IMPACT OF AUDITING IN GOVERNMENT PARASTATALS (A CASE STUDY OF ENUGU STATE AGRICULTURAL DEVELOPMENT PROGRAMME ENUGU)
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IMPACT OF AUDITING IN
GOVERNMENT PARASTATALS
(A CASE STUDY OF
ENUGU STATE AGRICULTURAL DEVELOPMENT PROGRAMME ENUGU)
ABSTRACT
This study is based
on the IMPACT OF AUDITING IN A GOVERNMENT PARASTATALS using ENUGU STATE
AGRICULTURAL DEVELOPMENT PROGRAMME; located at Okpara Avenue as a study guide.
The entire work was
divided into five(5) characters and the data for the study was collected using
both primary and secondary sources, questionnaires, textbooks, literally
materials and journals respectively.
The population of the
study is 150 – whole the sample size was derived by the use of YARO YAMANI 1964
formular and it gave 109.
The data collected
were presented in tables using simple percentages and averages; then the
hypothesis of the study was tested using chi-square formular.
The findings of the
study was that auditing has great impact on the activities of government
parastatals; through checkmating irregularities and that whether the management
should rely on the report generated by the auditor; finally what is management
perception on the role of the auditor in the prevention and detection of fraud
in a government parastatals.
In the end, the
researcher made some useful recommendation to the parastatals; views that will
encourage the full utilization of auditing and auditors as tools in their
activities and actualization of accountability in the parastatal.
PROPOSAL
This study is based
on the impact of AUDITING IN A GOVERNMENT PARASTATAL USING ENUGU STATE
AGRICULTURAL DEVELOPMENT PROGRAMME; located at Okpara Avenue as a study guide.
The entire work was
divided into five(5) characters and the data for the study was collected using
both primary and secondary sources, questionnaires, textbooks, literally
materials and journals respectively.
The population of the
study is 150 – whole the sample size was derived by the use of YARO YAMANI 1964
formular and it gave 109.
The data collected
were presented in tables using simple percentages and averages; then the
hypothesis of the study was tested using chi-square formular.
The findings of the
study was that auditing has great impact on the activities of government
parastatals; through checkmating irregularities and that whether the management
should rely on the report generated by the auditor; finally what is management
perception on the role of the auditor in the prevention and detection of fraud
in a government parastatals.
In the end, the
researcher made some useful recommendation to the parastatals; views that will
encourage the full utilization of auditing and auditors as tools in their
activities and actualization of accountability in the parastatal.
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
1.1 Background
of the study
1.2 Statement
of Problem
1.3 Purpose of
the study
1.4
Significance of the study
1.5 Research
Questions
1.6 Statement
of Hypothesis
1.7 Scope of
the study
1.8 Definition
of terms
1.9 Historical
Background of case study
1.10 References
CHAPTER
TWO: LITERATURE REVIEW
2.1
Historical Background of Auditing
2.2
The Prevention of Fraud Act
2.3
The First Auditor, The First Act and Class
2.4
Qualities of An Auditor
2.5
Auditing Procedures
2.6
Uses of Audit Reporting to ENADP
2.7
Importance of Auditing to ENADP
2.8
Auditing in a Computer Environment
2.9
Objective of an Audit Department in a Government Parastatals
2.10
Management of an Audit Department
2.11
References
CHAPTER THREE: RESEARCH DESIGN
AND METHODOLOGY
3.0
Introduction
3.1 Research
Design
3.2 Source of
Data Collection
3.2.1 Primary Data
3.2.2 Secondary Source of Data
3.3 Population
of Study
3.4 Sample size
3.5 Sample
Distribution
3.6 Instrument
of Data Collection
3.7 Method of
Data Presentation
3.7.1 Method of Data Analysis
3.8 Validity
Test and Reliability of Instrument
3.9 References
CHAPTER FOUR: DATA PRESENTATION
AND ANALYSIS
4.0
Introduction
4.1 Data
Presentation
4.2 Hypothesis
Testing
4.3 Brief
Conclusion on Chapter Four
4.4 Reference
CHAPTER FIVE: SUMMARY OF FINDINGS,
RECOMMENDATION AND CONCLUSION
5.1
Summary of findings
5.2
Conclusion
5.3
Recommendation
Reference
Bibliography
Appendix I
Appendix II
CHAPTER ONE
1.1
BACKGROUND OF THE STUDY
The term auditing
came into use when accountants have to add to their existing function. It
is not new though the interest shown in it is of relatively recent
origin. Auditing particular task is to provide information to managers,
shareholders and investors on the outcome of turnover rate in an organization.
