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
- To verify whether auditing standards and procedures are adhered to in public sector organizations.
- 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.
- 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.
- To investigate whether the relevance and credibility of audit report in public sector organizations like the ones mentioned above is even in doubt.
- To verify whether the audit report of these organizations, show efficiency and economy of operation in the organization.
- To make recommendations on how the audit report can become relevant and credible.
- FORMULATION OF HYPOTHESIS
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.
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.
- 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:
- What effect has audit report in public sector organizations like the ones mentioned above?
- Has audit standard and procedures been adhered to in carrying out audit of these organizations vis-à-vis the resultant audit report?
- To what extent has audit report written on Power Holding 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?
- 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.
The study is very timely especially today that all hands are on deck to enhance the development and growth of Nigeria’s economy. This study will be of immense benefit to public organizations and the organized private sector to:
- Determine the impact of audit report in public sector organizations, especially as it relates to checking fraud and fraud related activities.
- To auditors in general, the study is necessary to expose the rudiments of improved auditor performance and efficiency.
- 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.
- The study will also try to expose the management to the need for prompt and total implementation of audit report.
In the academic arena, this study will prove to be significant in the following ways: