AUDITING AS A CONTROL IN PUBLIC SECTOR ACCOUNTING
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
From time past productive resources owned by one person or group of persons. It has been a convention that the managers of the productive resources from time to time report back to the owner (s) of the resources on how thye fare with the resources entrusted to them.
In a similar view Millichmp 1999 opined that most business today are operated by limited companies, which are owned by their shareholder and managed by directors appointed by the shareholder. Corporally the public own central government resources including nationalized industries but they are managed by the government.
As a result of this divorce between resources management and ownership it has become expedient and pertinent that has become expedient and penitent that an independent body or person (s) different form both management and ownership be situated to examine the account rendered by the manager to the owner of the economic resources for such accounts to be reliable credible and trust writing by the owners and other interested user of financial report hence the emergence of auditing as a profession.
Auditing which has become the owners “third eye” is very important in the public sector of Nigeria economy in view of fact that over 65% of the assets base and other productive resources of the country come under the control of the public sector of the economy. These assets need to be safeguarded in order that the real owner (the public) can enjoy their full benefits.
The relevance of auditing as it regards proper accountability and safeguard to the nation asset base was borne out of the fundamental roles the public sector accounting play in effective and efficient governance of the country. Ani 2001 save the rotes of public sector accounting to include the following.
a. Control purpose: To ensure efficient financial administration through system of internal control and management
b. Planning Purpose: To provide historical bases for model budget and plans as guide to the formulations of policies
c. Accountability purposes: To provide a system of financial accountability by which will promote stewardship of assets deter waste dishonesty and extravagance and promote effectiveness of reasonable cost.
d. Appraisal Purpose: To provide outsider with financial data that will help them to reach informed decision.
The basic functions of auditing therefore are of two types :
Primary and secondary functions.
The primary function of auditing is to enable the auditors to report as to whether the financial prepared my manager presents a true and fair view of the state of the financial affairs of the organization during the period under review while the secondary functions as are to detect fraud and errors and prevent fraud and errors in the accounting system. But how relevant has public sector auditing become in view of the current decay in the management of public resources in Nigeria? In the nutshell corruptions bribery mismanagement of government resources and lack of honesty that characterize the economic life in Nigeria has dragged the efficiency and proficiency of public sector auditing in Nigeria to the mud.
Leave a Reply
You must be logged in to post a comment.