CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Internal audit is an independent, objective assurance and consulting activity designed

to add value and improve organization’s operations. It helps an organization to

accomplish its objectives by bringing a systematic, disciplined approach to evaluate

and improve the effectiveness of risk management, control and governance process”.

The new definition of internal audit represented a shift from a narrower role of

control and appraisal to encompass a broader role that would process improvement

framed against Most of the development in the internal audit has taken place in the

private sector. However, the public sector has also started realizing the importance of

this function. The public sector has seen several waves of thought. Soon after the

World War II, the rebuilding of war torn economies and developing the de-colonized

countries became the most important priority. Everyone was enthusiastic about

planning, import substitution and fixed exchange rate. The theory worked well for a

few years when it started showing constraints. The challenge of socialism and the

cold war concerns gave birth to large-scale nationalizations around the globe. The

size of government started bulging. The public sector became quite large. This gave

birth to the realization that public sector must perform in an environment of economy,

efficiency and effectiveness. Demands for performance measurement, and value for

money became prominent. Not satisfied with appropriate framework for performance

1
measurement and value for money auditing, the concerns about the efficiency of the

public sector remained vexing until a wave of privatization engulfed the entire world.

The privatization led to demands for proper regulation of the newly emerging

privatized enterprises. Along with this came a whole host of concerns for good

governance, transparency and accountability of the public sector. Internal audit had

been defined “as an independent appraisal function established within an organization

to examine and evaluate its activities as a service to the organization”. Internal

auditing is a process generally adopted towards ensuring and safeguarding of

resources and promoting operational efficiency in organizations. The responsibility

for effective internal auditing normally rest on the internal auditors who in turn rely a

great deal on the soundness and effectiveness of internal control system. The business

world is developing so in the complex nature of the organizations. This complexity of

modern organizations and hence the management has led to the much broader role at

the internal audit. The role of internal audit is fast moving from mere checking of

documents and physical duties to analyzing the ability of organization to react to

changing circumstances. Auditing for the public sector is aimed at prevention of

mistakes, shortcomings and misdeeds in the public administration. The internal audit

has become a good control measures that can foretell all the incidence of fraud and

misappropriation of fund in government ministries if properly put in place. Local

government is the third tier of government in Nigeria that is nearest to people at

grassroots. It is a structure which provides for the social services needed by the

2
people and also brings development and good governance to the grass root. The major

objective of establishing local government is for the development to thrive at the

grassroots level. Event at all level, controls have to be exercise over all aspect of the

government resources. All organizations whether profit oriented or not-for-profit

making operates within resource constraints. As a result, various forms of control are

taken and procedures established to ensure that the use of the resource is maximized

in achieving the organizations goals. Therefore, local government as an organization

also do incorporate into its accounting system all methods and forms of controls

which enable her to operate effectively and efficiently to achieve her targeted

objectives. Apart from the problems of scarce resources, local governments are

vulnerable to run a high rate of fraud, errors, misappropriation, and inefficient and

effective operations. Steps are required therefore, to minimize, if not eliminate

completely, these risk by establishing rules and regulations. For every local

government, there are risks that the local government goals and objectives may not be

achieved. All efforts aimed at preventing such risks, and/or identifying and

controlling such risk, are viewed as internal audit. Therefore, an effective internal

audit service should reduce overhead and identify ways to improve efficiency and

minimize losses which are essential elements for proper accountability.

Accountability is about adherence to management policies, safeguarding the assets

and securing as far as possible the completeness and accuracy of records. Since

proper constituted internal audit should asset towards all these. Our attempt is to

3
critically assess and properly locate the operational input of internal audit department

in the overall administration and management towards greater accountability.

