Impact of Value for Money Audit and Publice Section
In:
Submitted By sihel Words 14175 Pages 57
CHAPTER ONE
INTRODUCTION
1.0 Background OF THE STUDY
Financial accountability is not complete without audit, which remains one of the most neglected and mis-understood areas of financial management.
This could be traced to the crudeness of accounting methods used in the early stages of civilization where individuals check account by themselves. It is for this reason that the practice of audit has been accorded its rightful place with a view to imposing some system of check upon person whose business involves to record the receipt and disbursement of money on behalf of others.
However, the need for audit mostly government account is precipitated by a number of issues. One of such issue is the size of the public sector, the financing of which have become very burdensome, especially with the fall in public revenue resulting from the change of circumstances of the international oil market. According to Asechemic (1999), the pervasive presence of public sector is due, in part, to the historical national condition of a weak private modern sector in the past colonial Nigerian economy. The economy activity of government arising from this historic condition has made the Nigerian public sector very large. A need to reduce the size of the public expenditure has become clear to many observers. The privatization and commercialization project in the structural adjustment programmers (SAP) is an office response to the call for a reduction of public sector spending.
The second issue is the financial accountability of public officer. Corruption and lack of accountability by holders of public officer have long been a problem in Nigeria. So much have been said about the need for public accountability in the recent past, that there can hardly be anybody in Nigeria who is not convicted that the public services as expected (asecheme,1999:21).
The third issue that has arisen relates to efficiency in the operation of the public service, The citizens expect the government to do more for their welfare in the face of deteriorate public finance. For public expectation to be met in this situation, public servants must seek to achieve more for each unit of resources expended in their operations. In other words, the logic of our public finances calls for the enhancement of efficiency in the public service (Asechemie, 1999:4).
Hence, to lessen the burden on government, there is the need for an audit, and not just an audit for its own sake, but a comprehensive auditing that shaping the various aspect of government affairs and promote overall public interest. Comprehensive auditing comprises attest (regularity) auditing and value-for-money auditing. Regularity auditing is the traditional function of government auditing which verifies that expenditure has been incurred on approved service and in accordance with statutory and other regulation that govern them. It is seen as a vital component in the entire edifice of financial management which is geared towards the principle of accountability.
Value-for-money (V.F.M) auditing which is the main focus of this project is the second aspect of comprehensive auditing. It relates to the extent to which public funds are expended economically, efficiently and effectively with a view to meeting programmed result. Okezie (1994:425) state that value-for-money auditing is the examination for economy, efficiency and effectiveness so as to bring to light examples of wasteful, extravagant, or unrewarding expenditure, failure to maximize receipt or financial arrangements detrimental to the government /organization treasury and any weakness leading to them.
The auditing standard defined value-for –money audit as an objective and systematic examination of evidence for the purpose of providing an independent assessment of performance of public sector organization, their programmers, projects and service in other to improve public accountability and service delivery. It includes the assessment of the economy, efficiency and effectiveness with resources of an entity had been used in achieving results.
The value - for– money (V F M) auditing concept hinges on the auditors concern with matter of economy, efficiency and effectiveness. The 3Es are the accepted component of the value- for –money concept. It is defined by the audit commission (1983) as follows:
1. Economy may be defined as the terms under which the government acquires human and material resource. An economical operation acquires these resources in the appropriate quality and quality at the lowest cost.
2. Efficiency may be defined as the relationship between good or services produced and resources used to produce them. an efficient operation produces the maximum output for any given set of resources inputs or, it has maximum input for any given quantity and quality of service provided.
3. Effectiveness may be defined as how well a programmed or activity is achieved in its established goal or other intended effects.
Public office carries with it the responsibility to apply resources efficiently, economically and effectively to achieve the purpose for which the resources were furnished. This responsibility applies to all resources whether entrusted to public officials by their own constituency or by other level of government (GAO 1981).
1.1 STATEMENT OF THE PROBLEM
This study will be aim at finding out the root cause of the public office to performance of their duty based on the value- for – money audit. As a backdrop of this, the following questions arise
1. Would the introduction of value –for –money audit in the public sector have any effect (whether positive or negative)?
2. Can public sector perform better if value-of –money audit is introduced?
3. Would value – for –money audit increase productivity (i.e turnover and utility provision)in the public sector
4. Would it enhance transparent accountability in the public sector?
1.2 PURPOSE OF THE STUDY
The study is to intend to proffer solutions that would improve the importance of value for money audit.
To determine whether the entity concern is acquiring, protecting and using its resources economically and efficiently. And whether the entity concern has complied with relevant laws and regulations applicable to its programmer project and services.
To evaluate whether the extent to which the desired results or benefits established by the enabling law are achieved or being achieved.
1.3 RESEARCH QUESTION
The following are the research questions the study attempted to answer.
1. Would the introduction of value-for-money audit have any positive effect on employee’s attitude to work in the public sector?
2. Would it increase the level of performance in the public sector?
3. Would it increase the level of accountability in the public sector?
1.4 STATEMENT OF HYPOTHESIS
In order to have a clear test and validity of this study, the following hypothesis were formulated
1. Ho1 There is no significant relationship between value – for –money audit and employee’s attitude to work in the public sector
2. HA1 There is significant relationship between value – for –money audit and employee’s attitude to work in the public sector
3. HO2 there is no significant relationship between value-for-money audit and the level of employee’s performance in the public sector
4. HA2 there is significant relationship between value-for-money audit and the level of employee’s performance in the public sector.
5. Ho3 there is no significant relationship between value- for –money audit and the level of accountability in the public sector.
6. HA3 there is significant relationship between value- for –money audit and the level of accountability in the public sector.
1.5 DEFINITION OF TERMS
Some terms are defined as used in this work to ease understanding.
1. AUDIT – an activity involving the gathering and evaluation of evidence relating to the validity of statement about economic and financial performance and conduct.
2. AUDITOR – an outsider who look into, enquire and review the account of stewardship of management and to express an opinion as to the fairness or otherwise of the said account.
3. PUBLIC SECTOR – All organization, which are not privately owned and operated but, which are established, run and financed by the government on behalf of the public.
4. EFFECTIVENESS – A relationship between achieved output and optimal output.
5. EVALUATIONS – When management judges the implication of various past, present and future events as it affect the organization profit.
6. ECONOMY –A relationship between standard input cost and actual input cost of an organization or programmer.
7. EFFICIENCY – A relationship between optimal output and standard input costs.
8. INTERNAL AUDIT – Is described as a review of operation and records, sometimes continuous undertaken within a business by specially assigned staff.
1.6 SIGNIFICANCE OF THE STUDY
This research is conducted to stress on the impact of value for money audit in our socio-economic activities.
This research plays a vital role in performance evaluation in government i.e. its conclusion can help the government funds are lost in numerous programmer through the award of contract, and it is prudent that an efficient and effective audit should be carried out. The submission of a onetime auditor-general of Lagos state while answering question concerning the use of tax consultant says. “The issue of percentage i.e. 10% runs against universally accepted standard of between two to seven percent”. It is worth mentioning here that not only in contracts that huge amounts of money have been sunk, but there are some other areas such as payment of salaries, transportation allowance, housing allowance, medical allowance, etc. that substantial amount have been paid to non-existing workers and contracts. This is due to the non-integration of value-for –money audit in the scheme of the public sector. It could add to the existing stock of knowledge in the area of audit the area of auditing which has to do with value –for –money. However, the need for value –for-money audit under the auspices of comprehensive auditing has been recognized by the federal audit department. A division has been created by the department to investigate the relevance and applicability of value – for – money in the public sector.
It serves as a bed rock in which other scholarly Endeavour could take off from. By this other researcher can learn which procedures and instrument have proved useful; shed light on way to efficiency of date collection and obtain useful advice of how to increase the effectiveness of data analysis.
1.7 SCOPE OF THE STUDY
This field of study is such that the researcher will have to limit himself to reasonable scope of study.
The concept of value –for –money audit in public sector is too vast, infect it runs through all ministries and department of Rivers State civil service. Therefore the scope is narrowed down to internal audit section of accounts and audit department of the ministry of finance and economic planning to save the researcher the agony of time constraint.
1.8 LIMITATION OF THE STUDY
Every study has certain limitation which falls short of the idea which the researcher has established or recognized (BARIDAM, 1995:195). This study is therefore not an exception A fundamental problem encountered in the course of carrying out this present study from the non-chalets and suspicious attitude of most (officer) respondents. Consequently, while some officers were hesitant to grant me access to their records, others do not grant the audience. The lack of related literature to draw from, this is because not much work has been done in this area of study. Another major limitation of this study is due to financial constraints and time needed to complete this work The questionnaire method adopted as the major collection instrument has its own limitation.
