Analysis of audit procedure in a public sector organization (a case study of kaduna state water board)

Project Abstract

Audit procedures are critical in ensuring accountability, transparency, and efficiency in public sector organizations. This research project focuses on the analysis of audit procedures in the Kaduna State Water Board, a public sector organization responsible for providing water supply services in the state. The study aims to evaluate the effectiveness of the audit procedures in place within the organization and identify areas for improvement. The research methodology involves a case study approach, utilizing both qualitative and quantitative data collection methods. Interviews with key personnel within the Kaduna State Water Board, including auditors and management staff, will provide insights into the current audit procedures and practices. Additionally, document analysis of audit reports and internal control mechanisms will be conducted to assess the existing framework. The study will assess the adherence of the Kaduna State Water Board to audit standards and regulations, such as the International Standards on Auditing (ISA) and the Government Financial Management and Accountability (GFMA) framework. By comparing the current audit procedures with these established standards, the research aims to identify gaps and weaknesses in the organization's audit practices. Furthermore, the research will examine the role of internal audit function within the Kaduna State Water Board and its interaction with external auditors. The effectiveness of communication and coordination between internal and external audit functions will be evaluated to determine the overall efficiency of the audit process. The findings of this research project will provide valuable insights for improving audit procedures within the Kaduna State Water Board and other public sector organizations. Recommendations will be made to enhance the organization's internal control mechanisms, strengthen audit oversight, and promote greater transparency and accountability in financial management practices. Overall, this study contributes to the existing literature on audit procedures in public sector organizations, particularly in the context of water supply services. By evaluating the audit practices of the Kaduna State Water Board, this research aims to enhance the organization's governance structure and contribute to the overall efficiency and effectiveness of public sector auditing.

Project Overview

<p> <b></b></p><p><b><b>INTRODUCTION</b></b></p><p><b><b></b></b></p><b><b><p><b>1.1<br>&nbsp; BACKGROUND TO THE STUDY</b></p><p><b></b></p><b><p>As it will be practically impossible to<br>talk of a building without a foundation, so also it will be professionally<br>imbalance to talk of Audit procedure in a public sector organization” without<br>actually bringing to time light what public sector organization portrays.</p><p>Public sector organization refers to those<br>organizations set up by government for the purpose of providing social services<br>with profit motive if any, at the background.</p><p>“organization” in the eyes of the law is<br>an actual being. It is an intangible person with many of legal rights, powers<br>and obligations of an individual. It may take contracts, hold and sell<br>property, sue and be sued in its own name. Organizations therefore, owe their<br>births to creation and they are owned and managed differently precisely because<br>of their unique artificial legal make up. Such organizations include Kaduna<br>State Water Board, National Electric Power Authority, to mention but few.</p><p>Every human organization, however,<br>simply require written records which the management or administration needs to<br>keep decisions formulation of general rules, the making of policies and the<br>legal validation of the organization status, procedures and relationships with<br>other organizations or individuals.</p><p>Every civilization, ancient or modern<br>that had a commercial background or that which had any difficult problems of<br>governmental organization or administration to solve had to have financial or<br>at least numerical records of some sort.</p><p>Auditing being the exercise aimed at<br>ensuring that the accounts being reported on show the auditor’s opinion, a true<br>and fair view of the financial position as at the balance sheet data and of the<br>profit and loss for the period ended the date, it is suffix to say that as<br>erroneously being carried about, it is not the objective of an audit to detect<br>fraud, although fraud or defalcation may surface during audit.</p><p>The auditing of an organization<br>financial statements involves the verification of the balance sheet and the<br>income and expenditure accounts and the examination of the underlying records<br>to test their reliability and the basis from which these statements had been prepared.