CHAPTER ONE
INTRODUCTION
1.1 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 records. 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 problems: i. To what extent do the auditors exercise procedures in a public sector organization. ii. What constraints are there that inhibit auditors procedure on internal control. iii. What is the relationship between the company’s auditing process and the level of accountability.
1.3 AIMS AND OBJECTIVES OF THE STUDY
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: Hi: Auditing process has a positive and significant relationship with the level of accountability in a public sector organization. Ho: Auditing process has no positive and significant relationship with the level of accountability in a public sector organization. Hi: Lack of effective and efficient performance of internal control inhibit auditor’s procedures. Ho: Lack of effective and efficient performance of internal control does not affects auditor’s procedures. Hi: Lack of independent mind of most internal auditors does not affect effectiveness of internal control system. Ho: Lack of independent mind of internal auditors affects the effectiveness of internal control system.
