Assessment of value for money audit as a tool for fraud control in the public sector (A case study of ministry of finance)

CHAPTER ONE

INTRODUCTION

• Background of the study

Every sector of the economy both the private and the public sector has it’s own goal 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 shape of these sectors have sometimes made it clear for the executors to exercise personal and first hand supervision and operation. It is in this light that the value for money audit established by the management is initiated for any organization to carry out it’s business efficiently and effectively, there must be some factors that must be put in place for the smooth running of any organization like materials, machines, human labour and money etc.

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 the private sector which will help the business to keep it’s adequate financial records. These financial records are kept in response to the demand by a system control which require that the business enterprise must be carried out in an orderly manner, ensure adherence to the management policies, safe guard the assests and secure possibly the completeness and accuracy of the records. Irrespective of these facts of the system of control established by the management of the organization, fraud still thrives.

Therefore fraud control has become increasingly important to the managers of various government in an organization.

• Statement of the problem

Fraud is indeed a complex phenomenon, it is rampant in both public and private sector of the Nigerian economy. In the public sector, the value for money audit reports are mostly unquantified even in a glaring situation or cases of corrupt practice by the managers that means that auditors especially those in the public establishment compromise their duties or their duties are being influenced and threatened in the performance of their statutory functions. So lack of transparency and adequate method of accountability is a major factor that hinders the growth and progress in the public sectors and if this is handled amicably there will be an increase in the financial aspect of the sector.

• Objectives of the study

The main objective of the study is to determine the assessment of value for money audit as a tool for fraud control in the public sector. However for the successful completion of the study, the following sub objectives were put forward by the researcher:

(i)To determine the extent of the value for money audit relevant to the effectiveness and control of an organization.

(ii)To identify the effect of value for money audit in fraud detection and control in the public sector.

(iii)To find out why there is lack of transparency and inadequate method of accountability.

(iv)To evaluate the relationship between money audit and fraud control.

1.4 Research question

For the successful completion of the study, the following research questions were formulated:

(i)How can the extent of the value for money audit relevant to the effectiveness and control of an organization be determined?

(ii)What are the ways of identifying the effect of value for money audit in fraud detection and control in the public sector?

(iii)What are the causes and lack of transparency and inadequate method of accountability?

(iv)To  what extent can the relationship between money audit and fraud control be evaluated?

1.5 Significance of the study

There is need to inform the management in the business organization on the value for money audit as regards to fraud control, detection and prevention in order that the auditor would be giving a maximum co-operation in the performance of the study.

It will also encourage the interest groups in the organization eg. potential investors, creditors etc.

It will also enlighten the public on the topic and provide further literature in the field of auditing and investigation.

Also the research work will be handy and also serve as a reference for further researches concerning auditors and fraud control and it will add to our knowledge generally.

• Scope and limitation of the study

The scope of the study is the assessment of value for money audit as a tool for fraud control in the public sector. However, the study has some constrained and limitations which are:

(a)Availability of research material: The research material available to the researcher is insufficient, thereby limiting the study.

(b)Time: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

(c)Finance: The finance available for the research work does not allow for wider coverage as resources are very limited as the researcher has other academic bills to cover.

• Definition of terms

Assessment

Assessment is the process of gathering and discussing information from multiple and diverse sources in order to develop a deep understanding of what students know understand and can do with their knowledge as a result of their educational experiences.

Value
The regard that something is held to deserve; the importance, worth or usefulness of something.

Money

A current medium of exchange in the form of coins and banknotes, coins and banknotes collectively.

 Auditing

It is the systematic examination and verification of a firm’s books of account, transaction records and other relevant documents.

Tool

It is a device or implement especially one held in the hand, used to carry out a particular function.

Fraud control

Fraud control occurs when a trusted person in a high position of responsibility in a company, corporation or state subverts the organization and engages in extensive fraud for personal gain.

Public sector

A public sector is that portion of an economic system that is controlled by national, state or provincial and local governments.

Economy

An organized scientific study of the problem by which scarce resources which have alternative uses are allocated among competing wants with the objective of maximizing welfare.

Public sector

The portion of an economy in which the activities are under the controland direction of the state.

Private sector

That portion of the economy in which the activities are under the control and direction of a non-governmental economic unit.

The federal ministry of finance

The federal ministry of finance is the government body that manages the finances of the Federal Government of Nigeria including managing, controlling and monitoring federal revenues and expenditures.

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