<br>It means going through financial transaction which had given rise to the<br>records.</p><p>In a public sector like Kaduna State<br>Water Board, auditing, and audit programme<br>has to be drawn up and this will be a guide for the audit work. The audit programme will seek to verify<br>the efficient working of internal control system with particular reference to<br>the internal check, division of duties and managerial supervision.</p><p>The proper working of the system of book<br>keeping and accounting with particular reference to the accuracy, completeness<br>and reliability of the records being compiled and the extent of the true and<br>fair view of the financial statement as produced there from.</p><p>In analyzing an audit, it involves a set<br>of procedures which include: general financial control procedure, cash controls<br>and the procedures involving receipt and payment, salaries and wages control,<br>sales and trade debtors control procedure contract award procedure and fixed<br>asset and investment control.</p><p><b>1.2 &nbsp; STATEMENT OF PROBLEMS</b></p><p><b></b></p><b><p>This research work is set out to examine<br>effective analysis of Audit procedure in a public sector organization so as to<br>have an insight into how it affect individual, and government as well as how<br>proper analysis of audit procedure helps in attracting and retaining the<br>financial position in public sector.</p><p>The following are the statement of<br>problems:</p><p>i. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br>To what extent do the auditors exercise<br>procedures in a public sector organization.</p><p>ii. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>What constraints are there that inhibit<br>auditors procedure on internal control.</p><p>iii. &nbsp; &nbsp; &nbsp; &nbsp;<br>What is the relationship between the<br>company’s auditing process and the level of accountability.</p><p><b>1.3 &nbsp; AIMS AND OBJECTIVES OF THE STUDY</b></p><p><b></b></p><b><p>Auditing in the public sector<br>organization especially those in public corporations like Water Board, have<br>been so neglected by government these days. Most of the relevant books<br>consulted so far in the field of auditing, little or nothing have been said<br>about auditing of public corporation. Major concern has been towards the audit<br>of limited liability companies.</p><p>This research however, is designed to<br>enable the readers understand the procedure in the auditing process in the<br>public sector organizations with reference to Kaduna State Water Board and<br>also, to know the role of auditors of public sector organization.</p><p><b>1.4 &nbsp; STATEMENT OF HYPOTHESIS</b></p><p><b></b></p><b><p>In order to have a bearing for this<br>study, formulation of hypotheses is necessary which is an opinion statement on<br>research question and data to be obtained during the research work will be used<br>to test the hypothesis.</p><p>Nnadozie and Akuzuito (1995 P.32) “The<br>research hypothesis is a tentative answer to a research problem/question. It is<br>an educated or intelligent guess of an answer to the problem of the research<br>under investigation. It is however, an answer which has no evidence supporting<br>it until a full investigation is carried out. The research hypothesis may<br>therefore be seen as an opinion statement”.</p><p>Considering the problems already stated<br>data gathered during this study will be used to test the following hypothesis:</p><p><b>Hi</b>:<br>&nbsp; &nbsp; Auditing process has a positive and<br>significant relationship with the level of accountability in a public sector<br>organization.</p><p><b>Ho</b>:<br>&nbsp; &nbsp; Auditing process has no positive and<br>significant relationship with the level of accountability in a public sector<br>organization.</p><p><b>Hi</b>:<br>&nbsp; &nbsp; Lack of effective and efficient<br>performance of internal control inhibit auditor’s procedures. &nbsp;</p><p><b>Ho:<br>&nbsp; &nbsp;</b>Lack of effective and<br>efficient performance of internal control does not affects auditor’s<br>procedures.</p><p><b>Hi:</b><br>&nbsp; &nbsp; Lack of independent mind of most<br>internal auditors does not affect effectiveness of internal control system.</p><p><b>Ho:</b><br>&nbsp; &nbsp; Lack of independent mind of internal<br>auditors affects the effectiveness of internal control system.</p><p><b>1.5 &nbsp; SIGNIFICANCE OF THE STUDY</b></p><p><b></b></p><b><p>With the rapid growing of economy crises<br>in the country, the effect of audit procedure can be highly detrimental to the<br>users of a company’s report if not properly carried out.</p><p>Kaduna State Water Board being one of<br>the public sector organization in Nigeria economy. It is necessary to work into<br>how the audit procedures is been carried out in such public organization.