1.2 STATEMENT OF THE PROBLEMS

The issue of local government finance has been a problem for every government; the

problems are in various forms ranging from limited sources of revenue to frequent

changes of the revenue allocation formula (Abubakar, 2010). Efforts in local

government reform in this country are well documented. The local government

council system in the country has undergone various stages of development and

reform, the other local government reform that followed that of 1976 were limited by

the successive administration of President Shehu Shagari, Major-General Muhammed

Buhari, General Ibrahim Babangida, General Sani Abacha, and General Abdusalami

Abubakar. In all these, the aim has been to make the local government system

achieve their objectives of establishment, which is to be efficient and effective in

developing the grass root. Despite the above steps to revamp the local government

system in Nigeria, local governments are still encountering problems of financial

mismanagement, accountability, ineffective and inefficient operations.

1.3 OBJECTIVES OF THE STUDY

The main objective of this study is to examine the internal audit as a tool for

enhancing accountability in Maiduguri metropolitan council. While, the specific

objectives are to;

i. Examine the various factors that militate against internal auditing from

4
 achieving its objectives

ii. Assess the effect of inadequate accountability on the development of local

government.

iii. examine the impact of internal audit to proper use of organizations funds and

assets.

iv. Ascertain whether perpetration of fraud and losses of Revenue in an

organization are as a result of weakness in internal audit system.

1.4 RESEARCH QUESTIONS

The following are adopted as the central research questions:

1. What are the factors that chits objectives?

2. How does inadequate accountability affect the development of local men?

3. To what extent does the internal audit measures impacts on appropriation of

organization. To what extent does perpetration of fraud and losses of Revenue

in an organization are as a result of weakness in the internal audit

1.5 RESEARCH HYPOTHESES

Ho: Internal audit does not enhance accountability in local government in Nigeria.

HI: Internal audit enhance accountability in local government in Nigeria.

1.6 SIGNIFICANCE OF THE STUDY

This research work is significance to the local government system, other researchers

and the general public as discussed below;

To The Local Government: It enhances accountability and how it affects the

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efficient operations of the local government and account for possible ways of

improving the internal audit and accountability.

To The Researchers: It is believed that this project will be of use to the researchers

reading accounting and audit and will serve as a reference point to those willing to

undertake a research in similar case study.

To The General Public: It will help in educating the masses especially at the grass-

root level, the importance of contributing to the development of the government by

promptly enhancing accountability on them. This is considered necessary as well as

eyes on local government of each state to see if they could improve the macro-

economic life of the inhabitant.

1.7 SCOPE OF THE STUDY

This research is limited to internal audit as a tool for enhancing accountability in

Maiduguri Metropolitan council. The project covered the period of year 2019 to 2020

within which the development of activities of Maiduguri metropolitan council was

assessed.

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 CHAPTER TWO

LITERATURE REVIEW

2.1 CONCEPTUAL ISSUES

2.1.1 Concept of Internal Audit

Internal audit is an independent appraisal function within an organization for the

review of the system of control and the quality of performance to the organization

(Millichamp, 2002). It therefore objectively examines, evaluates and reports to

management, on the adequacy of internal control as a contribution to the proper

economic, efficient and effective use of organizational resources. According to

Whillington (2004), internal auditing is an independent, objective assurance and

consulting activity designed to add value and improve an organizational operations.

Kabiru (2002) also view internal auditing as a responsibility of safeguarding the

assets and liabilities of the company and other services that will enhance the

efficiency and effectiveness of the operations of the company through review of

accounting systems, review of internal controls systems, review of the

implementation of the corporate policies, plans and procedures and possibly through

carrying out special investigations assigned by the company. Adeniyi (2004) defined

internal audit as an independent appraisal activity established within an organization

as a service to it. According to him, it is a control which functions by examining and

evaluating the adequacy and effectiveness of other controls. He further mentioned

that it is originally concerned with the financial records; the investigative techniques

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developed are now applied to the analysis of the effectiveness of all parts of an

entity’s operations and management. Nwankwo (2006) look at internal auditing as

independent appraisal activity within the organization, for the review of operations as

a service to management. According to him, it is a management control which

functions by measuring and evaluating the effectiveness of other control.

