ABSTRACT
The study evaluated the “effectiveness of financial control establishments in promoting public sector accountability in of Enugu State, Nigeria”. This study was aimed to evaluate the significance of public budget as an instrument of legislative control over public finance, to determine whether the reliance of the Auditor-General on internal audit work influences his audit work and to ascertain the extent of legislative oversight function on state audit performance in Enugu State, Nigeria. To achieve these objectives, the study adopted descriptive survey design. Formal financial control Establishments (Enugu State Ministry of Finance, Office of the Auditor-General of Enugu State and Enugu State House of Assembly) were used for the study. The population of the study was 195 respondents which comprised of treasury staff of Enugu State Ministry of Finance; core Auditors from the Office of the Auditor-General of Enugu State and Public Accounts Committee Members of Enugu State House of Assembly. Primary data was used for the study. Data were collected through questionnaire research instrument on a five-pointLikert scale. The reliability of the instrument of the study which was 0.72, was determined using Spearman ranking. The validity of the instrument was measured using content validity, and this was done by three public sector experts from both the academia and public sector. Data collected were analysed using simple linear regression and Pearson product moment correlation, at 5% probability level of significance with the aid of SPSS (v.22). The findings revealed that: Thepublic budget is a significant instrument of Legislative control over public finance (r = .649, p < 0.05). in Enugu State, Nigeria. Performance of the Auditor-General is significantly dependent on internal audit work (r = .955, p < 0.05). There is a statistically significant relationship between State audit performance andlegislative financial oversight (r =.83, p < 0.05). It recommended that the legislature should be more transparent, accountable and competent in the performance of their oversight activities if they are to improve public budget control and accountability. The office of the Auditor-General and Internal Audit Unit in Enugu State, Nigeria should be further strengthened by way of being adequately staffed, equipped, funded and independent to make them more effective institutional mechanisms for financial control and accountability. Lastly, the 1999 Constitution should be amended to give atime frame for the Public Accounts Committee of House of Assembly to consider and report back to the whole house matters arising from the audit reports of the Auditor-General in order to improve his performance.
TABLE OF CONTENTS
Title Page i
Declaration ii
Approval iii
Dedication iv
Acknowledgements v
Abstract vi
List of tables x
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study 1
- Statement of the Problem 2
- Objectives of the Study 4
- Research questions 5
- Research Hypotheses 5
- Significance of the Research 6
1.7 Scope of the Study 6
- Limitations of the Study 7
1.9 Operational Definition of Terms 7
REFERENCES 10
CHAPTER TWO
REVIEW OF RELATED LITERATURE
- Conceptual Review 12
2.1.1 The Concept of Accountability 12
- Process Based Accountability 13
- Performance Based Accountability 13
- Accountability in Public Sector 13
- The Concept of Financial Control 14
2.1.2.1 Internal Control Mechanism 16
2.1.3 Concept of Government Accounting 18
2.1.3.1 The Basis of Government Accounts 19
2.1.3.1.1 The Cash Basis of Government Accounts 19
2.1.3.1.2 The Accrual Basis of Accounting 21
2.1.3.1.3 The Commitment or Encumbrance or Obligation Basis of Accounting 22
2.1.4 Concept of Budget and Budgetary control 22
2.1.4.1 Budgeting Techniques 23
2.1.4.1 Benefits of Budgeting 24
2.1.4.2 Purposes of Budget 24
2.1.5 The Concept of Legislature 25
2.1.5.1 Functions of the Legislature under the Nigerian Constitution 26
2.1.6 Audit of Government Funds 28
2.1.6.1 Definitions and Evolution of Audit 28
2.1.6.2 Types of Audit 29
2.1.6.3 The Need for an Audit 29
2.1.6.4 Qualities Generally Required of Auditors 30
2.1.6.5 Constitutional Provisions for Appointment and Removal of Government
Auditors (Auditors- General) in Nigeria 31
2.1.6.6 Constitutional Duties and Rights of the Auditor-General in Nigeria 31
2.2 Theoretical Framework 33
2.2.1 Efficiency Theory 33
2.2.2 Agency Theory 33
2.2.3 Stewardship Theory 34
2.2.4 Stakeholder Theory 35
2.2.5 Institutional Theory 37
2.3 Empirical Review 37
2.4 Summary of the Review of Related Literature 49
2.5 Research Gap 50
REFERENCES 51
CHAPTER THREE
METHODOLOGY
3.1 Research Design 59
3.2 Population of the Study 59
3.3 Sources of data 59
- Sampling Technique and Sample Size 59
3.5 Description of Research Instruments 60
3.6 Data Analyses Techniques 60
3.7 Model Specification 60