REFERENCES
1. ASECHEMIE, D.P.S (1999) Anatomy of public sector accounting in Nigeria. Port Harcourt: sunray book limited
2. BARIDAM, D.M (1995) “Research Method in Administrative
Sciences. Port Harcourt; paragraphics
3. IBEZUE, (1986) “Accountability and Social objectives” Business Time, March 31,1986
4. OKEZIE,B.N (1994) “Auditing and investigation” with emphasis on special classes of audit: Owerri bon publication
5. ZAYYAD, H (1986) “Chartered Accountants should find practical solution to public accounting”. The NIGERIA ACCOUNTANT,
6. UCHENDU, A.I (1987) “problem of public enterprise management in Nigeria” MBA THESIS; university of Port Harcourt.
7. AUDIT COMMISSION (1983)
CHAPTER TWO
LITERATURE REVIEW
2.0 INTRODUCTION
This chapter shall review what people have writer on the subject matter of this research study. The fact that most of the materials available in this area have not specifically dealt with the subject, a lot have been draw from related surveys and write-ups. Baridam (1995:31) has argued that ‘it is enough to review related literature without presenting the studies by topic related to the researcher own study. The literature on the subject matter of this study shall be reviewed and presented accordingly.
Public sector organization is free from competitive force to achieve efficiency. Even the wasteful and extravagant government body can continue, provided it retains the power to levy sufficient fund to cover expenditure. The fact that the public sector is inextricably bound up in the political process is another reason for establishing a value for money awareness. Politicians face conflicts of interest; their decisions may be influenced by factors other than the best interests of those who provide the funds which are to be spent. The level of education and enlightened minds are more now than before, hence the expectation and responsibilities of public officers are more. Today the number and monetary value of public sector activities have increase tremendously. This upsurge has brought about added demand for accountability. The custodians of public fund need to render adequate account of their activities to the public. The public are expected to be feedback in form of accountability report in order to assess the performance of those entrusted with public resources.
2.1 VALUE –FOR –MONEY AUDIT CONCEPT
Value –for –money audit has been in existing for long in developed countries like united state of America, Canada, Britain, to mention a few. Series of literature have been written by eminent scholars in the international journal of government auditing and the government accounting journal.
In the United Kingdom, the current jargon for management audit is value – for –money audit or V F M, for short. This means, value – for –money (VFM) audit is in a way synonymous to management audit. Asechemie (199:342) see value – for –money audit “as an investigation into the relationship between cost and achievement organization.”
The most desirable relationship between cost and achievement is dependent on the three criteria – economy, efficiency and effectiveness. Wes wick’s (1987) operated the three E’s. He gives economy as a relationship between standard input costs and actual input cost of an organization or programmers. Efficiency as a relationship between processing capability or optimal output and standard input costs. And effectiveness as a relationship between a achieved output and optimal output.
The above mentioned concept can be expressed mathematically as follows:
ECONOMY = standard input cost Actual input cost Effectiveness = standard output Standard output
V FM = Actual output Actual input cost
These variables are very difficult to measure and the effort to measure them has sometime appeared to be the primary objection rather than seeking a deeper understanding of the forces in the operation of the organization, for enhancing management performance. Asechemie (1999:342), MC Sweeney (1985:25) has been led in this regard to write, but V F M theory largely neglects relies the rich insights that can be found from these diverse sources and instead relies on what is, despite the emphatic way it is asserted, a dry and mechanical view of organization. He therefore, proposes a more selective use of method assessment of programmer performance based on the characteristic of the programmer along four dimensions of”
(i) Ambiguity
(ii) Measurability of outputs
(iii) Clarity of the causal link between output and acts of intervention by management
(iv) Repetitiveness of the activity undertaken.
However, programmers that lead themselves to the quantities approach are those with unambiguous objectives measurable subjects, known causal link, and repetitive activity. Other s would require varying degrees of adoption of quantities approaches.
As an indication of the practical aspects of value – for – money, it is worth while nothing the report by Horwath (1985) of the approach adopted by a Manchester-based firm of accountants – Armistice and Norton.
A value – for –money project involves the following steps
1. Forming a project team that is multidisciplinary, possibly including a representative of the firm, the client organization.
2. Carrying out an initial review covering:
(i) Discussion with senior office of the client organization about problems and solutions.
(ii) In-depth consideration of statistical information so that the performance of the client organization can be compared to others. This initial review should provide a broad overview of the area of concern, and indication of the focal point to the client.
3. Determination of the level of man-day to be committed to the project and the terms of reference to be proposed.
4. Agreement of term of reference with the client
5. Study core encompassing:
(i) Collecting (entreating)data
(ii) Analysis of data
(iii) Determination of best practice
(iv) Recommendation
2.2 VALUE –FOR – MONEY AUDIT AND THE CIVIL SERVICE
The civil is the bedrock of the executive arm of government, its main tasks are implementing and execution of the policies decided by the government. Accomplishing this task, civil service involves in formulation of policy and advising generally on policy matters. They are also responsible for the management of the machinery of government and carrying out the day-to-day duties that public administration demand, such as providing basic needs of the mass of the people.
One unique role of the civil service is that stand for continuity of policy as far as it is possible under any government. Infect, public service traditionally have been setup with express purpose of satisfying some specific facets of the citizens need, examples include health care education, electricity, good network of new roads, transportation and any others. Government units are primary engaged in supplying general public service which are largely financed through tax and levels, therefore government concerns itself with control of these funds, rather than with production of product for sale in the market at a profit.
The government collection of huge sums of revenue that came in form of tax from her citizen’s aids to facilitation the, machinery of governances. This tax is collected in different ways; viz :personal income tax petroleum profit tax, development levy, entertainment taxes, pools and casino taxes, value added tax. Its flexibility, which over the years, have been an important source of revenue to the rivers state government.
Despite its flexibility, ever year, rivers state government like other states in the federation prepare budget for each financial year. The government tax record show that the budget revenue target from these sources of revenue is not always attained. Unfortunately, the government has to cope with the problem of achieving her set objectives or goals. These objectives are not fully realized due to the inefficiency of our tax administration. According to Vincent (1986:82), the current economic problems in which the country finds herself was caused by the sudden neglect of agriculture (which would have been important source of revenue) at the emergence of the oil boom and the gross mismanagement of the nation’s economic sources. This has in effect forced the federal, state and local government to look inward for internally generated revenue.
It was against this background that Olusoal Adekanola and company found opportunity to offer themselves for service under the auspices of Accelerated Revenue Generated Programmer (ARGP) to help the state generate more revenue than it was earning then, to prosecute the various programmer of the state. A commission of 10% of the incremental monthly revenue generated contract was entered into. Apart from this, a specified amount not disclosed is to disclose is to be paid to them “professional fees” to cover their accommodation and transportation facilities.
Now the question is been asked, is it economical, effective, and efficient in contracting a revenue consultant or the collection of revenue in the states? With a view to answering these question some critics even argue that “if half of what the tax consultant was collecting as their fee was given to the board of internal revenue (BIR) to re-structure itself (ie employing competent manpower, motivate them by paying them better salary with good condition of service) the outcome would not have been very different, if not the same. Hence was concluded that such measure is not an economy means for the collection of revenue in the state. It was in this haze of conflicting opinions and petition that decree 18 and 21 of 1998 were promulgated by the federal government of Nigeria, proscribing the use of revenue consultants by state and local government.
However, if value –for –money audit is to be achieved in the public service, it should start from the internal audit sections of government departments. This is so because they carry out what is called “pre-audit”. Pre-audit is the examination of transaction before payment. Howard(1973) defined internal audit as follows: internal auditing is an independent appraised activity within an organization for the review of operation as a service to management. It is a managerial controls, which function by measuring and evaluating the effectiveness of other controls, he enumerated the objective as follows.
The objectives of internal auditing are to assist all member of management in the effective discharge of their responsibilities, by famishing them with analysis, appraisals, recommendation and pertinent concerning the activist reviewed.
2.3 EVALUATION OF THE THREE ELEMENT OF VALUE–FOR–MONEY AUDIT
The scope of the discussion here is to revenue generation
Economy –
In analyzing the impact of economy, two variables are of particular interest to us namely standard input cost and actual input cost. Operationally, standard input cost refers to what is budgeted to be expended in generating revenue for the period.
Assuming that the Rivers State Government has earn marked the sun of four million naira (N4,000,000) to the revenue consultant – Olusola Adekonola and company for the collection of monthly revenue of twenty million naira (N2,000,000), and ten million naira (N1,000,000) was expended on the process is it economical or equal to what was planned and budgeted? If yes or no, what is your view and recommendation?
In trying to answer the above question, we would look at it from two scenario, where we can convey the right ideology.
Scene 1
From the operational definition
Economy = standard input cost Actual input cost = N4,000.000 N10.000.000 = N0.4
This shows that it is not economical on the side of the Rivers State Government to embark on such contract. The government has exceeded or over short its budgeted allocation for revenue collection by six million Naira (N6, 000,000). In this case, I will advice the government to do away with the consultant and restructure the Board of internal revenue and give them the enablement to perform.
In the light of the second scenario, if Four Million Naira (N4, 000,000) or less was expended on the process of collection by the Board of Internal revenue following enablement given to them by government. It will go this way:
Scene 1
Economy = standard input cost Actual input cost = N4,000,000 N4,000,000 = N1.0
This shows that it is economical on the side of government to use the board of internal revenue, since the board has not exceeded or overshot its budgeted allocation for revenue collection.
However, for it to be economical actual input cost must be less than standard input cost.
EFFICIENCY:
In analyzing the impact of efficiency, two variables are of particular interest to us namely standard output and standard input cost.
Operationally, standard output refers to what is agreed to be generated for the period, while standard input cost refers to the amount to be expended on achieving the goal.
