RELEVANCE AND CREDIBILITY OF AUDIT REPORT IN PUBLIC SECTOR ORGANIZATIONS IN NIGERIA.

ABSTRACT

Audit report is indeed very relevant to public sector organizations. As such, its credibility is highly needed. When an audit report losses these two qualities; relevance and credibility, it looses its worth and can no longer be relied upon. The study is oriented towards identifying set objectives for audit report and the implementation of the objective directed towards the growth and operational efficiency of the organization. Audit report should be designed to comply with the statutory requirements of audit and of the organization concerned. Both primary and secondary data were collected from the University of Nigeria Teaching Hospital Ituku/ozalla, National Orthopaedic Hospital and the Power Holding Company of Nigeria Plc Enugu Zonal Office. Tables and percentages were used to analyze and interpret the collected data. However, findings from hypothesis testing show that the relevance and credibility of audit report is never in doubt and that audit report when relevant and credible, helps in checking fraud and other irregularities in the organization. However, there exist some lapses on the part of the management which the researcher has made some recommendations for improvement. Other measures that can aid credibility to an audit report were also recommended. In summary, the researcher do not claim to have carried out an exhaustive study on the subject matter, hence, she has put up some suggestions for further study.

CHAPTER ONE

INTRODUCTION

1.1  BACKGROUND OF THE STUDY

Improved accountability is an important aim for all public bodies. As accountable units to management within the public sector, all public bodies are required to demonstrate that they are conducting their operations as economically, efficiently and effectively as possible. Annual reports and accounts are the main vehicles for discharging this “stewardship” function and enabling parliament, the tax payer and customers to judge whether the body is securing value – for – money in its operations.

Public sector “audit expectations gap” arises due to a lack of technical competencies, the timeliness and relevance of auditor communication, lack of assurance – provider (auditor) independence and a lack of commitment to the public interest.

It is therefore expedient to mention that audit report should be relevant and credible. This means that audit report should posses  the  qualities  that  will  make  it  reliable,  trusted  and accepted, especially by the users. Furthermore, independence lies at the core of the credibility of an evaluation. According to the Development Assistance Committee (DAC),an evaluation is deemed to be independent when carried out by entities and persons free of control of those responsible for the design and implementation. The Development Assistance Committee also suggests that the independence of an evaluation is characterized by evaluators being able to carry out their task:

–   without  political  influence  or  pressure  from  within     the organization.

–   that evaluators are given full access to all relevant information required for the evaluation.

–  and that they have full autonomy in conducting and reporting their findings.

On the contrast, most auditors are not given access to all relevant information. While some public bodies give part of  their information to the auditors, some falsify their records.

Some auditors, even when given complete information, do not adhere strictly to auditing guidelines and procedures. Some collect bribe from the management who themselves at times pay less attention to recommendations made in the audit report. All these problems and many more hamper the relevance and credibility of audit report, thus leading to inefficiency in the public sector.

1.2  STATEMENT OF THE PROBLEM

There has been concerted efforts by the government to ensure that audit reports of government institutions like university of   Nigeria   Teaching   Hospital,   Ituku/Ozalla,   Power   Holding Company of Nigeria, Enugu Zonal Office and the National Orthopaedic Hospital is at least reliable and relevant.

However, at most of the time, auditing standard and procedures are sometimes not strictly adhered to, internal control System  may  not be  clearly  defined  and  complied  with,  audit reports may not be promptly implemented to letter, some ethical principles in government auditing like auditors independence, objectivity, integrity of the auditor etc may be hampered. These, most often affect the relevance and credibility of audit report, thereby giving room for irregularities like fraud and fraud related activities and hence decreasing the productivity of the institution.

This study is therefore directed towards verifying whether the audit report of Power Holding Company of Nigeria, Enugu zonal office, University of Nigeria Teaching Hospital, Ituku ozalla and the National Orthopaedic Hospital, Enugu is even in doubt, whether  the  audit  standards  and  procedures  expected  of statutory audit report in public sector organizations has been compromised and many other findings.

1.3  OBJECTIVES OF THE STUDY

In view of the above, our objectives of study will include

1. To  verify  whether  auditing  standards  and  procedures  are adhered to in public sector organizations.

2. To  investigate  the  impact  of  audit  report  in  public  sector organizations like power Holding Company of Nigeria, Enugu Zonal office, University of Nigeria Teaching Hospital, Ituku and National Orthopaedic Hospital as it relates to checking fraud and fraud related activities.

3. To investigate the purpose for which audit report was set to achieve in government owned organizations with particular reference to Power Holding Company of Nigeria, University of Nigeria Teaching Hospital and the National Orthorpaedics Hospital, Enugu.

4. To investigate whether the relevance and credibility of audit

report in public sector organizations like the ones mentioned above is even in doubt.

5. To verify whether the audit report of these organizations, show efficiency and economy of operation in the organization.

6. To  make  recommendations  on  how  the  audit  report  can become relevant and credible.

1.4  FORMULATION OF HYPOTHESIS HYPOTHESIS I:

H0:  The relevance and credibility of audit report in public sector organization is not in doubt.

Hi:  The relevance and credibility of audit report in public sector organizations is in doubt.

