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.
(BRIEF REVIEW OF THE FIRM, POWER HOLDING COMPANY OF NIGERIA, P H C N)
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.
Therefore these studies tend to find out why there are:
Improper methods of appointment of auditors
Inadequate internal control
Lack of independence of auditors
Untimely and unreliable financial statements
Lack of transparency and inadequate method of accountability
1.3 OBJECTIVES OF THE STUDY
This study tends to find out some of the objectives which will include:
1. To find out the effect of value for money audit in fraud detection and control in the public sector.
2. To find out the relationship between internal control and fraud detection.
3. To determine what extent is the value for money audit relevant to the effectiveness and control of an organization.
4. To find out why there is lack of transparency and inadequate method of accountability.
5. To find out why there is inadequate internal control system.
1.4 RESEARCH HYPOTHESIS
In order to achieve the objectives of this research study, the following
hypothesis was formulated.
Null Hypothesis (Ho)
There is no significant relationship between economic and political instability and performance of public sector organization in Enugu State.
Alternative Hypothesis (Hi)
There is a significant relationship between economic and political instability and performance of public sector organization in Enugu State.
Null Hypothesis (Ho)
There is no significant relationship between cash basis of accounting and performance of public sector organization in Enugu State.
Alternative Hypothesis (Hi)
There is a significant relationship between cash basis of accounting and performance of public sector organization in Enugu State.
Null hypothesis (Ho)
Inadequate implementation of law had no effect on performance of public sector organization in Enugu State.
Alternative hypothesis (Hi)
Inadequate implementation of laws has been effect on performance of public sector organization in Enugu State.
1.5 RESEARCH QUESTIONS
1. To what extent does the inconsistency in public sector objectives which is as a result of political and economic instability affect performance of public sector organization in Enugu State?
2. How does the diversity in accounting records or lack of uniformity in accounting records affect the public sector organization in Enugu State
3. Could the problem of the use of cash basis rather than accrual basis accounting affect public sector organization in Enugu State?
4. To what extent does the insufficient emphasis on accountability and stewardship affect public sector organization?
1.6 SIGNIFICANCE OF STUDY
This research therefore aims that value for money audit will be relevant in the public sector because of the special needs for government organizations to demonstrate their accountability and their regards for economy, effectively in the use of public funds and other resources. Value for money auditing is particularly appropriate for any organization whose activities cannot be judged solely by their contribution profit.
a. Budgeting and budgeting control
b. The development of management information system necessary to plan, cooperate and control an organization.
c. Human resources management (that is planning procurement appraisal) construction procurement and utilization of physical asset such as property, plant and equipment
1.7 SCOPE OF STUDY
This work is restricted to Enugu State Water Co-operation; this work will enlighten them on how to achieve their goals with a minimum cost.
1.8 LIMITATION OF STUDY
The limitations involved in the course of this research includes hostility and non co-operation on part of executive respondent unwilling to disclose their necessary and vital information or document which they felt it will be detrimental to their business. Also the financial implication was very high and this imposed certain restrictions. The constraint of time was also a limiting factor as one the areas of interest were not covered as they would have been adequate.
1.9 DEFINITION OF TERMS
Value for money: Providing a service for a product in way that is economical,
efficient and effective.
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