Assuming that the rivers state government has budgeted to realize the sum of twenty million naira (N20,000,000)from internally generated revenue through a revenue consultant, and four million naira (N4,000,00) was earn marked to be expended on achieving this goal? Is it efficient? If yes or no what is your recommendation?
In trying to answer the above question, we will look at it from two scenarios where we can convey the right ideology.
Scene 2
From the operational definition
Efficiency = standard output Standard input cost = N20,000,000 N 4,000,000
= N 5.0
This shows that the impact is efficient on the side of government since they can expend four million naira (N4, 000,000) to realize twenty million naira (N20,000,000) or (N16,million naira). The same is applicable if standard output is increasing at the expense of standard input cost or standard input cost is decreasing at the expense of standard output.
In the light of the second scenario, if fifteen million naira (N15,000,000) was expended by the consultant in generating revenue. It will go this way. Efficiency = standard output Standard input cost = N 20000000 N 150000000 = N 1.3
This show that the impact is not efficient on the side of the government for spending 15million to realize N20million to (N5million net)
EFFECTIVENESS:
In analyzing the impact of effectiveness, two variables are of particular interest to use namely actual output and standard output. Operationally, actual output refers to the physical amount generated, while standard output refers to expected estimation to be generated for the period.
Assuming that the Rivers State Government with a view to increasing its average monthly revenue of twenty million naira (N 20,000,000) contracted it out to Adekonola and company who promise to double the average monthly revenue (i.e. 40,000,000) and on the process 3omillion was realized. Is it effective? If yes or no, what is your reason?
Scene 1 From the operational definition Effectiveness = Actual output Standard input cost = N30,000,000 N20,000,000 = N1.5
This show that the impact is not effective because they were able to meet half of what was targeted. The same is applicable if the actual output is increasing at the expense of the standard output.
In the light of the second scenario, if eighteen million naira (N18,000,000) was realized on the process by the consultant, it will go this way. Effectiveness = actual output Standard input cost = N18000000 N20,000,000
= N1.9
This shows that the impact is not effective because they were unable to meet their target. The same is applicable, if the actual outputs decreasing at the expense of the standard output.
2.4 VALUE –FOR- MONEY AUDIT PROCEDURES
Chandler (1985:3-4) suggested that the following may be followed in auditing the three elements of value – for- money audit.
ECONOMY: The auditor must ascertain what steps the management has been taking to ensure that it acquires it manpower and material resources in the right quantity at the right price. Substantive test will have to be performed by comparing input cost with those of those of other units within the organization, or with the cost of similar organization. Investigation may be carried out with other supplier to see if materials could have been acquired more cheaply. Comparative figures may very through differences in costs of performances, local factor and so on.
EFFICIENCY: This is concerned with the relationship between inputs and outputs. It is difficult to measure output in the public sector. It has been suggested that “intermediate performance” could be used by measuring not overall quality of service but simply one aspect which can easily be quantifiably maintained. The auditor must assess whether management is using proper yard sticks by which to judge its performance.
EFFECTIVENESS: This is the highest level of value –for –money concept. For effectiveness to be judged the objectives must be quantified and spelt out then an agreed form of measurement applied to the actual performance to enable an intended versus actual comparison to be carried out. it is in this area that the auditor is likely to encounter most resistance because he may be perceived as commenting on management judgments and exercise of prerogative. As a result of this problem, the auditor and the audit agree on the basic principle that the management must be left to manage, thus avoiding the misunderstanding and suspicion that may occur.
2.5 LEGAL BASIS OF PUBLIC SECTOR AUDITING AUDIT ORDINANCE 1956
The first statutory authority for audit in Nigeria came in 1956 with the publication of the audit ordinance passed by parliament on April 1, 1957. The audit act section 7(1) states that
“The audit general for the federation shall enquire into and audit the account of all accounting officers and of all persons entrusted with the collection, receipt, custody, issue sales, transfer or delivery of any stamp securities, stores or other property of the government of the federation” The audit general of federation shall satisfy himself that
(a) All reasonable precaution have been taken to safe-guard the collection of federal public money and all direction or instruction relating there have been obeyed
(b) All money appropriated or otherwise disbursed have been expended and applied for the purpose or purposes for which the truant made by the legislature of the federation was intended to provided to and the expenditure conforms to the authority which governs it.
(c) Adequate regulations exist for the guidance of store keepers and store accountant and they are duly observed.
Sections 85(2) states that “the public account of the federation and of all officers and courts of the federation shall submit this reports to the national assembly or any person authorized by him in that behalf shall have access to the books, records, returns and other documents relating to those accounts” Section 85(6) also states that “in the exercise of his functions under this constitution, the auditor-general shall not be subject to the direction or control of any other authority or person. However, it is pertinent to mention here that throughout the history of Nigeria political and constitution processes, there is no legal basis for value-for –money auditing. This is confirmed by dean (1985) in his book Nigerian public sector “that” in Nigerian government, there is no statutory requirement for value- for-money auditing. But we recognize that the high level audit undertaken by the federal audit department is of this nature.
Decree 21 of 1998
Still on the same purpose with decree18,decree 21 was promulgated on September 30, 1998.
Section 2(1) state that “notwithstanding anything contained in the constitution of the federal republic of Nigeria 1979, as amended, or in any other enactment or low, no person, other than appropriate tax authority, shall assess or collect, on behalf of the government, any tax or levy used in the schedule to this decree, and members of the Nigeria police force only be used in accordance with the provision of the tax laws.
2.6 VALUE- FOR – MONEY AUDIT AND THE AUDITOR
For value –for-money audit to take its rightful place in the scheme of thing in the public sector, Winkler (1981) state that “an auditor must not limit the examination of activities on mechanical checks or accounting vouchers”. Auditor should extend their effort to the internally generated revenue process and its collection to check whether the entity in question has complied with relevant laws and regulations applicable to its programmers, projects and services. This will involve a study into the appropriate use of resources as well as the level of efficiency and soundness of the programmer.
He further stated that the auditor must consider the economy and efficiency of the programmer operation cost. Edet in support of Winkler, emphasized that “The auditor must look beyond the pure accounting functions” many important controls over the financial transaction of the department will normally operate outside the accounts branch and it is important that the auditor should review these. For example the authority for much expenditure will emanate from outside the accounts branch and the auditor may consider it necessary to examine the procedures for an control over such authorization. The auditor should not be subject to narrow restrictions. To be effective, his review must be comprehensive and wide ranging with access to all records and necessary for the conduct of the audit.
2.7 BENEFITS OF VALUE – FOR –MONEY AUDIT
1. It ensures that business in the public sector is carried out in an orderly and efficient manner.
2. It curbs extra-budgetary expenditure
3. It increases the revenue base of government
4. It foster social responsibility accounting
2.8 BARRIER TO THE INTRODUCTION OF VALUE – FOR – MONEY AUDIT
1. Information needed for value for money audit is very scanty, since management will not make all the facts available.
2. The parameter for the measurement of effectiveness of a project which is an essential of lack of statistical date.
3. Value – for –money audit might prompt the internal auditor to challenge some policy matters which are outside the realm of audit.
4. Recruitment of efficient people from different professions may not be easy because of poor salary and fringe benefits in public service.
2.9 SUMMARY
This chapter explains the impact of value – for – money audit in the public sector. It goes further to explain the various concepts that relate to this present field of study as described by various author of auditing and accountancy bodies. Apart from these views, opinion from past research work related to the present study is also given.
REFERENCE:
1. Asechemie, D.P.S(1999)Anatomy of public sector accounting in
Nigeria. Port Harcourt: sunray book limited
2. Baridam, D.M (1985) Research method in administrative sciences. Port Harcourt: paragraphics
3. Chandler, K.A (1985) “value-for-money auditing: its potential and
Problem” the charted association of certified accountant; student newsletter. December p.3-4
4. Dean, P.N (1985)financial management in the Nigeria public sector;
Pitman
5. Horwath, C. (1985) “value-for-money: A chartered firm’s view”. Certified accountant; April .p.24-25
6. Winkler,G.(1981) “Audit s of public works: thought on some practice
PUBLIC DOCUMENT
1. Audit ordinance 1956
2. Decree no 18 and no. 21 0f 1998
3. Constitution of the federal republic of Nigeria 1999
CHAPTER THREE
RESEARCH METHODOLOGY
3.0 INTRODUCTION
This chapter deals with the method used to acquire relevant data and analyzing same by using appropriate techniques. In this section, we are going to enumerate the various ways in which data for this work were collected. The data for our analysis were obtained mainly through primary and secondary sources. The statistical tool used for this work took the following procedures:
1. Research design
2. Data collection method
3. Questionnaire design
4. Data analysis and statistical tools
3.1 RESEARCH DESIGN
Research design is the framework or plan that is used as a guide in collecting and analyzing the data for a study. It is a model of proof that allows the researcher to draw inferences concerning causal relations among the variables under investigation.
In beginning the questionnaire, many factors were considered such as the ability to understand the questions, the level of people involved and their attitude relating to such matters.
The questionnaire contain question designed to elicit information on the impact of value – for – money audit in civil service.
