ABSTRACT
The subject of this research investigation is “The Role of Internal Auditor and the method of Internal Control in Local Government in Enugu state specifically. The objective of the study is to know whether the function of the internal audit department are performed in compliance with the established standards and policies and how much it have succeeded in achieving the objectives of the local government. The methods of data collection were interviews, direct observation and study of secondary materials. In analyzing the data collected, percentage and some formulated hypothesis were used. The major findings of this study are: That Udi Local Government Area has an Internal audit department, that internal auditing helps to know how well the policies of the management are executed, that the duties of the internal control be performed by either the accounts division or the external auditor who must be statutorily appointed, that all the internal auditors of the local government report to the auditor general, through the executive chairman of the local government area. The researcher hereby recommends that internal auditing should be employed in local governments, because it will help immensely in management control.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The new civil services move with designed to make the service more functional professional, productive and responsive to the socio-economic needs of the nation. The federal government has also recently revamped and restructured the local government system to enable it perform its role of promoting, co-ordinating and implementing community services enhancing citizens participation and maximizing the use of local resources. Enormous amount of money of flowing to the local government form the federation account, the of the state internally generated revenue and the revenue of the local government.
The federal government of Nigeria came up with a financial instruction in 1979, instructing all local government to set up internal audit unit in each local government. But the behaviour and attitude of operation of local government system resulted in many local government not setting up internal audit unit or if set up. They were not functional. The federal government in 1988 set in motion a real ware of change. A real frame work of internal auditing in the local government was spelt out in order to make it less difficult for management of the local government as the greatest contributing factor to the poor performances of local government.
1.2 STATEMENT OF THE PROBLEM
The local government has three broad sources of revenue, they include: direct from the federation’s account, of internally generated revenue of the state government and revenue generated internally by the local government her self. The internal sources available to the local government area include: rents from market stores, royalties paid by some residents company in a local government contractors registration, sales of car/bus emblems, etc. Since the local government has a whole lot of possible sources of revenue, the problems therefore include:
a) How can efficient management controls be achieved?
b) What is the role of internal auditing in ensuring this control?
c) How can the internal auditing be made a useful tool management control?
1.3 OBJECTIVE OF THE STUDY
a) The researcher intends to find out, the role of auditors and the method of internal control in local government.
b) Whether the function of the internal audit department are performed in compliance with the established standards and policies and how much it has succeeded in achieving the objective of the local government.
c) In the end, the researcher shall establish some acceptable benefit that may be derived from effective audit control system.
1.4 RESEARCH QUESTIONS
a) Do Udi Local government Area have an internal audit department?
b) If internal auditing helps to know how the polices of management were executed?
c) Can the duties of the internal auditor be performed by either the accounts division or the external auditor who must be statutory?
d) Do all the internal auditors of the local government area report to the auditor general, through the executive chairman of their local government area?
1.5 RESEARCH HYPOTHESIS
In the research work, the following hypothesis were formulated, tested and analysed in solving the research problem.
Ho: The internal audit department helps the accounting system of the local government.
Hi: The internal audit department does not help the accounting system of the local government.
Ho: The internal audit department does not help to prevent fraud and improve revenue position.
Hi: The internal audit department helps to prevent fraud and improve revenue position.
Ho: Reporting to the auditor general, through the executive chairman of the local government makes the internal auditor perform his fiduciary duties diligently.
Hi: Reporting to the auditor general, through the executive chairman of the local government makes the internal auditor not to perform his fiduciary duties diligently.
1.6 SIGNIFICANCE OF THE STUDY
This research is on attempt to survey the constructive parts, which internal auditing can play in the local government system in Nigeria with particular reference to Udi Local government Area of Enugu State. A lot of problems are facing the local government area as not having an effective audit central system one of these problems is the management seems to gloss over the operation of the local government, which are carried out in disorganized manner. The researcher was motivated to choose this topic because of his belief that if management of Udi local government, an efficient management which is pre-requisite for high productivity will be assured.