THE IMPACT OF INTERNAL CONTROL ON EFFECTIVE ADMINISTRATION OF LOCAL GOVERNMENT COUNCILS

THE IMPACT OF INTERNAL CONTROL ON EFFECTIVE ADMINISTRATION OF LOCAL GOVERNMENT COUNCILS (A CASE STUDY OF IKONO LOCAL GOVERNMENT COUNCIL)

 

CHAPTER ONE

INTRODUCTION

  • Background of the Study

It can be traced back to the ancient firms state was auditing as seen today in its reformed state was established in the later part of 19th century. Originally, on auditor was one to whom the receipt and payments of an establishment were read (Akinkemin 2009, p. 85).

The definition of auditing came as independent examination and investigation of the evidence from which a financial statement has been prepared with a view of enabling the independent examiner to report whether in his opinion and according to the best of his knowledge, the formation and the explanation obtained by him is properly drawn up and gives a fair view of what it reports to show and if not, in what respect he is not satisfied. The independent examiner who does the investigation and report there upon is referred to as Auditor. (Attwood, Praff and Paula, 2011, P. 11).

The auditor being an independent examiner who should be professionally qualified, examines the book of account and vouchers him to report whether he is satisfied or not that the statement of financial position is properly drawn up so to show a true and fair view of the profit or loss of the financial period.

The role of auditors is rigorous and from the above description of an auditors position in this dynamic business world, it can be concluded that the main objective of internal control is to ascertain that the rules and regulations, policies and procedures established by management of an organization to guide its operations and to secure compliance by staff of established standards.

The detection of fraud and error in business organization is therefore important to note with great concern that the auditor is not absorbed from the responsibility for fraud or a company. The auditors must therefore satisfy himself that the account are not incorrect in the consequent of fraud or error committed by directors or managers consequent upon the paradoxical position in which the auditor has found himself as regard the detection and prevention of fraud and errors.

Auditing guidelines 2010 defined internal control as a system of control, financial and otherwise established by the government in order to carry on business of the enterprises business in an orderly and efficient manner. It is designed to ensure adherence to management policies, safeguard the asset and accuracy of its records. It brings into play both internal check and internal/Audit.

Local government is the third-tier of government in Nigeria, state government council, local government council are now recognized by the forth schedule of the constitution which include consideration of economic planning and the making of recommendation to a state commission for planning and administration. The council chairman now becomes the chief accounting officer administrator, while the counselor makes laws for the administration. By law, the council generates revenue and obtains as well as funds from both state and federal government, hence the need for accountability and effective administration. It is therefore pertinent that a sound financial system be in place to affect internal control by way of internal audit to prevent fraud, embezzlement and defalcation of public funds. For these reasons, internal and external control measures become the administrative tools of this administration.

Internal control includes:

  • Appointment of committees for different services.
  • Issuance of financial authorities (warrants).
  • Centralization of all payment in the council.
  • Preparation of the budget/standing orders for the financial administration.

The External control includes:

  • Parliamentary control
  • Control by the general public
  • State/federal government
  • External auditors control.

Therefore internal audit should create impact on the financial and general administration of the local government system.

 

  • Statement of the Problem

Generally, the measures of the public and observers believe that internal auditing is not of any value to local government council administration since there are always yearly external audit, there are financial regulation guiding the control of funds in and out of the system. More so, there are problems of lack of independent/confidence in the part of internal auditors who are also staff of the organization.The combine impact of these hinder effective administrative of the council.

 

  • Objectives of the Study

The study has the following objectives:

  • To evaluate whether internal auditor’s role is of any importance in a government organization.
  • To know the role of internal auditors in the local government system in terms of it’s significant.
  • To determined the contribution and impact internal auditor in the administration of local government.

 

  • Research Questions
  • Of what important is the role of internal auditors to government organization?
  • What is the significant of the role of internal auditor in the local government administration?

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