The scope and objectives of internal audit may vary widely and they are usually

determined by the management. According to Mayo BPP (1993), the scope and

objectives of the internal audit depend upon the responsibilities assigned to the

internal audit by the management, the size and structure of the enterprise and the

skills and experience of internal auditor. Millichamp (1993) identifies the following

as the broad areas of internal audit;

i. Review of accounting system and related internal controls,

ii. ii. Examination of financial and operating information for management

including detailed testing of transaction, balances and business processes,

iii. Review of the economy, the efficiency and effectiveness of operations and

the functioning of the non-financial controls,

iv. Review of the implementation status of organizational policies, plans and

procedures.

2.1.2 Nature and Scope of Auditing

The origin of audits dates from ancient times when the land owners allowed tenant

and farmers to work on their land, while the land owners themselves did not become

8
involved in the business of farming. The landowners relied upon overseers to the

account of stewardship given by the tenants (Adeniyi, 2004). In those days, the

receipts and payments of an establishment were read to the hearing of an individual

termed as the “auditor”. The word “auditor” was derived from the Latin verb

“Audire” which means “to hear” (Kola, 2007). In the early days of auditing, the prime

qualification for the position of auditor was reputation (ability to report and give

unbiased opinion on the truth and fairness of the financial statement). It is possible

to find evidence of audits of one form or another, going back over many centuries

with auditing, probably having its origin in the ancient Egypt. Auditing like the type

we have today began in sixteen-century Europe. The “Golden Age” of Elizabeth I,

witnessed a major development in international exploration and trade (Johnson,

2003). As commerce developed, it became common for the number of participation in

an enterprise to increase more significantly. Those who provide the financial backing

for a venture would often not be prepared to take any of the “physical risk” or endure

any of the “physical hardship” involved in it execution. In Nigerian, the companies

Act of 1968 can be regarded as the first comprehensive enactment to require all

incorporated companies to have their annual financial statement audited. Under

provision of the 1968 companies Act, the company’s auditor was required to examine

and report on the balance sheet, which the company presented to its shareholders

(Nwanku, 2006).

The 1968 companies Act was replaced by the companies and Allied Matter Act

9
(CAMA) 1990 as amended 2009 which equally required auditors of companies to

examine and report on the financial statement to be presented to the shareholders

(CAMA, 1990).

It has become increasingly common, and seen as a good practice to adopt effective

and efficient internal audit system and for organization to set-up internal audit

department and for the external auditor to alter their audit approach to take account of

the work of the internal audit. Internal auditor in a critical factor in determining the

quality of an organization‟s internal control, and its development has made a major

contribution to modern audit practice (Adeniyi, 2004).

According to Millichamp (2002), auditing is an exercise whose objectives is to enable

auditors to express an opinion whether the financial statement give a true and fair

view (or equivalent) of the entity’s affairs at the period end, and of its profits or loss

(or income and expenditure) for the period ended and have been properly prepared in

accordance with the applicable reporting framework. In his view, Taxmann‟s (2004),

had it that, audit is an exercise of examining the financial statement to enable the

auditor to express an opinion whether the financial statement are prepared, in all

material aspect, in accordance with an identified financial reporting frame work.

Messier (2003), view auditing as a systematic process of objectively obtaining and

evaluating evidence regarding assertions about economic actions and event to

ascertain the degree of correspondence between those assertions and published

criteria and communicating result to the interested users. Whittington and Pany,

10
(2004) on their part, view auditing as a process, which involves searching and

verifying the accounting records, and examining other evidence supporting the

financial statement. Adeniyi (2004), defined auditing as the independent examination

of/and expression of opinion on the financial statement of an enterprise by an auditor

in pursuance of their appointment and in compliance with any relevant statutory

obligations.

Auditing is an independent examination of the expression of an opinion on financial

statements of an enterprise by an appointed auditor, in accordance with his terms of

engagement and the observations of statutory regulations and professional

requirement (Kabiru, 2007). Awe (2008) defines auditing as an independent

examination of the books and accounts of an organization by a duly appointed person

to enable that person give an opinion as to whether the accounts give a true and fair

view and comply with relevant statutory guidelines. The American Accounting

Association (1971) in its Statement of Basic Auditing Concepts in Hayes et al. (1999)

described auditing as: a systematic process of objectively obtaining and evaluating

evidence regarding assertions about economic actions and events to ascertain the

degree of correspondence between these assertions and established criteria and

communicating the results to interested users.