</p><p>The effect of this audit procedures to<br>individual investors, customers and other governmental agent are of paramount<br>importance. it is with the believe that the research work will bring about<br>relevant questions that will require further analytical investigation, thereby<br>increasing the existing knowledge on the subject matter.</p><p><b>1.6 &nbsp; SCOPE AND LIMITATIONS OF THE STUDY</b></p><p><b></b></p><b><p>The study has been basically limited to<br>areas that is concerned by Kaduna State Water Board that is, the analysis and<br>the procedure in a public sector organization. The process of this study covers<br>the control and procedure of expenditure of the Board as well as that of<br>receipts. it is also pertinent to mention that the project research is purely<br>an academic exercise.</p><p><b>Time<br>Constraint: </b>Time is an important factor in a<br>research work. For a researcher to exhaust all the requirements for a<br>particular study, a lot of time must be invested. However, the time allowed for<br>this research work is short coupled with other academic activities.</p><p><b>Financial<br>Constraint: </b>Closely following the above constraint<br>was finance. Research of this nature requires large fund, indequate fund does<br>not allow for a large scale research to include the organizations.</p><p><b>Respondent<br>Constraint: </b>Most of the audit and account staffs<br>confronted for information felt somehow skeptical to release them for fear of<br>leaking official secret, this actually make it difficult for the researcher to<br>obtain adequate information needed to the study.</p><p><b>1.7 &nbsp; DEFINITION OF TERMS</b></p><p><b></b></p><b><p>The following are some terms used in<br>this project work.</p><p><b>Audit<br>Programme: </b>Is a schedule of operation to be carried<br>out in the course of any particular audit exercise.</p><p><b>Audit<br>Planning: </b>Audit planning refers to the plan of work by a firm<br>of accountants or a government audit department to ensure that during a year it<br>covers the entire audit job it has at hand. &nbsp; </p><p><b>Audit<br>Evidence: </b>All information obtained by the auditor in arriving<br>at his conclusion on any matter within the scope of his audit.</p><p><b>V.F.M:<br></b>Means<br>value for money audit</p><p><b>Audit<br>Working Papers: </b>Working papers consit of file of<br>evidence obtained during audit work, the details of the methods and procedures<br>the auditor followed and the conclusion he has reached concerning the object of<br>the audit.</p><p><b>Testing:<br></b>Selecting<br>and examining representative items from a large set of similar items for the<br>purpose of drawing conclusions about the charactertics of the set.</p><p><b>Audit<br>Procedures: </b>The acts performed by the auditor in the<br>course of attaining the objectives of the examination.</p><p><b>1.8 &nbsp; HISTORICAL BACKGROUND OF KADUNA STATE WATER<br>BOARD</b></p><p><b></b></p><b><p>The Board was created by Kaduna State<br>(then North Control State of Nigeria) through Edict No. 2 of 1971. Since then<br>the Board is operating separate set of books of Accounts and treasury, for<br>payment of vouchers, time to time new set of procedures and accounting system<br>were introduced through circulars while sometime through instruction on the job<br>training, to bring the Board’s Accounting system on modern lines. However, all<br>these circulars and instructions are in lose form and some are unwritten too. The<br>introduction of commercial accounting system at Kaduna State Water Board is to<br>provide suitable, sufficient and authentic management information to help in<br>decision making and planning of operation.</p><p>This data falls under two categories<br>viz:</p><p>i. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br>Financial and management information</p><p>ii. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>Control and flow of financial data for<br>future planning.</p><p>Classification and coding of accounting<br>data is necessary to process the data speedily. In pursuance to this objectives<br>revenue and expenditure have been coded and classified.</p><p>The general managed/chief executive, is<br>the accounting officer of the Board. Any officer expending money within the<br>board does so on behalf of the chief executive. The limits of power of the<br>chief executive in this regard are stipulated in circulars issued from time to<br>time by the government and in conformity with the edict.</p><p><b>REFERENCES</b></p><p>Milichamp, A.H (2000) Auditing Continuum London and New<br>York. The Edition</p><p>Ekwere A. B. (1991) Contemporary Auditing, Fab Education<br>Book, Jers, Nigeria. AAT Study Pack Paper 14, Public Sector Accounting and Auditing/2<br>Published September.</p><p>Akuezuilo<br>E. O. And Nnadozie B. M. (1995) Research Methods and Statistics in Education,<br>Social and Management Sciences, Nuel Centi (Nig) Publishers Akwa.</p></b></b></b></b></b></b></b></b></b></b> <br><p></p>