3.8 Validity of the Research Instrument 61
3.9 The Reliability of the Instrument 61
3.11 Decision Rule 63
REFERENCES 64
CHAPTER FOUR
DATA ANALYSES AND PRESENTATION
4.1 Introduction 65
4.2 Distribution and Return of Questionnaire 65
4.3 Descriptive Analysis of Research Questions One to three 66
4.4 Descriptive Analysis of Research Questions two 68
4.5 Descriptive Analysis of Research Questions three 72
4.6 Test of Research Hypotheses 76
4.7 Discussion of Results 82
REFERENCES 85
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
5.1 Summary of Findings 86
5.2 Conclusion 86
5.3 Recommendations 87
5.4 Contributions to Knowledge 88
5.4 Suggested Areas for Further Studies 88
BIBLIOGRAPHY 89
APPENDIX 97
LIST OF TABLES
Table 3:1 Reliability Test 62
Table 4.1: Distribution and Return of the Questionnaire 65
Table 4.2: Budget as a Significant Legislative Tool in Controlling Public Finance 66
Table 4.3: Adequacy of the Involvement of the Legislature in Budgetary Process 67
Table 4.4: Extent of Implementation of Budgets according to Legislative Approval 67
Table 4.5: Seeking Legislative Approval for Supplementary Expenditure before incurring them by the Executive 68
Table 4.6: Extent of Independence of the Auditor-General in the Performance of his Audit Work 69
Table 4.7: Adequacy of Funding Received by the Office of the Auditor-General 69
Table 4.8: Extent of Independence of Internal Audit Units 70
Table 4.9: Auditor-General’s Reliance on the Internal Audit Performance 71
Table 4.10: Extent of the Influence of Internal Audit Performance on the Auditor-General’s Work 71
Table 4.11: Adequacy of Auditor-General’s Queries and Observations on Financial Information Supplied by the Internal Audit Units 72
Table 4.12: Effectiveness of the State Legislature in Performing its Financial Oversight Function over the Executive 73
Table 4.13: Effectiveness of the Public Account Committee (PAC) in Checkmating the State Audit Reports 73
Table 4.14: Extent of Consideration of the Auditor-General’s Report by the Public Accounts Committee in the last four years 74
Table 4.15: Effectiveness of the Legislative Oversight Function in Enhancing the Quality of State Audit work 75
Table 4.16: Extent to which Financial Support from the Executive arm of Government Influences the Legislative Oversight Performance 75
Table 4.17 Model Summaryb 76
Table 4.18 ANOVAa 77
Table 4.19 Coefficientsa 77
Table 4.20 Model Summaryb 79
Table 4.21 ANOVAa 79
Table 4.22 Coefficients 79
Table 4.23 Descriptive Statistics 81
Table 4.24 Correlations 82
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Nigeria was colonized by Britain but had her independent in 1960. Nigeria is a federation of thirty-six States and seven hundred and seventy-four Local Government Areas, It has a population of over one hundred and forty million people and the dominant source of income is oil (Oyelakin, 2003).Nigeria is a country endowed with abundant natural economic resources. But despite the abundance of national wealth, Nigeria has remained underdeveloped and is ranked among the poorest nations of the world (King, 2003; Soludo, 2007). Since there is an abundance of resources, Nigeria’s poverty level and underdevelopment can only be attributed to mismanagement and corruption, facilitated by weak, inappropriate and malfunctioning public sector.
During the colonial era, the British installed a financial control measure that is still being practised today in the Nigerian public sector. The legal framework for the control of public finance is still based on the laws that were transferred to Nigeria by the British colonial administration at independence. Most of these laws have been scantily amended. The two most relevant legal frameworks that predate independence and which are still used today are the Finance (Control and Management) Act No. 33, 1958 and the Audit Act No. 38, 1956 (Anyafo, 2000). Other legal documents that influence financial control practice include the Constitution of the Federal Republic of Nigeria; the Appropriation Acts; Financial Regulations and Finance and Treasury Circulars (Daniel, 2002).
Ugwoke (2005) opines that the Nigerian public sector is made up of the governments of the Federal, States, Federal Capital Territory, Local Governments and all their Ministries, Ministerial Departments and Parastatals.The public sector plays an important role in economic development. It provides services which the private sector may not be willing or able to provide. Chan (1988) argues that the public sector provides many essential services to society. It plays an essentially compensatory function; that is, it performs those functions that the market economy does not do efficiently or lacks the incentive to do at all.
Musgrave and Musgrave (1976), classify these functions as resource allocation, distribution of income and economic stabilisation.