Some precaution taken in designing the questionnaire includes:
a. Only relevant and straight to the point questions were asked.
b. Each question was asked In such a way as to make it understandable and answerable by the respondent.
c. The questions were adopted partially form the internal audit sections of government department and proper care pirate to the scope of the study.
In implanting these precautions and administration of the questionnaire, and introductory letter was designed and attached to each questionnaire. The letter introduces the researcher and the purpose of research.
TABLE 3.1 TABLE OF QUESTIONNAIRE DETAILS NO PERCENTAGE
No. of questionnaire issued 80 100%
No. of questionnaire return 78 97.5%
No. of questionnaire correctly completed 72 90%
No. of questionnaire correctly wrongly completed 6 10%
No. of questionnaire correctly to work with 72 100%
3.2 DATA COLLECTION METHODS
Both primary and secondary source of collection of data were used in the work. The primary data were collection mainly from the questionnaire and from personal interview with some of the respondents. Out of the (80) questionnaires distributed,(78) were of which (72) questionnaire were used as valid data for the purpose of analysis.
This secondary data, of course consist of references to reports. Newspaper publication and library visited and other books as well as journals.
3.3 DATA ANALYSIS TECHNIQUE
The major statistic technique used in the analysis of data collected in this research work is chi-square. In addition, percentages and frequency distribution were used especially in analyzing the response.
Chi-square is used to determine whether a set of “observed” frequencies differ so greatly from a set of “expected” frequencies so that the hypothesis under which the study was carried out will be tested and analyzed to know whether to accept or reject the hypothesis. The formula for chi-square is thus, X2 = (F0 – Fe)2 Fe
Where X2 = chi=square FO = observed frequency Fe = expected frequency = R(i).C(i) S
Where R(i) = sum totals of rows (i) C(i) = sum total of column (i) S = Gross total of row and column
The outcome of the above calculation would either confirm our null hypothesis resulting from the fact that the discrepancy between “fo” and “fe” is so small as could be attributed to chance. Another important consideration in the use of chi-square is the assumption of a certain level of confidence or margin of error. In addition of freedom which is characteristic of the use chi-square is also calculated thus. Degree of freedom (D.F) = number of cell in table number of to linear constraints on the expected frequencies. This can also be expressed as D.F =(r-i)(c-i).
The null hypothesis that will be used for this research is thus:
1. There is no significant relationship between value-for-money audit and employee’s attitude to work in the civil service.
2. There is no significant relationship between value-for-money audit and the level of employee’s performance in the public sector.
3. There is no significant relationship between value-for-money audit and the level of accountability in the public sector.
In determining the existence of correlation or relationship of the null hypothesis, we therefore conclude that the test is a two-tailed test. For a two-tailed test (i.e. a test with the alternative hypothesis given as (HA). The critical region is divided so as to fall in the extreme left and right tail of the standard normal curve. For a two-tailed least at x = 0.05, the rejection region has an area of (x/2+x/2) = 0.025 +0.025 = 0.05. Each area of size 0.025 is located at both tails of the standard normal curve.
3.4 DECISION RULE IN THE USE OF CHI – SQUARE
Two sets of figure are relevant to decision making using chi-square. These are the calculated chi-square value and the critical value which usually given in the X2 table. Using the two then, if calculated X2 is greater than X2 critical value, the null hypothesis is rejected on the other hand, accept the null hypothesis (Ho). If the calculated value is equal or less then X2 critical value.
Thus
Accept Ho; the X2 cal X2 tab
Reject Ho; if X2 cal X2 tab
3.5 SUMMARY
This chapter dealt with the methodology of carrying out this study. It equally touched on the research design in which the type research and techniques employed were discussed. The data collected and method employed in their collection were also clearly explained. The statistical methods used in analyzing the result of the information are the percentage and chi-square method coupled with the definition of key relationship.
Finally, total of (80) questionnaires were distributed to respondent, (78) were returned of which (72) questionnaires were used as valid data for the purpose of this research project.
REFERENCE:
1. Aham, A (1994) data collection and analysis: a practical guide:
Avan global publication
2. Nachimas, D & nachimas, C(1976) research method in the social
Sciences, New York: st matins press.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
1.0 INTRODUCTION
The researcher usually collects data in order to predict or make inferences about some preconceived notion that he or she had concerning the population from which the data were collected.
The purpose of statistical testing is to draw inference on hypothesis and to estimate the population parameter. Statistical inference, therefore, confirms the preconceived notion that the researcher had about the situation, (Baridam, 1995:130).
This chapter therefore will feature the presentation and analysis of data collected during the field work. This is to enable us put our results in a clear and concise from.
1.1 DESECRIPTIVE ANALYSIS
The total number of questionnaire that were distributed were eighty (80) in number and only seventy-eight (78) were collected back showing a percentage recovery of 98 percent and this can be seen in table 4.1 TABLE 4.1 NUMBER OF QUESTIONNAIRE DISTRIBUTED AND NUMBER RECEIVED
NO. OF QUESTIONNAIRE DISTRIBUTED NO. OF QUESTIONNAIRE PERCENTAGE RECEIVED 80 78 98 1.1.1 EDITING OF THE QUESTIONNAIRE
By editing of questionnaire, this involves, an examination of the questionnaire to see that the question in the questionnaire were answered properly and to evaluate the reliability of the responses (Baridam, 1995: 119)
Along this line of thinking, the seventy-eight(78) questionnaire which were received, were checked to make sure that the questions were property filed and I then discovered that only seventy-two(72) questionnaire out of the seventy-eight (78)questionnaire could be use for the research analysis. TABLE 4.2 EDITED QUESTIONNAIRE
NO. OF QUESTIONNAIRE DISTRIBUTED NO. OF EDITED QUESTIONNAIRE RECEIVED PERCENTAGE OF EDITED QUESTIONNAIRE 80 72 90
4.2 INTEREPRETATION OF RESULTS AND DISCUSSION PERSONAL DATA:
The following table represents the person characteristics, the highest educational qualification of respondents.
TABLE 4.3A PERSONAL CHARACTERISTIC OF RESPONDENTS (SEX)
SEX NO. OF RESPONDENTS PERCENTAGE
Male 47 65
Female 25 35
Total 72 100
TABLE 4.3B PERSONAL CHARACTERISTICS OF RESPONDENTS (AGE)
AGE RANGE YEARS NO. OF RESPONDENTS PERCENTAGE
Below – 24yrs 8 11
25yrs – 34yrs 29 40
35yrs – 44yrs 27 38
45yrs & above 8 11
Total 72 100 Source: completed questionnaire
As could be seen from table 4.3A; 65% of the respondents are males, while 35% are females. Also from the table 4.3B, 11% of the respondents are below the age of 25years, while 40% and 38% of the respondents are between the ages of 25yrs to 34yrs and 35yrs – 44yrs respectively, and another 11% of the respondents are from 45yrs and above.
DESIGNATION NO. OF RESPONDENTS PERCENTAGE
Executive grade 21 29
Auditors grade 38 53
Audit clerks 13 18
Total 72 100
Source: completed questionnaire
The above table shows that 29% of the respondents were of executive grade, and 53% were of auditors grade while 18% were audit clerks.
TABLE 4.5: ACADEMIC QUALIFICATION OF RESPONDENTS
QUALIFICATION NO. OF RESPONDENTS PERCENTAGE
G.C.E / WASC 13 18
OND Accounting 11 15
HND Accounting 16 22
B.Sc Accounting 28 39
ACA 4 6
Total 72 100
Source: completed questionnaire
The above table shows that 18% of the respondent had GCE/WASC, 15.% and 22% had OND and HND respectively in Accounting, while 39% and 6% had B.Sc in Accounting and ACA respectively.
Table 4.6: WORKING EXPERIENCE OF RESPONDENTS IN AUDIT WORK How long have you worked with the department?
Answer to question 8: B in the questionnaire answers this question. WORKING EXPERIENCE (YEARS) NO. OF RESPONDENTS PERCENTAGE
1-5 years 28 39
6-10 years 24 33
11-15 years 11 15
16 years & above 9 13
Total 72 100
Source: completed questionnaire The question as to know how long have respondents worked with the Department shows that 39% of respondents have worked with the Department for between 1-5 years, while 33% and 15% have worked with the Department for between 6-10 years and 11-15 years respectively. Only 13% of the respondents have worked for 16 years and above.
Table 4.7: SAMPLING OF AWARENESS
Have you heard f he term value-for-money audit?
Answer to question 9 section: B in the questionnaire answers this question.
Option NO. OF RESPONDENTS PERCENTAGE
Yes 63 87
No 9 13
Total 72 100
Source: completed questionnaire
The question as to know whether respondent have hear of the term value-for-money audit show that 87 of the respondents says that they have heard of it, while 12 of the respondents says that they have not heard of it. The researcher concludes that value-for-money audit is not new or strange to those in the accounts and audit department in the civil service.
Table 4.8: Evaluation of value-for-money audit component
What does this concept connotes?
Answer to question 10 section: B in the questionnaire answers this question.