Audits are typically classified into three types: Audits of financial statements,

operational audits and compliance audits. Audits of financial statements examines

financial statements to determine if they give a true and fair view or fairly present the

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financial statements in conformity with specified criteria (Adeniji, 2004; Okezie,

2008; Appah, 2011). Operational audit is a study of a specific unit of an organization

for the purpose of measuring its Performance. According to Hayes et al. (1999),

operational audits review all or part of the organization‟ operating procedures to

evaluate effectiveness and efficiency of the operation. Effectiveness is a measure of

the extent to which an organization achieves its goals and objectives. Efficiency

shows how well an organization uses its resources (Oshisami, 2004). Compliance

audit is review of an organizations procedure to determine whether the organization is

following specific procedures, rules or regulations set out by some higher authority.

According to Oshisami (2004), compliance audit provides examination of financial

statements, accounts and reports and their compliance with applicable regulations to

certify that: there are effective controls over revenue, expenditure, assets and

liabilities; there are proper accounting records of the resources, operations and

encumbrances; the accounting and financial reports are sufficiently accurate, reliable,

timely and useful and fairly represents the transactions, events and conditions

reported upon and applicable laws and regulations have been complied with.

Organization of Internal Audit In order for the internal audit section to enjoy some

degree of independence, it should be a separate unit, and not under the control of any

other department. Mayo BPP (1993) opined that the internal auditors should have full

right of access to records, assets and personal and should be able to obtain all

information and explanations required for the performance of his duties.

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Kola (2007) identified the requirement of an internal audit for the maintenance of

independence status as follows;

i. The audit section should be a separate section quite independent of

accounts. The chief internal auditor should be a person of high standing,

properly trained and experienced and should be responsible to high level of

management.

ii. The audit section may be informed and consulted about proposed changes

but should not be directly responsible for the development or

implementation of such system.

iii. The audit section should have direct access to all heads of department, chief

executives and/or management board.

iv. The chief internal auditor should have the right to report in his own name

without such report being edited.

v. Chief internal auditors should have right to report on any aspect of the

financial work, including that of the finance department.

2.1.4 Essential Elements of internal Auditing

Mittichamp (2002) identified the following as the essential elements of auditing:

i. Independence: though the internal auditors are employees of an organization, in

order to ensure that they are objective, their units must be independent not only of

finance department and must be accountable only to management.

ii. Staffing: the internal audit should have adequate and competent staff. The staff

13
 should possess relevant skills.

iii. Training: the internal auditors and internal audit should be well trained

iv. Relationships: the internal auditor is expected to foster a constructive

relationship with external auditors, audit committee, management etc.

v. Due care: just like external auditors, the internal auditor also owes a duty of

care and skills to the organization. He must demonstrate technical expertise,

honesty, probity and integrity.

vi.Planning, Controlling and Recording: the internal auditors are also expected to

plan, control and record their work.

vii. System controls: the internal auditors must verify all the operation of the

system by investigating, identification of the controls, and performance of

compliance test on the controls.

viii. Evidence: The internal auditor must obtain sufficient, relevant and reliable

evidence he requires to perform his functions.

ix. Reporting: since the internal auditor is equally accountable, he must produce

timely, accurate, reliable, understandable and comprehensive report to the

management.

2.1.5 Functions of Internal Audit

According to Thompson (2003), internal auditing should not be restricted to financial

transactions, he believe internal auditors can equally assist management by ensuring

that adequate financial and management controls have been implemented are

14
operating effectively or by identifying weaknesses in such systems and making

recommendations to towards the improvement. Thompson further posits that internal

audit ensure transparency and accountability and therefore, identified the following

major functions to be performed by it;

i. To ensure whether the individual or entity is managing and using his/it resources

prudently in order to achieve the desired result.

ii. To identify the causes of inefficiency, un-economical practices, or inability to

obtained desired result.

iii. To ascertain whether the entity has complied with laws and regulations

governing its operations.

iii. To find out whether the entity has actually considered several other plausible

alternatives, which might produce lower cost while that might produce lower cost

while achieving the some desired result.

iv. To find out whether there are serious violations of internal audit and policies.

