective performance
Table 4.1.7 Analysis to know the level of efficient performance on financial audit in the public sector
Table 4.1.8 Analysis to show the performance on quality assurance Table 4.1.9 Analysis to show the inadequacy of internal control system
Table 4.1.10 Analysis to know the level of co-operation between internal audit unit and other departments
Table 4.1.11 Analysis to show lack of proper segregation of duties
Table 4.1.12 Analysis to show the non-implementation of routine audit report Table 4.2.1 Table showing computed value of Z Hypothesis 1
Table 4.2.2 Table showing computed value of Z Hypothesis 2 Table 4.2.3 Table showing computed value of Z Hypothesis 3
CHAPTER ONE INTRODUCTION
The Kaduna state ministry of finance started when the country was pre- independent in 1958 during the northern region, the ministry of finance is the custodian of public fund and stores and is therefore essentially a controlling ministry as opposed to other executing agencies of the government. The ministry is headed by a commissioner as the chief executive officer and deputized by the permanent secretary who is a carrier and servant and is the chief officer of 145 staff including accounting officers on monthly basis. The ministry consists of three
major departments and seven (7) sub-treasuries.
Administration and finance which further sub-divided into stores and verification division.
Treasury which is further sub-divided into final accounts and debts management and ministry of finance Incorporated division and sub-treasury.
Internal audit (state)
ADMINISTRATION AND FINANCE DEPARTMENT.
The department is headed by the director and is responsible for the general administration of the ministry which includes maintenance of staff records, processing of staff promotion, recruitment training discipline and welfare etc.
STORES AND VERIFICATION DIVISION.
This division is headed by the chief stores officer who is charged with the responsibility of purchasing and disturbing of office equipment’s the ministry of finance is in custody of the public funds and stores, and is therefore a protective clothing to all government ministries and department and boarding of unserviceable equipment/ vehicles.
TREASURY DEPARTMENT
This department is headed by the accountant general and is charged with the responsibility of keeping receipt of government funds banking and maintenance of bank accounts, disbursement of all approved fund released, bank reconciliation, control of treasury documents and control of pooled accounting staff of the state.
MINISTRY OF FINANCE INCRPORATED (MOFI) DIVISION
This division is headed by the deputy director and is responsible for revenue collection management. Appraisal of investment opportunity for government,
management, of investment of government companies and ensuring the receipts of dividend and other funds due to government.
FINAL ACCOUNT AND DEBT MANAGEMENT DIVISION
The division is headed by the deputy director and is responsible for the collection and accounting data from ministry department, analysis of accountant-general’s reports, maintenance of external internal loan records and supervision of the state computer center.
INTERNAL AUDIT DEPARTMENT (STATE)
The department is headed by the director and is charged with the responsibility of drawing up of internal controls and checks ensuring the adherence to the administrative and finance controls, investigation of fraud and other malpractices.
SUB-TREASURY
There are seven (7) sub-treasuries located at Kaduna, Zaria, Ikara, Saminaka, Kafanchan, Kachia and Birnin gwari. They are charged with the responsibility of collecting revenue and payment of pension.
BACKGROUND OF THE STUDY
Internal audit had been defined “as an independent appraisal function established within an organization to examine and evaluate its activities as a service to the organization”. Internal auditing is a process generally adopted towards ensuring and safeguarding of resources and promoting operational efficiency in organizations. The responsibilities for effective internal auditing normally rest on with the internal auditors who in turn rely a great deal on the soundness and effectiveness of internal control system.
The business world is developing so in the complex nature of the organizations. This complexity of modern organizations and hence the management has led to the much broader role at the internal audit. The role of internal audit is fast moving from mere checking of documents and physical duties to analyzing the ability of organization to react to changing circumstances.
Auditing for the public sector is aimed at prevention of mistakes, shortcomings and misdeeds in the public administration. The internal audit has become a good control measures that can foretell all the incidence of fraud and misappropriation of fund in government ministries if properly put in place.