Option NO. OF RESPONDENTS PERCENTAGE
Economy, Efficiency, Effectiveness 64 89
Extravagancy, External, Efficiency 2 3
Effectiveness, Economy, External 3 4
Efficiency, Extravagancy, Economy 2 3
External, Effectiveness, Extravagancy 1 1
Total 72 100
Source: completed questionnaire
Table 4.8 shows that 89% of the respondents says that the concept connotes: Economy, Efficiency, Effectiveness; while 3%, 4%, 3% and 1% respectively of the respondents ticked component which doesn’t conform to value-for-money audit concept. The researcher concludes from the above analysis that the 3E’S Economy, Efficiency and Effectiveness are the accepted component of value-for-money audit concept.
Table 4.9: Evaluation of the use of value-for-money audit concept.
Has this concept been used in your department?
Answer to question 11 section: B in the questionnaire answers this question.
OPTION NO. OF RESPONDENTS PERCENTAGE
Yes 63 87
No 9 13
Total 72 100 Source: completed questionnaire
Table 4.9 shows that 87% of the respondents believed that the concept has been in use in their department, while 13% says it has not been used. The researcher concludes that the concept is been used in the department despite the fact that it is yet to have a legal backing.
Table 4.10: Evaluation of the practice of value-for-money audit concept.
How often do you practice this concept in your department?
Answer to question 12 section: B in the questionnaire answers this question.
OPTION NO. OF RESPONDENTS PERCENTAGE
Regularly 63 67
Intermittently 15 21
Non 9 12
Total 72 100
Source: completed questionnaire
Table 4.10 shows that 67% of the respondents says that these concept is practiced regularly in their department, and 21% says that these concept is practiced intermittently, while 12% says that it is not been practiced in their department. The researcher concluded from the analysis gotten that value-for-money audit is practiced on a regular basis in the departments.
Table 4.11 EVALUATION OF ATTITUDE TO WORK
Does this concept enhance your attitude to work?
Answer to question 13 section: B in the questionnaire answers this question.
OPTION NO. OF RESPONDENTS PERCENTAGE
Yes 63 87
No 9 13
Total 72 100
Source: completed questionnaire
Table 4.11 shows that 87% of the respondents says that the concept enhance their attitude to work, while 13% of the respondents says that the concept doesn’t enhance their attitude to work. The researcher concludes that, in respect to enhancement of attitude to work, it encourage staff/employee to adhere to relevant rules and regulations at all times to be dutiful and serve as an exemplary character for others to emulate.
Table 4.12: Evaluation of the degree of attitude to work if yes, to what extent does this concept enhance your attitude to work?
Answer to question 14 section: B in the questionnaire answers this question.
OPTION NO. OF RESPONDENTS PERCENTAGE
To a great extent 37 51
To a considerable extent 12 17
To a moderate extent 10 14
To a slight extent 4 6
Not at all 9 12
Total 72 100
Source: completed questionnaire Table 4.12 shows that 51% of the respondent says that the concept has enhanced their attitude to work: to a great extent, while 17% 14% and 6% respectively of the respondent says that the concept has enhanced their attitude to work. To a considerable extent; to a moderate extent respectively. Only 12% of the respondent says that the concept has not enhance their attitude to work.
TABLE 4.13: EVALUATION OF PERFORMANCE
Do budget holders prepare report to ascertain their actual budget versus budgeted income and expenditure?
Answer to question 15 section: B in the questionnaire answers this question.
OPTION NO. OF RESPONDENTS PERCENTAGE
Yes 63 87
No 9 13
Total 72 100
Source: completed questionnaire
The above table shows that 87% of the respondent says yes to the questions, while 13% of the respondent say no. The researcher concludes that this enables management to secure by individual action the objectives of the department’s policy and provides a firm basis for its revision.
TABLE 4.14: IDENTIFICATION OF SHORTFALL/WEAKNESS
Do budget holders called upon to explain any shortfall from budget by their superior?
Answer to question 17 section: B in the questionnaire answers this question.
OPTION NO. OF RESPONDENTS PERCENTAGE
Yes 63 100
No - -
Total 72 100
Source: completed questionnaire.
The above table shows that all the respondents says “yes” to the above question. The researcher concludes that the recognition of shortfall/weakness can enable management to make improvement on their policies and use it against any future occurrence.
TABLE 4.15 REVIEW OF PERFORMANCE Do plan evaluation frequently carried out by the department to review its performance annually
Answer to question 19 section. B in the questionnaire answers this question.
OPTION NO. OF RESPONDENTS PERCENTAGE
Yes 62 86
No 10 14
Total 72 100
Source: completed questionnaire
The above table shows that 86% of the respondents say “yes” to the above question, while 14% say no.
Table 4.16: Rating performance of the department
How would you rate the level of annual performance of the department? Answer to question 20 section: B in the questionnaire answers this question.
OPTION NO. OF RESPONDENTS PERCENTAGE
High 60 83
Low 12 17
Total 72 100
Source: completed questionnaire.
Table 4.16 shows that 83% of the respondent says that the performance of the department are high while 17% of the respondents says that it is low. The researcher concludes that, the analysis indicate that the civil service is performing up to expectation.
Table 4.17: Delegation of responsibility
Do the individual responsibilities of the top three levels of management defined in terms of the results to be achieved?
Answer to question 21 section: B in the questionnaire answers this question.
OPTION NO. OF RESPONDENTS PERCENTAGE
Yes 72 100
No - -
Total 72 100
Source: completed questionnaire.
The above table shows that the responsibilities says yes to the above question, meaning that the individual responsibilities of the top three levels of management are defined in term of the results to be achieved.
TABLE 4.18: ASSESSMENT OF RESPONSIBILITY
Do every individual manager or supervisor performance regularly assessed by his/her superior against the agreed results?
Answer to question 22 section: B in the questionnaire answers this question.
OPTION NO. OF RESPONDENTS PERCENTAGE
Yes 53 74
No 19 26
Total 72 100
Source: completed questionnaire
The above table shows that 74% of the respondents says “yes” to the above question, while 26% of the respondents say no.
Table 4.19: rating the performance of employees
How would you rate the level of performance of individual managers or supervisors?
Answer to question 23 section: B in the questionnaire answers this question.
OPTION NO. OF RESPONDENTS PERCENTAGE
High 62 86
10 - 14
Total 72 100
Source: completed questionnaire
The above table shows that 86% of the respondents says that the performance of individual managers or supervisors is high while 14% of the respondents says it is low. The researcher concludes that the employees in the respondents says it is low. The researcher concludes that the employees in the departments are working up to the expectation of their employers and tax payers.
Table 4.20: CAREER DEVELOPMENT PROSPECT Do training and development needs explicitly identified? Answer to question 24 of section: B in the questionnaire answers this question?
OPTION NO. OF RESPONDENTS PERCENTAGE
Yes 46 64
No 26 36
Total 72 100
Source: completed questionnaire
The above table shows that 64% of the respondents says yes that training and development needs are explicitly identified while 36% of the respondents says no. The researcher conclude that though training and development needs are explicitly identified, to compliment this kind gesture, staffs should be exposed to regular courses, seminars, working knowledge.
Table 4.21: Evaluation of career development Do any system for rewarding managers or supervisors who consistently achieve more than their planned results?
Answer to question 25 of section; B in the questionnaire answers this question.
OPTION NO. OF RESPONDENTS PERCENTAGE
Yes 72 100
No - -
Total 72 100
Source: completed questionnaire’ The above table shows that all respondents say yes to the above question. The researcher concludes that if such system of reward exists, it should come in the form of financial reward (basic and performance pay) and non-financial rewards (praise, prestige, promotion). He further concluded that such gesture should be continuously encouraged to ensure that employees are motivated adequately to increase their productivity.
Table 4.22: QUALIFICATION OF ACCOUNTING AND AUDITING SYSTEM IN THE CIVIL SYSTEM.
How would you qualify the present accounting and auditing system in the civil service as compared to the private sector?
Answer to question 26 of section; B in the questionnaire answers this question.
OPTION NO. OF RESPONDENTS PERCENTAGE
Flexible 10 14
Too-bureaucratic 62 86
Total 72 100
Source: completed questionnaire.
The above table shows that 14% of the respondents says that the present accounting and auditing system in the civil service is flexible as compared to the private sector while 86% of the respondent says it is too-bureaucratic.
Table 4.23: Detection of fraud and error
Should detection of fraud and error be part of the main objective of value-for-money audit?
Answer to question 28 of section; B in the questionnaire answers this question.
OPTION NO. OF RESPONDENTS PERCENTAGE
Yes 61 85
No 11 15
Total 72 100
Source: completed questionnaire
Table 34.23 above shows that 85% of the respondents says “yes” while 15% of eth respondents says no.
Table 4.24: Assessment of accountability
Research question three:
Value-for-money audit at present aim at confirming that tax payers money has been spent as authorized. Do you consider this adequate for true accountability?
OPTION NO. OF RESPONDENTS PERCENTAGE
Yes 61 85
No 11 15
Total 72 100
Source: completed questionnaire
Table 4.24 above shows that 85% of the respondents says “yes to the question while 15% of the respondents says no.
Table 4.25: Rating the level of accountability
How would you rate the present level of accountability in the civil service?
Answer to question 30 of section; B in the questionnaire answers this question.
OPTION NO. OF RESPONDENTS PERCENTAGE
High 61 85
Low 11 15
Total 72 100
Completed questionnaire
The above table shows that 85% of the respondent says it is high, while 15% of the respondents says it is low.