Auditing is a broad
based subject drawing upon relevant Laws and Cases, financial account,
taxation, costing and management accounting. It could be reasonably
assumed that if there is a sound auditing department in an organization or
parastatals is bound to financially perform well, if such information gotten is
effectively and efficiently utilized.
The extent of which
the above assumption or they is true using the Nigerian parastatals as the
subject of the study.
It is my ultimate desire
as a researcher that at the end of this thesis I should be able to show the
importance of auditing to government parastatals. Hence auditing is one
key to the success of any parastatal set-up.
WHAT IS AUDITING:
According to Okorie
Onovo’s book (2001) he views auditing as the expression of an opinion on the
financial statement of an organization or parastatal within a recording
principles. While in NWEKE and UNEGBU (2001), views auditing to be a form
of stewardship where the messenger is expected to account for what was left
under him by the shareholders so as to know, if it actually increased, or
reduced and if they were the way they gave it to them, just as the case in, in
the Holy Book of Matthew Chapter 25:14-30.
Many Directors and
Managers are better and stronger when they have good idea of the actual work of
auditing in what have been under their care. Their performance and reward
are determined by the correctness of the shareholders during the annual general
meeting of the organization or parastatals.
It is however assumed
in this thesis; that it is an efficient and effective auditing system that is
the only high cause of financial performance in parastatals.
1.2
STATEMENT OF PROBLEM:
So many managers have
failed to recognize the efforts of auditing in the financial performance and as
a result; it has led them to poor planning, control and decision making.
IMPLICATION:
-
It retards the growth of the parastatals
-
It leads to loss in shareholders fund
-
It will welcome the idea of take overbid
-
The reputation of the company will be at stake
-
It will hinder corporation objectives of the company
-
The loss of public confidence in the company and shifting of interest to other
company.
It is a well known
fact that officers of the parastatals i.e. (ENADEP) are entrusted with the
management of both material and human resources of their establishment and in
most cases, these officers are not brought under thorough control or question;
the ultimate consequence of this is that much of the resources are
indiscriminately mismanaged. Equally, some accountant and key personnel
in most parastatals and companies do not resist the temptation of colliding
with other workers to embezzle their organizations funds to the detriment of
the masses and owners of business or even the shareholders. Also some
parastatals do not seem to have an audit department or engage the service of
the external auditor or where such a unit exist, they allow it to exist only in
name as a mere compliance to the statutory requirement. An audit
department of such standard will not make or have any impact as regards to
internal control. This state of affairs from investigation is usually
deliberate attempt by management to execute its exploitation, plans without any
hindrance.
Another aspect of
this, is lack of adequate regulatory standards in Nigeria regarding the duties,
rights, responsibility and qualification of auditors.
However, am more
interested in the impact which a paper auditing system will achieve under these
conditions in government parastatals and other organizations. Thus the
proper care is taken towards auditing, the purpose of these parastatals should
be achieved, and the fear of the auditor will be for every section, department
and staff of the management.
1.3
PURPOSE OF THE STUDY:
The main purpose of
this study will among others include:
-
To determine the function which an auditing department can perform in a
government parastatals or other organizations.
-
To ascertain how far these functions have contributed in the overall
performance of the parastatals.
