CHAPTER
ONE
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
Every
sector of the economy both the private and the public sector has its own
objectives and goals to achieve. For the public sector of the economy, their
goal is to satisfy the social needs of the citizens and in the effort to
achieve these purposes, auditing more often, play a vital role.
The size and
scope of these sectors have sometimes made it clear for the executor to
exercise personal and first hand supervision of operation. It is in this light
that value for money audit established by management is initiated, for any
organization to carry out its business efficiently and effectively, there must
be some factors that must be put in place for the smooth running of the
organization like materials, machines, human labor and money e. t. c.
Auditing is seen
to play an intermediary function in between management and the resources of the
organization. It is also fundamental to any business either the public or
private sector, which will help the business to keep its adequate financial
records. These financial records are kept in response to the demand by a system
control which requires that the business enterprise must be carried
out in an orderly manner, ensure adherence to management policies, safe guard
the assets and secure possibly the completeness and accuracy of the records.
Irrespective of these facts of system of control established by the management
of the organization, fraud still thrives.
In the early
1970s, the role of the state auditors began to change dramatically. Changes
began in USA, Canada, and in several European countries. The representative of
the people started demanding information on the efficiency and effectiveness of
public expenditure.
In Nigeria no
specific legislation has been put in place to empower auditors to carryout
value for money audit. However, the 1999 constitution section 88 (2) empowered
both the two federal house and the state house of assembly to conduct
investigation to expose corruption, inefficiency or waste on the execution or
administration of law within the legislative competence and in the disbursement
or administration of fraud appropriated by it.
Therefore, fraud
control has become increasingly important to managers of various governments in
an organization. In general, financial statements fraud has always weakened
investors’ confidence investment. This is because 1 fraud against an organization
reduces the net income by 1 and services to be provided to people in the case
of public sector.
However, value
for money audit will be wildly concerned with the economy and efficiency of an
organization and the effectiveness of achieving its desired objective thereby
controlling fraud to evaluate the effectiveness of the internal control system
within the organization.
The history of
electricity in Nigeria can be dated back to the end of the 19th
century when the first generating plant was installed in Lagos in 1898. From
then until the 1950, the platform of electricity development was in the form of
individual electricity power undertaking scattered all over the towns, some of
the few undertaking were federal government bodies under the public works
department, some by the native authorities and others by the municipal
authorities.
1.2
STATEMENT OF THE PROBLEM
Fraud
is a complex phenomenon. It is rampant in both private and public sectors of
Nigerian economy. In the public sector, value for money audit reports are
mostly unqualified even in a glaring situation or cases of corrupt practice by
the managers that means that auditors especially those in public establishment
compromise their duties or their duties are influenced and threatened in the
performance of their statutory functions.
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