Table 4.26: CHECK AGAINST UNLAWFUL EXPENDITURE
Who is authorized to inquire as to whether a particular expenditure has been made in the most efficient manner?
Answer to question 31 of section; B in the questionnaire answers this question.
OPTION NO. OF RESPONDENTS PERCENTAGE
The auditor 69 96
The accountant - -
The audit committee 3 4
Total 72 100
Source: completed questionnaire
The above table shows that 96% of the respondents says that auditor is authorized to inquire as to whether a particular expenditure has been made in the most efficient manner, while 4% of the respondents say that it is the audit committee.
Table 4.27: Power to sanction against unlawful expenditure.
Would you recommend the extension of the rights of the director of audit to include the power of sanction against unlawful expenditure or loss?
Answer to question 32 of section; B in the questionnaire answers this question.
OPTION NO. OF RESPONDENTS PERCENTAGE
Yes 72 100
No - -
Total 72 100
Source: completed questionnaire.
The above table shows that all the respondents say “yes” to the question, indicating that they are in support of all the extension of the right of the director of audit to include the power of sanction against unlawful expenditure of loss.
Table 4.28: THE DEGREE OF BENEFIT OF VALUE-FOR-MONEY AUDIT TO THE CIVIL SERVICE.
To what extent do value-for-money audit beneficial to your department?
Answers to question 34 of section; B in the questionnaire answers this question.
OPTION NO. OF RESPONDENTS PERCENTAGE
To a great extent 49 68
To a considerable extent 15 21
To a moderate extent 8 11
Total 72 100 Source: completed questionnaire
The above table shows that 68% of the respondents says that the value-for-money audit is beneficial to them and their department; to a great extent, while 21% and 11% respectively of the respondents says it is beneficial to a considerable extent, and to moderate extent.
Table 4.29: Evaluation of obstacle to value-for-money audit
Do you foresee any obstacle in achieving this objective in the civil service? If yes, please indicate some of these obstacles
Answer to question 35 of section; B in the questionnaire answers this question.
OPTION NO. OF RESPONDENTS PERCENTAGE
a) All of the above
b) No legal backing Conflict of interest. Adequate time frame.
c) No legal backing Conflict of interest Lack of awareness
d) Conflict of interest Equal right Lack of awareness -
12
54
6 -
17
75
8 Total 72 100
Source: completed questionnaire.
The above table shows that 17% of the respondents says that b-option certify some of the obstacles that may hinder value-for-money audit in achieving its objective in the civil service, while 75% and 8% respectively of the respondent says that it is c-option and d-option.
The researcher concludes that c-option best describe some of the obstacles that might militate against the achievement of value-for-money audit in the civil service.
4.3 HYPOTHESIS TESTING
The objective here is to determine the significance of results obtained from sample data. In order to test a hypothesis, it is necessary to state it in the form of null (Ho) and alternative (Ha) hypothesis (Spiegel, 1972:209;211).
The null hypothesis is usually the opposite of what is to be detected and a rejection of this hypothesis mean an acceptance of the alternative hypothesis in all cases, it is assumed that the population from which the samples is drawn is normally distributed.
4.3.1 HYPOTHESIS ONE
Ho: there is no significance relationship between value-for-money audit and employee’s attitude to work in the civil service. 4.3.2 TESTING STATISTIC
The test statistic to be used for this hypothesis is the chi-square (X2) which is represented by the formula as X2 = ∑(Fo-Fe) Fe
Where X2 = chi-square Fo = observed frequency Fe = expected frequency = R(1) X c(i) S
Where R(i) = sum totals of rows (1) C(i) = sum total of column (1) S = gross total of rows and columns
TABLE 4.30: OBSERVED FREQUENCY
Question 13 of questionnaire
GRADE AUDITOR EXECUTIVE AUDIT CLERK TOTAL
OPTION
Yes 37 18 8 63
No 1 3 5 9 total 38 21 13 72 Computation of expected frequency from table 4.30
R(1) X c(i) = 63 X 38 = 33 S
Table 4.31: OBSERVED AND EXPECTED
Frequency of question 13 of questionnaire
GRADE AUDITOR EXECUTIVE AUDIT CLERK TOTAL % OF TOTAL
Options
Yes 37 33 18 18 8 11 63 87
No 1 5 3 3 5 2 9 13
Total 38 38 21 21 13 13 72 100
Computation of tabulated chi-square
Degree of freedom D.F = (R-1) (c-1)
From table 4.32
R = 2, c = 3
:. D.F = (2-1) (33-1) = 1X2 = 2
D.F = 2
Using the two-tailed test at 0.05 level of significance
i.e. cx/2 = 0.05 = -.25 2
X2 = 0.05 at D.F (2) = 7.37
Fig 4.1
DECISION RULE
Accept Ho; if the X2 cal7.37
CONCLUSION
The researcher therefore accepts the alternative hypothesis (HA); and rejects the null hypothesis; and concludes that there is a significant relationship between value-for-money audit and employee’s attitude to work in the civil service.
4.3.2 HYPOTHESIS TWO
Ho: there is no significant relationship between value-for-money audit and the level of employee’s performance in the civil service.
4.3.2.1 TEST STATISTICS The test statistic for hypothesis two is the chi-square (X2) Formula: As in hypothesis one above
Table 4.33: Observed frequency of question 23 of questionnaire
GRADE AUDITOR EXECUTIVE AUDIT CLERK TOTAL
OPTION
High 37 17 8 62
Low 1 4 5 10
Total 38 21 13 72
Computation of expected frequency from table 4.33 R(i) . C(i) = 63 X 38 = 33 S 72 Table 4.34: OBSERVED AND EXPECTED FREQUENCIES OF QUESTION 23 OF QUESTIONNAIRE
GRADE AUDITOR EXECUTIVE AUDIT CLERK TOTAL %OF TOTAL
Option fo fe fo fe fo fe
High 37 33 17 18 8 11 62 86
Low 1 5 4 3 5 2 10 14
Total 38 38 21 21 13 13 72 100 Table 4.35: computational table for calculating chi-square (X2) OPTION GRADE Fo Fe Fo-Fe (Fo-Fe)2 (Fo-Fe)2/Fe
High Auditor 37 33 4 16 1
High Executive 17 18 -1 1 0
High Audit clerk 8 11 -3 9 1
Low Auditor 1 5 -4 16 3
Low Executive 4 3 1 1 0
Low Audit clerk 5 2 3 9 5
Total 72 72 0 10
Computation of tabulated chi-square
Degree of freedom D.F = (R-1) (c-1)
From table 4.35
R = 2, C = 3
:. D.F = (2-1) (3-1) = 1 X 2 = 2 D.F = 2
Using the two-tailed test at 0.05 level of significance
i.e. cx/2 = 0.05 = 0.25 2
X2 = 0.025 at D.F(2) = 7.37
DECISION RULE
Accept Ho; if the X2 cal < X2 tab
Reject Ho; if the X2 cal > X2 tab
From the computation X2 cal = 10 X2 tab = 7,37 This means that X2 cal > X2 tab
i.e. 10 > 7.37
CONCLUSION the researcher therefore accept the alternative hypothesis (HA); and reject the null hypothesis; and concludes that there is a significant relationship between value-for-money audit and the level of employee’s performance in the civil service.
4.3.3 HYPOTHESIS THREE
Ho: there is no significant relationship between value-for-money audit and the level of accountability in the civil service.
4.3.3.1 TEST STATISTIC
The statistic for hypothesis three is the chi-square (X2)
Formula: as in hypothesis one above.
Table 4.36: Observed frequency of question 30 of questionnaire
Grade Auditor Executive Audit clerk Total
Option
High 37 17 7 61
Low 1 4 6 11
Total 38 21 13 72
Computation of expected frequency from table 4.36 R(i) . C(i) = 61 X 38 = 32 S 72 Table 4.37: observed and expected frequencies of question 30 of questionnaire Grade Auditor Executive Audit clerk Total %of Total
Option fo Fe fo fe fo fe
High 37 32 17 18 7 11 61 85
Low 1 6 4 3 6 2 11 15
Total 38 38 21 21 13 13 72 100
TABLE 4.38: COMPUTATIONAL TABLE FOR CALCULATING CHI-SQUARE (X2)
Options Grade fo fe fo-fe (fo-fe)2 (fo-fe)2 /fe
High Auditor 37 32 5 25 1
High Executive 17 18 -2 1 0
High Audit clerk 7 11 -4 16 2
Low Auditor 1 6 -5 25 4
Low Executive 4 3 1 1 0
Low Audit clerk 6 2 4 16 8
Total 72 72 0 15
Computation of tabulated chi-square
Degree of freedom D.F = (R-1) (c-1)
From table 4.38
R=2, c=3
:. D.F = (2-1) (3-1) = 1 X 2 = 2
D.F = 2
Using the two-tailed test at 0.05 level of significance
i.e. cx/2 = 0.05 = 0.25 2
X2 = 0.02 at d.f(2)
DECISION RULE
Accept Ho; if the X2 cal < X2 tab
Reject Ho; if the X2 cal > X2 tab
From the computation X2 cal = 15 X2 tab = 7.37
This means that X2 cal > X2 tab
i.e. 15 > 7.37
CONCLUSION
The researcher therefore accept the alternative hypothesis (HA); and reject the null hypothesis; and conclude that there is a significant relationship between value-for-money audit and the level of employee’s performance in the civil service.