2.1.5 Internal Control

According to Messier (2003), internal control is concerned with all measures used by

an organization for the purpose of safeguarding of its assets from waste, fraud, an

inefficiency to promote the accuracy and reliability in accounting operating data and

encourages compliances with the organizational policies. Internal control include not

only internal check and internal audit but all forms of control, financial and otherwise

established by the management in order to carry out the business of the enterprises in

15
an orderly and efficient manner, ensure adherence to management policies,

safeguarding the assets and secure as far as possible the completeness and accuracy of

the records (Taxmanns, 2004). The basic purpose of internal control is to promote the

efficiency of operations of an organization, the system of internal control consisting

measures employed by an organization.

2.1.6.1 Need for internal control

The information provided by the internal control enables management to control and

direct the enterprise. It keep management informed as whether the organization

policies are been carried out and whether the financial position is sound. Because

decisions of almost every part or section of the organization are based on accounting

data, those decisions overtime work or purchasing office supply to such major issues

as shift, from one product to another, or making a choice between make or buy

decision. The system of internal control provides assurance to management of the

dependability of the accounting data used in making these decisions. The audit

standard guidelines put forward some types of internal control system as follows;

i. Segregation of duties: this includes separation of duties, that the person

authorizing activity should not be the same person to approve it.

ii. Physical control: this is the custody of assets, and it involved procedures and

that, access to assets is limited to authorized person.

iii. Supervision and control: any system of internal control should include the

supervision by responsible official.

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 iv. Organization: Every organization should have an organizational

responsibility where every function specified by the chart must undertake

and be guided by a specified person at that level.

v. Authorization and approval: this means that all transactions should be

properly authorized and approved by the appropriate person.

vi. Arithmetic and accounting control: these are the control checks on the aspect

of transactions and recording process has been correctly done.

vii. Personal control: this is the control that enables the staff to have

responsibility which is equipped to their abilities and performance. The

proper functioning of any system depends on the integrity and competence

of those operating, their qualification, training, selection and also character

disposition should be taken into consideration when setting up internal

control system.

2.1.7 Financial Reporting

According to Adebayo (2005), financial reporting is the only way by which managers

of organizations give account of their stewardship to their owners and other

stakeholders. He further said financial reporting shall disclose in clear terms and

languages what resources are acquired and available, how they are utilized and

achieved results from such utilization. Also Obazee (2008) defined financial reporting

as the process of communication of financial information. Financial reporting is a key

source of information managers need to make informed choices about how to use

17
limited resources to best serve the interest of shareholders. Jenfa (2000) noted that the

objective of financial reporting was clearly defined in the True blood Report

published in New York in 1973. The report stated the basic objective as being, to

provide information useful for economic decisions. To this basic objective it now

adds the following additional objective:

i. To serve primarily those users who have limited authority, ability, or

resources to obtain information and who rely on financial statements as

their principal source of information about enterprise economic activities.

ii. To provide information useful to investors and creditors for predicting,

comparing and evaluating potential cash flows to them in terms of

amounts, timing and related uncertainty

iii. To provide users with information for predicting, comparing and

evaluating enterprise earning power

iv. To supply information useful in judging management’s ability to utilize

enterprise resources effectively in achieving the primary enterprise goal

v. To provide factual interpretation about transactions and other events

which is useful for predicting and comparing and evaluating earning

power

vi. To report on those activities of the enterprise affecting society which can

be determined and described or measured and which are important to the

role of the enterprise.

