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 dierently 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.