CHAPTER FIVE
DISCUSSION, CONCLUSION AND RECOMMENDATION
5.0 INTRODUCTION
This chapter is based on the discussion of the research findings derived from the analysis of data. This is followed by conclusion and recommendations, based on the results of the hypothesis tested.
Finally, the chapter will make suggestion of relevant areas based on the research findings. 5.1 DISCUSSION OF RESEARCH FINDINGS
This project was undertaken with a view to determine the impact of value-for-money audit and public sector performance. In doing this, the researcher tried to reveal the following findings.
Majority of the respondent responded that they have heard of the team value-for-money audit as this concept connotes: Economy; Efficiency and Effectiveness. This concept have been in use and practiced in various departments which have in a way enhanced workers attitude to work.
Majority of the respondents also disclosed that they have achieved high level performance in their job. To achieve this feat of performance, there had been a regular report, monthly/ by-monthly by all budget holders. The individual responsibilities of the top three levels of management was defined in terms of the results to be achieved, and every individual managers or supervisors performance was regularly assessed by his/her superior against the agreed results, and training and development need had been explicitly identified. There is also a system for rewarding managers or supervisors who consistently achieve more than their planned results.
Majority of the respondent further disclosed that the present Accounting/Auditing System in the public sector is too bureaucratic as compared to what is obtained in the private sector. It is for this reason that most frauds committed in the civil service are hardly exposed while the culprits are still around. Against this backdrop, it then became imperative to include the detection of fraud and error, extravagant expenditure, failure to maximize receipt as part of the main objective of value-for-money audit. However, value-for-money audit at present aim at confirming that tax payers money has been spent as authorized, this is considered adequate for true accountability.
Moreover, to check against unlawful expenditure, the auditor is authorized to inquire as to whether a particular expenditure has been made in the most efficient manner, while all the respondent recommend the extension of the rights of the Director of Audit to include the power of sanction against unlawful expenditure of loss.
A sizeable proportion of the respondent admitted that value-for-money audit is beneficial to their department to a great extent, though no l;egal backing; conflict of interest, lack of awareness and etc are some of the obstacle that may jeopardize the smooth operation and implementation of value-for-money audit in public sector. 5.2 CONCLUSION
In view of the findings and discussion in this study, the following conclusions have been reached.
The introduction of value-for-money audit in the Rivers state Civil Service in recent time has recorded significant achievement.
It has in a way enhanced employee attitude to work to a great extent, by so doing encourage them to adhere to relevant rules and regulations at all time; to be dutiful and serve as an exemplary character for others to emulate.
It has also increase the level of performance, by this, the fulfillment in the area of public responsibility is highly intangible and difficult to measure. Included are contributions to the life of the community in form of service supplied for community activities. Standard of performance in this case are not readily expressed in quantitative terms. Consequently, the result obtained in the area of public responsibility is appraised in terms of their broad contribution to the public.
It has increased the level of accountability such that most fraud committed in the public sector is exposed while the culprits are still around. It ensure that public fund “can only be” expended in the manner and over those areas which promote the overall public interest. The university accepted way to ensure that those funds are properly expended is through the impartial processes of value-for-money auditing whereby up to date records of property and transaction of government are vigorously drawn up and carefully inspected.
5.3 RECOMMENDATION Based on the findings of this study:
a.) The Audit Act of 1956 and the constitution of the Federal Republic of Nigeria 1999 should be amended to specifically provide for the utilization of value-for-money audit in public sector, as it is in developed countries like the United States, Canada, Sweden, etc. b.) In the amended Audit Act, there should be included the power for the auditor-general to audit the books of contractors and any other records concerning public expenditure.
c.) The office of the Federal Audit Department should issue a sort of guidelines to all civil service to carry out value-for-money audit.
d.) Employee should be adequately remunerated and provide with necessary incentives to enhance their performance.
e.) Employee should be exposed to regular courses, seminars, workshops and symposia to up date their working knowledge.
f.) The culture of annual review of performance against plan for the department as a whole should be encouraged.
g.) The Director of Audit should be given the power to primary sanctions under the audit to surcharge any public officer who fails to give answer to any audit query within the specified period. He should also be made to recover unlawful expenditures or loss even when the officer concerned has left he service.
h.) Value-for-money audit should be incorporated into the state audit laws as this will go further than compliance audit and reports directly on the economy, efficiency and effectiveness with respect to its objectives.
i.) The internal auditor should find ways to ensuring that his recommendations are favoured by management. This is very important since neglect of recommendation by management implies that not much use is being made of the internal auditors in promoting the efficient attainment of the civil service.
5.4 SUMMARY
In recent years, government activities have increased in size and complexity: there have been cases of fraud and embezzlement in alarming proportions. Cases of projects being abandoned after full payments have been made are also common news. The using of inferior materials for government projects is also very common. The payment of salaries to ghost workers is also in the increase while cases of overstating of contract is not left out.
To curb, these excesses, the researcher believes that the introduction of value-for-money audit in the civil service will help to curb these excesses. The researcher advocates that value-for-money audit should be introduced from the grass-root, that is from the internal audit section of government department. If this method is adopted, millions of naira leaking from government coffers will be saved.
The Federal Audit Department should issue guidelines to the departments in order to carryout value-for-money audit in the civil service.
The earlier the government recognizes the need for value-for-money audit, the better for the entire country. This should be introduced in the civil service without delay or second thought. It should also be embodied both in the Audit Act of 1956 and the constitution of the Federal Republic of Nigeria 1999 which presently in a state of review and amendment.
BIBLIOGRAPHY
1. Asechemie, D.P.S. (1999) Anatomy of Public sector Accounting in Nigeria. Port Harcourt: Sunray Books Limited.
2. Aham, A. (1994) Data collection and analysis: A practical guide. Avan Global Publication.
3. Baridam, D.M. (1995) Research methods in administrative science. Port Harcourt Paragraphics.
4. Chandler, K.A. (1985) “value-for-money auditing: Its potentials and problems” The chartered associations of certified accountants: Students News Letter. December 1985.
5. Dean P.N. (1985) Financial Management in the Nigeria Public Sector; Pitman.
6. Fiakpa, L. (1999) “The looting of Lagos State” Tell Magazine May 24, 1999.
7. Horwath, C. (1985) “Value-for-money: A chartered Firm’s View”. Certified Accountant: April 1985.
8. Ibezue, (1986) “Accountability and Social Objectives”. Business Times, March 31, 1986.
9. Mc Sweeney B. (1985) “Does the theory Accord with municipal practice”. Certified Accountant” April 1985.
10. Okezie, M.R. (1992) “Theory and principles of statistics, New York: McGraw Hall Book Company.
11. Spiegal, M.R. (1992) “Theory and principles of statistics, New York: McGraw-Hall Book Company.
12. Uchendu, A.I. (1987) “Problem of Public Enterprise Management in Nigeria” M.B.A. Thesis, University of Port Harcourt.
13. Wets Wick, C. (1987) “Relevance of Ratio” Certified Accountant; March 1987.
14. Winkler, G. (1981) “Audit of public works: Thoughts on some practical aspects” International Journal of Government Auditing.
PUBLIC DOCUMENTS
15. Audit Commission (1983)
16. Constitution of the Federal Republic of Nigeria (1999)
17. Decree No. 18 and No. 21 of 1998.
APPENDIX 1
RESEARCH QUESTIONNAIRE
Department of Accounting
School of Management Science
Rivers state polytechnic
Bori.
Dear respondent,
COMPLETION OF RESEARCH QUESTIONNAIRE
I am conducting a research on the topic “Value-for-money audit and public sector performance”, (A case study of Rivers State Civil Service). In view of your position in the civil service, I consider it best to collect information from you through this questionnaire which will help me carry out the study successfully.
The information sought in this questionnaire is purely for academic purpose. Please be assured that your response(s) will be kept confidential.
Thank you for your co-operation.
Yours faithfully,
OLLORONWI SILAS K.
QUESTIONNAIRE
Please tick appropriate box
SECTION A: PERSONAL PROFILE
1. Name: ……………………………………………………………………
2. Sex: (a) Male (b) Female
3. Age: (a) 1-24yrs (b) 25-34yrs (c) 35-44yrs
(d) 45yrs and above
4. Marital status: (a) Married (b) Single (c) Widowed
(d) Divorced
5. Department of the respondent:
(a) Accounts Department
(b) Audit Department
6. Official designation of respondent:
(a) Executive grade
(b) Auditors grade
(c) Audit clerk
7. Academic qualification:
(a) A.C.A.
(b) B.Sc Accounting
(c) H.N.D. Accounting
(d) O.N.D. Accounting
(e) G.C.E. / WASC
SECTION B: VALUE-FOR-MONEY AUDIT
8. How long have you worked with the department
(a) 1-5yrs (b) 6-10yrs (c) 11-15yrs (d)16yrs and above.