-
To find out whether an auditing system exist within those parastatals or
organizations.
-
To find out the qualifications of those who control the auditing units where it
exists.
-
To provide a basic understanding of auditing and its procedures.
1.4
SIGNIFICANCE OF THE STUDY:
It is the view of the
researcher that this study will be relevant to the government parastatals,
society at large and academic encouragement. Also, it will help highlight
the impact of auditing in an organization or establishment; and this can be
seen in the following ways: negatively and positively.
-
Auditing department could be seen as the “watch dog” to the management of an
organization on the ground that it will contribute to the successful and timely
implementation of the management policies as well as safeguarding assets and
ensuring financial accountability of the employee in an organization.
-
It works as grease to the effectiveness of the internal control system thereby
enhancing efficiency and adherence to the laid down rules.
-
This study will also make it clear to all, that auditing has control and impact
in the effectiveness of internal control and achievement of financial
accountability of all the staff of an organization.
Moreso, the
activities of auditing department encompasses all segments of the organization,
hence a collected act between the auditors and management will have a
devastating effect on the generality of the programme and the entire
organization in general
-
Frantically, the impact of auditing is not those who benefit from the projects
executed by the establishment.
1.5
RESEARCH QUESTIONS:
Based on the purpose
of the study, the following questions are raised to provide a guide and
solution to the research problems:
i.
What is the impact of auditing in government parastatal.
ii.
Do the management rely heavily on the reports generated by the auditor.
iii.
What is the management perception on the role of the auditor in the prevention
and detecting of fraud and error in the parastatal.
1.6
STATEMENT OF HYPOTHESIS:
In carrying out this
research work these conceptual statements are made to serve as a guide on which
the work will be anchored.
i.
Ho: Auditing has no impact in government
parastatal.
H1: Auditing has an impact in government
parastatal.
ii.
Ho: The management do not rely on the report
generated by the
auditor.
H1: The management do rely on the report
generated by the auditor.
iii.
Ho: The management perception on the role of
an auditor has not
helped
in the prevention and detection of fraud and error.
H1: The management perception on the role of
an auditor has
helped
in the prevention and detection of fraud and error.
1.7
DEFINITION OF TERMS:
The researcher finds
it worthy to define some important terms in the research work for a better
understanding of their meaning and the context in which they are applied in the
work.
i.
AUDITING:
This is an improved
calling by an organization seeking to investigate on the totality of stock
remaining and financial statement prepared by the company’s accountant so as to
know whether or not the organization is doing well.
ii.
SHAREHOLDER:
These are the owners
of the parastatals (major contributors) who contribute their quota towards the
upkeep of an organization or starting-up the parastatals.
iii. EXTERNAL
AUDITOR:
This is the invited
auditor who is elected by the shareholders so as to express its view about the
account carried out by the internal accountant or the company or
parastatal. Telling them if the account shows a free and fair view.
iv. INTERNAL
AUDITOR:
This is the company’s
staff (Accountant) who is elected by the management board to investigate and
present the raw view of the statement of account of the company or organization
and he can be seen as an auditor within the management.
1.8
HISTORICAL BACKGROUND OF THE STUDY:
Following the success
of earlier agricultural development projects in some states of the federation,
the federal government with the assistance of the International Bank for
Reconstruction and Development (IBRD), decided the extent the strategy of
Agricultural Development Project (ADP) for integral oral development to all
part of the country, until the first generation of (ADP), the Multi-States
Agricultural Development Projects (MSADP) are phased in wide coverage.
But in contrast with the earlier statewide ADPs, the MSADPs are phased in their
operations. The first set of such phased programmes covered ANAMBRA,
Benue, Plateau, Imo, Bendel, Cross River, and Ogun States, collectively
referred to as multi-states ADPI.
Anambra State ADP
(ANADEP); now (ENADP) has completed projects first year of life. The
sponsors of this project and indeed, the general public are interested in
knowing how far the project has fared.