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The determination of the quality of financial report will depend significantly on the

objective s of the report. According to Rappaport (1964) in Mainoma (2002), there is

no clear understanding on the objective of financial reporting. That is why the extent

of reporting may differ. Gautier and Underdown (2001) stated that the failure to

establish a framework for financial reporting purposes is directly as a result of the

attitude of management. That the report is prepared and presented, you either take it

or leave it. It is not even absence of the framework that is the major problem, but to

establish a framework may be difficult because the users of financial information

vary. Rappaport (1964) in Mainoma (2002) however posit that a financial statement

should serve four main purposes. That financial information should cater for

external users‟ needs like the potential investor, consumers, suppliers and the local

communities. That it should also satisfy the needs of the shareholders by way of

reporting equitable sharing of corporate profit. Rappaport also insist that the

information provided should be useful for playing purposes and finally that the

information provided should be capable of influencing socially desirable behaviour

and should discourage unethical behaviour. According to Lewis and Pendrill (1996), a

more recent description of the objectives served by financial statements has been

provided by the British Accounting Standards Board, the Board states that: “The

objective of financial statements is to provide information about the financial

position, performance and financial adaptability of an enterprise that is useful to a

wide range of users for assessing the stewardship of management and for making

19
economic decisions” According to Belkaoui (2002), the objectives of financial

reporting in Statement of Financial Accounting Concepts No. 1, Objective of

Financial Jenfa (2000) noted that the objective of financial reporting was clearly

defined in the True blood Report published in New York in 1973. The report stated

the basic objective as being, to provide information useful for economic decisions. To

this basic objective it now adds the following additional objective:

i. To serve primarily those users who have limited authority, ability, or resources to

obtain information and who rely on financial statements as their principal source of

information about an enterprises‟ economic activities

ii. To provide information useful to investors and creditors for predicting,

comparing and evaluating potential cash flows to them in terms of amounts, timing

and related uncertainty

iii. To provide users with information for predicting, comparing and evaluating

enterprise earning power

iv. To supply information useful in judging management’s ability to utilize

enterprise resources effectively in achieving the primary enterprise goal

v. To provide factual interpretation about transactions and other events which is

useful for predicting and comparing and evaluating earning power

To report on those activities of the enterprise affecting society which can be

determined and described or measured and which are important to the role of the

enterprise.

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2.1.8 Accountability

The concept of accountability has a long tradition in both political science and

financial accounting. In political science, John Locke‟s theory of the superiority of

representative democracy built on the notion that accountability is only possible

when the governed are separated from the governors (Staftan, 2009). As a

concept in ethics and governance with several meanings, accountability is often

used synonymously with such concept as responsibility, answerability,

blameworthiness, liability and other terms associated with the expectation of

account giving. As an aspect of governance, it has been central to discussion

related to problems in the public sector, non-profit and private (corporate) worlds

Bruce (2012) In leadership roles, accountability is the acknowledgement and

assumption of responsibility for action, products, decisions and policies including

the administration, governance and implementation within the scope of the role or

employment position and encompassing the obligation to report, explain and

answerable for resulting consequences Bruce (2012). In line with the

aforementioned, Akindele and Adeyemi (2011), in their contribution to the

discourse on the concept of accountability specifically contended as follows:

Accountability as a concept has been variously defined and classified; it has been

conceptualized as a way of being answerable or liable for one’s actions and/or

inactions and, conduct in office or position. It has equally been defined as the

process of making elected officials and other office holders accountable

21
 andresponsible to the people who elected or appointed them for their actions while

in office. Thus, accountability connotes the state or quality of being liable and

required by a specified person or group of people to report and justify their actions

in relations to specific matters or assigned duties”. Contributing to this debate,

Erero (2000), reviews the works of Ladipo Ademolekun and Wolfgang Wirth, which

according to him, the term accountability focuses attention upon the sanctions or

procedures by which public official may be held to account for his action. Wolfgang

Wirth on the other hand, asserts that, in its broadest normative sense, accountability

links bureaucracy and democracy by claiming that the administrative staff has to

render an account of his performance to his sovereign, the people. In essence, while