9. Have you heard of the team value-for-money audit?
(a) Yes (b) No
10. If yes, what does this concept connotes?
(a) Economy, Efficiency, Effectiveness
(b) Extravagancy, External, Efficiency
(c) Effectiveness, Economy, External
(d) Efficiency, Extravagancy, Economy
(e) External, Effectiveness, Extravagancy
11. Has this concept been used in your department?
(a) Yes (b) No
12. How often do you practice this concept in your department?
(a) Regularly (b) Intermittently (c) Non
13. Does this concept enhance your attitude to work?
(a) Yes (b) No
14. If yes, to what extent does this concept enhance your attitude to work?
(a) To a great extent
(b) To a considerable extent
(c) To a moderate extent
(d) To a slight extent
15. Do budget holder prepare report to ascertain their actual budget versus budgeted income and expenditure?
(a) Yes (b) No
16. Does this identify source of variance?
(a) Yes (b) No
17. Do budget holders called upon to explain any shortfall from budget by their superior?
(a) Yes (b) No
18. Do performance report submitted by the departmental head to members regularly during the year (e.g. quarterly)?
(a) Yes (b) No
19. Do plan evaluation frequently carried out by the department to review it performance annually
(a) Yes (b) No
20. How would you rate the level of annual performance of department achieved?
(a) High (b) Low
21. Do the individual responsibilities of the three levels of management defined in terms of the results to be achieved?
(a) Yes (b) No
22. Do every individual managers or supervisors performance regularly assessed by his/her superior against the agreed results?
(a) Yes (b) No
23. How would you rate the level of individual managers or supervisors performance against results?
(a) High (b) Low
24. Do training and development needs explicitly identified?
(a) Yes (b) No
25. Do they have any system for rewarding managers or supervisors who consistently achieve more than their planned result?
(a) Yes (b) No
26. How would you qualify the present accounting/auditing system in the civil service as compared to the private sector?
(a) Flexible (b) Too-Bureaucratic
27. What do you think is responsible for lack of accountability in the civil service?
(a) Poor accounting and auditing system
(b) Poor remuneration of officers
(c) Self interest on the part of public officers
(d) Others…………………………………………………………………
28. Should detection of fraud and error be part of the main objective of value-for-money audit?
(a) Yes (b) No
29. Value-for-money audit at present aim at confirming that tax payers money has been spent as authorized. Do you consider this adequate for true accountability?
(a) Yes (b) No
30. How would you rate the level of accountability in the civil service?
(a) Yes (b) No
31. Who is authorized to inquire as to whether a particular expenditure has been made in the most efficient manner?
(a) The auditor
(b) The accountant
(c) The audit committee
32. Would you recommend the extension of the rights of the directors of audit to include the power of sanction against unlawful expenditure or loss?
(a) Yes (b) No
33. Do you agree or disagree that your department have achieved its goal?
(a) Strongly agree
(b) Strongly disagree
(c) Agree
(d) Disagree
34. To what extent do value-for-money audit beneficial to your department?
(a) To a great extent
(b) To a considerable extent
(c) To a moderate extent
(d) To a slight extent
(e) Not at all
35. Do you foresee any obstacle in achieving this objective in civil service?
(a) Yes (b) No
36. If yes, please indicate some of these obstacles?
(i) No legal backing
(ii) Conflict of interest
(iii) Adequate tine frame
(iv) Equal right
(v) Lack of awareness
(vi) All of the above
(a) vii (b) i, ii, iii
(c) i, ii, v (d) ii, iv, v
THE IMPACT OF VALUE-FOR-MONEY
AUDIT AND PUBLIC SECTOR PERFORMANCE:
(A CASE STUDY OF RIVERS STATE CIVIL SERVICE)
BY
OLLORNWI SILAS KAA
NM10/0039
A PROJECT REPORT SUBMITTED TO THE DEPARTMENT OF ACCOUNTING, SCHOOL OF MANAGEMENT SCIENCE IN PARTIAL FULFILLMENT OF THE AWARD OF NATIONAL DIPLOMA (ND) RIVERS STATE POLYTECHNIC, P. M. B 20 BORI.
OCTOBER, 2012
DECLARATION
I hereby solemnly declare that the research was empirically carried out by me in earnest, in fulfillment of the requirement for the award of N.D of the department of accounting, school of management science, Rivers State polytechnic.
All materials consulted were adequately reference
Name: OLLORNWI SILAS KAA
Signature:
Date: October, 2012
CERTIFICATION
RIVERS STATE POLYTECHNIC
SCHOOL OF MANAGEMENT SCIENCES
TITLE OF PROJECT: VALUE-FOR-MONEY AUDIT AND PUBLIC SECTOR PERFORMANCE. (A CASE STUDY OF RIVERS STATE CIVIL SERVICE)
BY
OLLORNWI SILAS KAA
NM10/0039
DEPARTMENT OF ACCOUNTING
DECLARATION: The board of examiners declares as follows:
That this is the original work of the candidate.
That the project is accepted in partial fulfillment for the award of N.D
Signature ……………..………..………. Date……………………………
MR. CHARLES OKORO
(Supervisor)
Signature:……………………………..…. Date:……………………………
IDORNIGIE .A. GABRIEL
(HOD)
This book is dedicated to my lord and personal saviour Jesus Christ “the author and finisher if my faith”.
ABSTRACT
Owing to the growing demand by tax payers for better and more efficient management of resources by government, the present study attempts to help out by investigating the impact of value-for-money audit and public sector performance.
In order to achieve the objective of the study a survey questionnaire carrying thirty six (36) questions was prepared to elicit responses. The respondents were seventy two (72) individuals drawn from the Rivers state Civil Service. The data collected from the survey were analyzed and the hypotheses were tested empirically using the statistical instrument Chi-square (X2) and percentages.
The alternative hypotheses were all accepted because they met the decision rule stated. The test shows that, value-for-money audit enhance employees attitude to work; it increase the level of performance and also instill high level of accountability in civil service.
The researcher is of the opinion that if value-for-money audit is to be achieved, it should start from the internal audit sectors of government department. The researcher is also of the view that since value-for-money audit is associated with economy, efficiency and effective use of resources, it is best audit approach to meet the desired and unforeseen challenges in the civil service.
ACKNOWLEDGEMENT
First and foremost, I express my profound gratitude to the Almighty God, for this grace and guidance throughout my career in the university. Is infinite mercies granted me strength, fortitude, wisdom and understanding in all my endeavors.
Secondly, the credit goes to my humble, accessible and painstaking supervisor, Mr. Charles Okoro whose supervisory tutelage, I have undergone. His painstaking supervisory method produces creativity, originality and qualitative presentation of research work.
I also acknowledge the contribution of Mr. DAVIES, S.D. (ACA) , MR IGBARA NEEKA,MICHACL .T. BARIGBON and GDEREGDE FERRY BANNEKA (ACA), whose lectures in accounting rudiment have pieced through my bone marrows. I further commend his dedication to duties, especially in punctuality to lecture classes to ensure that the students enjoy the full value of the educational investments.
I wish to express my sincere thanks to all my lecturers in the school of management science particularly those in the department of accounting that I have benefited from in one way or the other.
I also wish to thank my parent Mr. and Mrs. GABRIEL OLLORNWI KAA for their encouragement, understanding, moral and financial support.
Further more I am grateful to my sister, brother Honourgod, Winner and a lovely friend Wuche Helen.
TABLE OF CONTENT
Declaration ……………………………………………………………………………i
Certification …………………………………………………………………………..ii
Dedication ……………………………………………………………………………iii
Abstract ……………………………………………………………………………....iv
Acknowledgement …………………………………………………………………...v
Table of content …………………………………………………………….…...vi-viii
CHAPTER ONE: INTRODUCTION
1.0 Context of the problem:…………………………………………………….1-4
1.1 Statement of the problem:…………………………………………………4
1.2 Purpose of the study:………………………………………………………4-5
1.3 Research question:………………………………..………………………….5
1.4 Statement of hypothesis:……………………………………………………..5
1.5 Operation definition of terms:……………………………………………...6
1.6 Significance of the study:………………………………………………..…6-7
1.7 Scope of the study…………………………………………………………….8
1.8 Limitations of the study……………………………………………………….8 References……………………………………………………………………9
Chapter two: literature review
2.0 Introduction…………………………………………………………………...10
2.1 Value-for-money audit concept…………………………………………11-13
2.2 Value-for-money audit and the civil service…………………………...13-16
2.3 Evaluation of the three element of value-for-money audit…………..16-20
2.4 Value-for-money audit procedures……………………………………..20-21
2.5 Legal basis of public sector auditing audit ordinance 1956…………21-23
2.6 Value-for-money audit and the auditor………………………………23-24
2.7 Benefits of value-for-money audit………………………………………….24
2.8 Barrier to the introduction of value-for-money audit……………………...24
2.9 Summary…………………………………………………………………….24 References……………………………………………………………………25
Chapter three: research methodology
3.0 Introduction…………………………………………………………………...26
3.1 Research design…………………………………………………………26-27
3.2 Data collection method……………………………………………….27-28
3.3 Data analysis technique………………………………………………...28-29
3.4 Decision rule in the use of chi-square………………..……………29-3O
3.5 Summary……………………………………………………………………..30
References……………………………………………………………………30
Chapter four: data presentation
4.0 Introduction………………………………………………………………….31
4.1 Descriptive analysis……………………………………………………..31-32
4.2 Interpretation of results and discussion……………………………….32-48 4.3 Hypothesis testing……………………………………………………...48-56
