AUDITING AS AN INSTRUMENT TO DISCLOSE ACCOUNTABILITY IN GOVERNMENT OWNED ESTABLISHMENT

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CHAPTER ONE
INTRODUCTION
1.1 AN OVERVIEW:  ACCOUNTABILITY
This is now a national issue. The increasing incidence of fraud and misappropriation of funds and property by Accounting officers and chief executive in the public sector of the Nigeria economy pose pertinent question as to whether auditing plays any significant role towards ensuring proper accountability and judicious use of fund set aside for various purposes and corporate objectives. Some programmers and activities organized by these individuals are assumed to be done on behalf of   the people therefore deserted to be assured the resources which they put at the disposal of these accounting officers are efficiently, effectively and economically managed, since it is known, that not all of us are judicious in the in the management of our private affairs and much less, the public affairs entrusted to us. A case in point is about distressed banks like continental merchant bank and Nigeria marchant bank. Poor management was the problem with these banks, if these banks hard carried out proper audit and made use of the recommendation, the directors would have reduced proper accounts of their deeds.
Accountability has clearly manifested itself as a principle to be pursued if the status quo is not to be perpetrated. Several past leader have pledged to introduce a more responsible system of government with accountability but their subsequent conduct or governance have show that they have little or no understanding of the definition and application of accountability, hence the question of what then is accountability arises. Accountability as it is contained in long man dictionary of contemporary English is the condition or quality of being able (that is having) to give an explanation for ones actions. Accountability is also defined as the management of funds and other assets of which individuals or institutions had been custodians. Auditing is regarded as one of the more recently established professions born out of the complexity of modern business world. It became relevant so as to discourage men from erring and to expose those who erred when they give account of how they managed the funds and property entrusted t them. This account or report is usually done by means of financial statement in order to verify the true and fairness of this report, an independent person- an auditor will audits the account. An audit is an investigation by an auditor into the evidence form which the final revenue accounts and balance sheet or other statements of an organization have been prepared in order to ascertain that they present true and fair view of the summarized transactions for the organization at the end date, so enabling the auditor to report thereon. There are more involved definitions such as; that issued by the consultancy council of accountancy of accountancy bodies (CCAB), which defined an audit as “ ….the independent examination of and expression of opinion.
On the financial statements of an enterprise by an appointed author in pursuance of that appointment and in compliance with any relevant statutory obligations. The law also makes provisions for the establishment of audit department as seen from the above definition, SEC 357 of companies and allied matters act auditors that will audit the financial statement of the company at the annual general meeting. The question now is that in spite of all these provisions and safeguards one still experience the alarming rate of fraud and misappropriation of public funds and property by those entrusted with their safe guards. It is not surprising that great emphasis is being laid on proper auditing as means to enhance accountability in the public sector of the nations.  
1.2   OBJECTIVES OF THE STUDY
The object of this study is to find out;
(A)  The role of audit as instrument to disclose accountability in the government owned establishment with reference to NNPC.
(B)  The problems facing auditors, which hinder their performance in NNPC
(C)  The roles being played by auditors towards protection of funds and property in NNPC
(D)  Whether the standard of auditing has fallen in recent years.
(E)  The effectiveness of audit report and their implementation to NNPC.
It is the supreme belief that the information collected from this study will highlight the benefits of auditing towards ensuring proper accountability in the public sector and also serve as a foundation for out regular audit.
1.3   STATEMENT OF PROBLEM
There has been an out-cry of poor accountability in the public sector of Nigeria with more emphasis on NNPC.  The effectiveness of an independent audit is not however limited to the added statement of creditability derived from the audit itself. There is the statutory effect of the prospective audit on employer who may be tempted to defraud their employers and or management that may find it expedient to endeavour to deceive third party users by preparation of misleading financial statements. The problem is that the funds and property of the organizations are entrusted to certain individual workers in the organization and in most cases; these individual employees are not brought under through surveillance. The result is that most of the funds and for property are distorted to personal use. Another Problem is the identification of the reasons for this ugly situation and why despite the fact that the accounts of these public organizations are said to be audited, there’s still an increase in fraud and misappropriation of fund and property.  
1.4   SIGNIFICANCE OF STUDY
The study is significant for the following:
Students: this study will serve as a foundation for further research on this topic to students in the school for financial studies.                        
Financial house: this study will be of great important to financial house wishing to improve on their standard of operation. It will assist them in their system of internal control and so help to check fraud.
Management: this study will help to highlight the causes of fraud and misappropriation of property and funds in the organization and provide suggestion to stop the practice. Other includes banks, professional’s bodies and in fact the general public.  
1.5   RESEARCH HYPOTHESES
To effectively conduct this research, the following hypotheses are desired to help us in our analysis. These are as follows:
Hypothesis 1
Ho:  Auditing, as an instrument to disclose accountability has not been more useful to NNPC over the year.
Hi:  Auditing, as an instrument  to disclose accountability has been more useful to NNPC over the year.
Hypothesis 2
Ho: Effective auditing and investigation have not really minimized the rate of fraud and misappropriation in NNPC (Nigeria National Petroleum Company.
Hi: Effective auditing and investigation have really minimized the rate of fraud and misappropriation in NNPC (Nigeria National Petroleum Company.
Hypothesis 3
Ho: The management of NNPC has not been implement auditors reports guidelines.
Hi:  The management of NNPC has been implementing auditors reports guidelines.  
1.6 DEFINITION OF TERMS
The terms used makes the study more understandable, these terms are as follows:
AUDITING: Investigation into the evidence form which trial revenue accounts and balance sheet are prepared to ascertain true and fair view.                        
AUDITORS: these are the professional persons in charge in audit.
ACCOUNTABILITY: This is the rendering of return on stewardship relating to management of fraud and assets which individual have been custodian.
FINANCIAL STATEMENT: This is the balance sheet of an organization showing of assets and liabilities whether there is profit or loss for the period of 1 year. (ie 12 months)
CONSULTATIVE COUNCIL OF ACCOUNTANCY BODIES (CCAB): Bodies, which bring laws and rules, stated for accountancy bodies.                        
EXTERNAL AND INTERNAL DUTIES: Internal auditors are auditors whose primary duties is not to detect fraud but with negligence could be sure while external auditor are auditors from various firms to check on company’s record.
OPERATIONAL MANUAL: This is manual used in guiding operations.
MANAGEMENT: This is an organization involved in every aspect from staff to staff etc. 
INTERNAL CHECK: This is the statement of auditing 114 as allocation of authority showing routine checks.                        
INTERNAL CONTROL: This means the whole system of controls, finance and otherwise, established by the management.                        
INTERNAL AUDITOR: A review of operation and records sometimes continuous undertaken within a business by a special assigned staff.
GOVERNMENT ACCOUNTING PROCEDURES (GAP), which guides series of laws.                        
AUDITING: This is a complete examination of a period of transactions a business and matter in which its transactions are recorded.                        
INVESTIGATION: Finding against fraud.
BALANCE AUDIT: Accurate audit.

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