MANAGEMENT OF FRAUD AND WASTAGE IN BUSINESS ORGANIZATIONS; IMPLICATION FOR INTERNAL AUDITORS

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MANAGEMENT OF FRAUD AND WASTAGE IN BUSINESS ORGANIZATIONS; IMPLICATION FOR INTERNAL AUDITORS

CHAPTER ONE

INTRODUCTION

It is said that the traditional role of financial accounting is to give account of stewardship to the owners of the business who was divorced from the management of the business. There is a need for accountability of money spent by various government statutory corporations, commissions, agencies, authorizations and al person entrusted in position of trust. The need for management and staffs of any government owned establishment to pilot the affairs of the organization effectively and efficiently when it comes to financial matters calls for appointment of a statutory auditor as stipulated by section 149 and 154 of companies act of 1968 and chartered accountant act of Nigeria of 1965 respectively. Section 85(4) of the Federal Republic of Nigeria constitution 1999 also provides that corporations, commissions, authorities, agencies including all persons and bodies established by an act National assembly which the University of Nigeria Teaching Hospital, Enugu is among shall be checked, examined and auditor by the Federal Auditor- general periodically, section 125 (4) provides same for the state.

The statutory auditor performs independent examination of an organization, its records and financial statement as been prepared by the management and this form an independent opinion on the accuracy and correctness of the competent and honest, so if their opinion a financial statement of an organization show a true and fair view of its state of affairs for the period under review, the users of such account ought to have faith in them.

The statutory auditor is primarily concerned with the responsibility of examining the financial statement and report whether in their opinion, the financial statement.

Have been properly prepared in accordance with the requirements; give a true and fair view; proper accounting records have been kept; proper returns adequate for their audit have been received from branches not visited; they obtain all the necessary information’s and explanations required for the purpose of the study (auditor);

The information given in the director’s report is in constituencies with the annual account.

However, the responsibilities of the auditor with regards to deletion/controlling of fraud, errors and other irregularities cannot be overemphasized.

BACKGROUND OF THE STUDY

For a long time now Nigeria have been witnessing a down turn in her development efforts. This primary cause of this down has been linked with the in or deinate ambition of the average Nigeria to get rich quick at the expense of less piviltedge ones. Those who a seen them selves as being opportunity to control government owned establishment use the opportunity to perpetrate fraud or misappropriate public funds and properties. However, the auditor should recognize the possibilities of material, misstatement or irregularities or fraud, and see that errors which could distort the trueness and fairness of the financial account are not committed. Therefore, a statutory auditor is said to be a watch dog and not a blood hound.

Our law makers have seen the need for acceptable accountability by making a provision for the federal and stated government to report on the account of stewardship rendered by these public officers.

Section 126 (1) the constitution of the federal republic of Nigeria 199. States that there shall be an audit general for each state who shall be appointed in accordance with the provision of section 126 of the constitution”.

Section (2) says that the public account of a state and of all offices and courts of the state shall be audited by the auditor general for the state”.

This study focused attention how well or otherwise the government audit department conduct it activities in response to section 125 of 1999 constitution of the federal republic of Nigeria.

STATEMENT OF THE PROBLEM

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

Lack of understanding of the purpose of auditing among the society in general.
Lack of a well defined goal oriented policies aimed at building up a strong and sound financial system.
Inherent weakness in the existing. Administrative arrangement for government owned establishment accounting function.
Improper supervision of over all officers under the authority entrusted with the receipts expenditure of public money.

Inability of the government owned establishment maintain a sound system of internal control.

OBJECTIVE OF THE STUDY

In regards to this study, is set forth to present fresh insight into the nature and role of a statutory auditor in controlling fraud in government owned establishment with a view to enabling the public appreciate the various limitations and weaknesses, inherit their effort in fraud detection and control in government owned establishments

To find out roles played by the audit department in protection of public funds.
To provide a system of financial accountability which will promote proper stewardship of assets deter wastes dishonesty and extravagancy and promote effectiveness at reasonable costs.
To ensure efficient financial administration through system of internal control and management information.
To determine the extent to which fraud misapporiation and embezzlement of public funds have persisted in public services.
To find out the delays in carrying out audit of account of government establishment.
1. SIGNIFICANT OF THE STUDY .

The significance of this study is that, it will teach the inherent disabilities and limitation of auditing in government owned establishment.It is expected that the result of this study will help improve financial reporting by government owned establishment providing annual reports in accordance with the requirement of audit acts, 1990.

The significant of the study to society in general is to correct the wrong notion of the society in general is to correct the wrong notion of the wealth of government which contrary to realty is usually. Regarded in position could cut his own share at will and get away with it.

To the government is ensuing the standard that down in the ministry manual of responsibilities and procedure are maintained.

To the auditor to pin point to them the risk that confronts the auditors in the excretes of his duties the legal action that could be taken against the auditor she/he deficit in this duty.

The study sure as a quite for future quern mental policy formulation on auditing guideline to government owned establishment .

Finally, it is expected that this study will serve as a work of reference to future researchers.

1. Time constraints: The researcher as a student also engaged in other activities which limited the time.

Used for the project the research was deeply affected by the shortness of time as a result of the short semester being ran by the school. The semester coupled with dash of programme of the school and there is no special time given for proper investigation are the constraints which left the researcher with little or no time to carry out this project.

SCOPE: Due to the vastness of the areas to be covered by the researcher, the researcher found it way difficult she could not obtain information from each of theses areas. For instance there are many firms dealing with auditing and investigation and for the fact that it is very difficult for one to gather information or data from each of these firm one being a student was compelled to unit his study to federal pay office (add your state after office)
LACK OF STATISTICAL INFORMATION:

Facts were not easy to come about during the course of this project work. Even where the facts are available they were either out dated or the authorities concerned refused to bring it out or are subject necessary protocols. At the expense of my limited time before they were male available.

FINANCIAL CONSTRAINTS:

The researcher lacked the necessary finance to carryout extensive research on this topic .

NON –RESPONSES:

Inadequate responses such as some ministries when interviewed defined responses and unable to help due to internal problem like staff of local government audit department of ( ADD YOUR STATE HERE).

BUREAUCRACY:

The bureaucracy in government establishment has made it very difficult for researcher to obtain research information.

SECREY:

Most Nigeria dislike activities that appear to be probing them, they tend to avoid researchers because they gelt their activities which are not meant for public consumption would be exposed through research work.,

RESEARCH QUESTION

The following research question were formulated by the researcher for the conduct of this project.

What aspect of the accounts government policies hinders effective and efficient auditing of account of government owned establishment
How can government establishment supervise the expenditure of government taking care that no payment were made which is not covered by proper authority.
To what extent do fraud effect economic development of the country.
What measures showed be taken to ensure that objective of auditing are achieved in government owned establishment.

STATEMENT OF HYPOTHESIS

H o: The audit does not play effective and efficient role in the control of fraud in government owned establishment .

Hi: The auditor play effective and efficient role in the control poof fraud in government owned establishment.

SCOPE / LIMITATION OF THE STUDY

The study is a case study of federal pay office pay officer Enugu between 1990 2003.

In this study the researcher only considered the ministerial accounting structure or accounting structure of selected government establishment on parastatals in the state, because of the following limitation.

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