When arrangement were
made for the actual take off the project and the project year one, 1986.
The first portion of
the report traced the need for conceiving special policies and programmes to
boost food production in Nigeria.
As part of
government’s rural development strategy, the Anambra State Agricultural
Development Project; which is now (ENADP) was inaugurated on 5th
August, 1985. It’s aim is to assist the small scale farmer in the state,
increase food production, thereby raising his income and standard of living.
An integrated rural
development approach was adopted to reach the farmer in his location.
This approach included an improved and revitalized agricultural extension, a
commercialized input supply system, sponsoring and encouragement of farm
produce as well as rehabilitation, spot improvement and maintenance of rural
feeder roads and the provision of rural water supply.
The total funds
received so far (December 1986) in the project is N4.13 million of this
amount. The sum of 3.86 million was contributed by the federal government
and state governments and the balance was generated within the projects.
The total project life is 10 years, to be implemented in three phases.
The first phase of four year duration from 1980-1989 is established to cost
38.7 million. The International Bank for Reconstruction and Development
(IBRD), Federal Government and Anambra State Government now Enugu State are
co-operators of the project.
The world bank’s
contribution is expected when the project and loan agreement becomes
effective. The sources of internally generated revenue were mainly from
the sale of fertilizer, etc. The total expenditure stood at N1.84
million.
The agricultural
sector has the fundamental role of providing food in adequate quantity and
quality, supplying industrial raw materials and earning foreign exchange
through exports. Contemporary agriculture in Nigeria is dominated by
small holder farmers using traditional methods. The agricultural sector
is known to account for 20% of gross domestic product (G.D.P.) and employs
about 60% of the labour force. Agricultural performance in the last few
decades has been undermined by disincentives created by factor price
distortions ushered in by the oil boom. In consequences the agricultural
sectors lost a good number of labour to other more lucrative sector of the
economy with the resultant decline in agricultural exports. Nigeria became
a net importer of both food items and raw materials. The cumulative
effect of the situation is that the agricultural sectors of the economy has
failed to perform its traditional functions effectively. To meet this
crises both the federal and state governments enunciated several policies and
embarked on a variety of agricultural projects meant to improve the capacity of
the sector to meet its obligations effectively.
Agricultural
development programme is aimed at increasing agricultural production and improving
rural condition of the people. The programme was conceived in 1972, while
the first projects (funtua in Kaduna, Gusaro in Sokoto and Gombe in Bauchi)
commence operation in 1975. The success of these first ADPs led the
federal government to accord the ADP idea quick recognition as prime
contributors to incremental food production. It thus became the policy of
the government to extend ADP strategy to all state of the federation.
Anambra State ADP now
Enugu State ADP is on the new generation of state wide ADPs to be implemented
in stages or phases. The strategy of the first phase include the
precision of a programs of adaptive research. The research is to be
conducted on the farmers’ farm based on the stepwise approach, preceded by diagnostic
surveys of typical farming systems. Services to be provided to farmers
would be through a re-organised agricultural extension system, better use of
fertilizers and improved planting materials.
PROJECT
AREA: Location:
Anambra State now Enugu State ADP has an area of approximately 6,727.1sq km
with an estimated population of 52,733,560. The estimate number of farm
families is 1,023,270 according to the Agricultural Projects Monitoring,
Evaluation and Planning Unit (APMEPU) Kaduna.
GEOGRAPHIC
FEATURES: The State lies partially within the
semi-tropical rain forest belt of southern Nigeria. It spreads in a north
earth direction with its physical features and vegetation changing as gradually
from the tropical forest belt to open wood land and then to Savannah land as it
approaches its northern boundary with Benue State.
FARMING SYSTEM:
The prevailing
farming system of the State is shifting cultivation with a bush fallow to
restore soil fertility. Burning of slashed fallow growth is used for
rapid recycling of soil nutrients.
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