H0:  The audit standard and procedures expected of statutory audit reports in the public sector organizations has not been compromised.

Hi:   The audit standard and procedures expected of statutory audit report in public sector organizations has been compromised.

HYPOTHESIS III:

H0:  Adequate measure has not been made to curb fraudulent activities through statutory audit report.

Hi:   Adequate  measure  has  been  made  to  curl  fraudulent activities through statutory audit report.

1.5   RESEARCH QUESTIONS

The  non-performance  of  public  sector  organizations  in Nigeria has raised a lot of questions.  These questions sometimes emanate  from  fraudulent  activities  prevalent  in  these organizations despite independent audit report written on them. Such public sector organizations like Power Holding Company  of Nigeria  (PHCN)  Enugu  Zonal  Office,  University  of  Nigeria Teaching Hospital Ituku Ozalla and the National Orthopaedic Hospital, Enugu are the core focus of the researcher.

The control questions are therefore:

1.      What   effect   has   audit   report   in   public   sector organizations like the ones mentioned above?

2.     Has audit standard and procedures been adhered to in carrying  out audit  of  these organizations vis-à-vis  the resultant audit report?

3. Company   of   Nigeria   (PHCN)   Enugu   Zonal   office, University of Nigeria Teaching Hospital Ituku Ozalla and the National Orthopaedic Hospital helped to check or curb fraud?

4.     What  are  the  measures  put  in  place  to  enforce  the implementation of the recommendations of audit report in government owned organizations like the ones under our focus?

1.6   SIGNIFICANCE OF THE STUDY

The significance of this study can be viewed from two major perspectives – practical and academic.

PRACTICAL SIGNIFICANCE:

The study is very timely especially today that all hands are on deck to enhance the development and growth of Nigeria’s

organizations and the organized private sector to:

1.     Determine  the  impact  of  audit  report  in  public  sector organizations, especially as it relates to checking fraud and fraud related activities.

2.    To auditors in general, the study is necessary to expose the rudiments of improved auditor performance and efficiency.

3.     The  study  will  expose  the  factors  that  will  enhance  a healthy, relevant and reliable audit report, especially as it relates to audit procedures and standards.

4.     The study will also try to expose the management to the need for prompt and total implementation of audit report.

ACADEMIC SIGNIFICANCE:

In the academic arena, this study will prove to be significant in the following ways:

1.     It will also throw more light on the ethical standards of audit which includes integrity, independence, objectivity etc.

2.     The study will suggest ways of enhancing a reliable and relevant audit report.

3.     It will serve as a body of knowledge to be referred to by researchers.

1.7  SCOPE AND LIMITATION OF THE STUDY

This study is restricted to public sector organization with particular reference to Power Holding Company of Nigeria (PHCN) Enugu Zonal Office, University of Nigeria Teaching Hospital, Ituku Ozalla and the National Orthopaedic Hospital, Enugu.

The study shall cover both internal and external audit.  The time range for the completion of this research work is assumed to be two months.  Data gathering was limited to library facilities, documents, questionnaires, internet etc.

The  study  focuses  upon  the  reporting  standards  that governs the form and content of the auditor’s report accordingly, attempts to deal with audit procedures or techniques.

1.8  DEFINITION OF TERMS

–  Audit can be defined as an independent examination of and expression of opinion on the financial statement of an organization by an appointed auditor in pursuance of that appointment and in accordance with any relevant law and regulations.

–  Engagement letter is defined as a letter addressed by an auditor to his client(s) defining the precise scope and nature of the works to be taken.

–  INTERNAL CONTROL: This is the whole system of controls, financial or otherwise, established by management, in order the records, run the business in an orderly manner and safeguard the company’s assets, its objective being the prevention or early detection of fraud and errors.   It may include internal auditing.

–  MANAGEMENT: This is the person or persons vested with the responsibility of planning, organizing, commanding, co- ordinating and controlling the organizational resources (human and material) in order to achieve the objective for which the organization is established.

–  WATCHDOG: A person or organization that tries to guard against stealing, wasteful use of public money, undesirable practices, etc.

–  AUDITOR  may  be  defined  as  an  accountant  who  has undergone recognized professional course and is a member of one of the recognized accountancy bodies resident in practice.

–  AUDITING STANDARDS may be defined as those standards of       auditing  which  have  been  issued  by  the  council  of institute of chartered Accountant of Nigeria (ICAN) prescribing   the   basic   principles   and   practices   which members are expected to follow when carrying out an audit.

–  AUDIT REPORT may be defined as the opinion expressed by the independent audit after the audit exercise.

–  INTERNAL AUDITORS may be defined as auditors who are members of staff of an organization.

–  EXTERNAL  AUDITORS  may  be  defined  as  independent auditor who are not members of staff of the organization but are appointed either by government or the shareholders a company.

–  CREDIBILITY   means   “believable   or   worthy   of   belief” (Canadian Oxford Dictionary).

–  INDEPENDENCE is the state of being impartial and free from bias and conflicts of interest – This is the cornerstone of auditing.   This definition is accordant to Hornby et all (1974:587).

₦5,000.00 – DOWNLOAD FULL PROJECT DOWNLOAD FULL PROJECT Added to cart

---

---

---

---

---

Related Project Topics :