THE IMPACT OF PUBLIC AUDIT IN GOVERNMENT ESTABLISHMENT

CHAPTER ONE

1.1 BACKGROUND OF STUDY

1.0    

Auditing by Wood and stein (1986) has been defined as checking somebody else accounting. Meigs et al (1982) puts the definition as an examination or investigation by independent public accountant of set of financial statement and the accounting records and other supporting evidence both within and outside clients business”. The Institute of chartered Accountant of England and Wale, (ICAEW 1985) sees auditing as independent examination and expression of an opinion on the financial statement of an enterprise by an appointed auditor in pursuance of that appointment and in compliance with relevant and statutory obligation. Osita Aguolu has also put that auditing is an independent examination of the financial statement of an organization with a view to expressing an opinion as to whether these statements give a true and fair view and comply with the relevant statues.

General Accepted Accounting Principles (GAAP) has defined Government auditing as an examination of public organization’s accounting records and books conduct by an outside professional in order to determine whether the organization is maintaining accurate government auditors are employed by agencies of Federal, State and Local Governments. When the audit recipients of government funds (including other government agencies), they act as external auditors.

Audit of government reporting is an essential element of public control and accountability to the information reported by or from management through objectively acquiring and evaluating evidence. The importance and comprehensive nature of auditing place a special responsibility on public government officials and other persons entrusted with public resources to ensure that audit is conducted in accordance with these standards.

However, the role of auditing in the public sector is changing in response to expectation. As the new democracy evolves and proper separation of powers entrenched, the audit office taking on the role of innovating standards of auditing the government activities and programs to:

·        Improve the quality of their auditing functions

·        Improve system control over public sector entities

·        Facilitate evaluation of government entities

Such standards as mentioned will become universally applicable to all organization, programs, activities whether they are performed by external auditors.

Recently, as quoted by B. Achaka in government auditing the role of the auditor has been extended by the need to become concerned with the value-for-money audit which is otherwise Performance Audit. Thus, the auditor is concerned with Economy, Efficiency, and Effectiveness of a particular function or departments within the body whose affairs are being audited. Financial audit which is one of the audit performance in government organization has been defined by B. Achaka as the audit of financial statements of an audited organization present fairly the financial position of the organization.

THE PUBLIC SERVICE

Government by (Osita Aguolu) may be defined as an organized entity which in addition to having government character, has sufficient discretion in management of its own affairs to distinguish it as separate from the administrative structure of any other governmental unit.

        The civil service, the judicial service, parastatals, government agencies etc constitute the public service. The civil service is a body in the executive arm of the government responsible for the execution of the policies and programmes of the government, performing purely administrative and executive function that entail formulation and implementation of approved government policies. The civil service provides the backbone for the stability and continuity of any control. Essential attributes include permance, impartiality, integrity, loyalty. These qualities are also applicable to the public service. The civil service is a subset of the public service, but it occupies a central position. Most of the organizations, which constitute the other parts of the public services are affiliated to and indirectly controlled by Ministers. Thus, this means that any inefficiency on the civil service affects the entire fabric of the society.

        The Public Service examination of Financial Statement by an independent auditor according to the American Institute of Certified Public Accountant is the expression of an opinion on the fairness with which they present financial position, results of operations and changes in the financial position, in conformity with the general accepted accounting principle. Thus, the auditor’s report is the medium through which he expresses his opinion or, if the circumstance requires disclaims on an opinion.

        Auditing has remained one of the oldest instruments of ensuring accountability, transparency and probity in the public sector of the economy. However, there has been some misgiving in this country on the role of auditing and auditors on the development of the nations. In a key not address at the 2001 annual conference of the Auditor-General of the Federation, state and local government, Chief Olusegun Obsanjo, stated thus “Significantly on the of the main demands of policy thrust of the 2001 budget is to entrench probity, transparency and accountability in government and ensure value for money in public expenditure”. But the President lamented that the role of auditors in the recent past observing that the mechanism and system existed to check abuse in the use of public resources where totally ignored, relatively applied or simply ineffective (and they did not achieve the objectives for which they were designed. Hence corruption set in and government became inefficient, uneconomically and ineffective resulting in large scale of misappropriation and misapplication of scarce resources”. Thus, it is against this back drop that this research has been conducted.

1.2       STATEMENT OF PROBLEM  

        From the outset, several cases of fraud, arson, misappropriation of public funds and other acts of indiscipline have been reported by government establishment. 

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