Ademolekun and Wirth appear to be saying the same thing, Ademolekun tends to

stress the coercive aspect of accountability, while Wirth sees it as something normally

expected in a democratic setting (Erero, 2000). In the social context, accountability is

often defined as the obligation of public power holders to account for or take

responsibility for their actions. Accountability exists when power holders must

explain and justify their action or face sanctions (Malena and McNeil, 2010). To Ola

and Effiong (1999) accountability refers to the ability to furnish satisfactory analyses

and explanation, of one‟s actions in the process of discharging one‟s responsibilities

at all levels, whether technical, administrative, political, financial or otherwise. Peter

Bird quoted in Ola and Effiong (1999) explain accountability thus: “Every steward is

held accountable to the person or body which entrusted resources to him whether the

22
latter is a superior steward or the ultimate owner. Accountability place two obligation

upon a steward he must render an account of his dealing with the stewardship

resources, and then he must submit to an examination (usually known as an audit) of

that account by or on behalf of the person or body to whom he is accountable. This

means that he must not only allow the audit to take place, but he must provide the

evidence from which the auditor can verify the account rendered. This double duty of

stewards, including an audit, has a long and continuous history. The need for

independent check or control (inspection or audit) lies deep in human history. In

similar vein, Etzioni associated accountability with three different meanings: greater

responsibility to elected superiors; greater responsiveness to community groups; and

greater commitment to values and higher standards of morality. Accountability can be

in form of social accountability, financial accountability, political accountability,

administrative accountability, ethical accountability and legal accountability.

2.1.8.1 Financial Accountability: Financial accountability according to Burkead

quoted in Ola and Effiong (1999) means legal liability the establishment of the

pattern of control over the receipts and expenditures that permits a determination

either by the executive or by the legislature (or both) that public monies have been

used for public purposes. It is concerned with the establishment of pattern of control

over receipt and expenditure of public funds. Financial balances between the

executive and the legislature. The legislature watches and checkmates the executive

through legislative process while the executive through its veto power could check

23
the excesses of the legislature The Economic and Financial Crimes Commission

(EFCC) has also been established to fight corruption. Its focus is to combat financial

and economic crimes. The commission is empowered to prevent, investigate,

prosecute economic and financial crimes and penalize offenders. It is also charged

with the responsibility of enforcing the provisions of other laws and regulations

relating to economic and financial crimes (Aiyede: 2006). Other sources of control

could include the Nigerian Public Complaints Commission.

2.1.8.2 Social Accountability: Social accountability is affirming and making

operational the direct accountability relationship between citizen and the State

(Malena and McNeil, 2010). Social accountability practices include for example

participatory public policy, participatory budgeting, public expenditure tracking and

citizen monitoring and evaluation of public services (Malena and McNeil, 2010). It is

an approach to enhancing government accountability and transparency. It refers to the

wide range of citizen actions to hold the State to account for its actions. Social

accountability strategies and tools help empower ordinary citizens to exercise their

inherent rights and to hold governments accountable for the use of public funds and

how they exercise authority (Pradhan, 2010). The use of the mass media, pressure

groups and consultative groups has gained some credence in making career

administrators and other public officer to be accountable for their various actions in

the course of performing their duties. The mass media specifically the newspapers

and magazines have been in the forefront of revealing the various atrocities

24
committed by military regimes of Babangida and Abacha. Up till date, the parcel

bomb that killed Dele Giwa, the then Chief Executive of Newswatch Magazine is still

linked to the Military Intelligent Agents of the Babangida‟s admini-stration (Ola and

Effiong, 1999; Malena and McNeil, 2010). In a similar vein, it was the newspapers

and magazines that revealed the unprecedented and crude looting of the treasuries of

Abacha‟s administration and under the democratic dispensation of the fourth

Republic since 1999. The corrupt practices in National Assembly as reported by the

News magazine in its July 11, 1999 issue “The Face of a Liar” broke the news of

forgery and perjury committed by the former Speaker of the House of

Representatives, Alhaji Ibrahim Salisu Buhari (Familoni, 2005). Also various

newspapers and magazines have reported the corrupt practices of former Speaker,

Dimeji Bankole and some of his principal officers during their tenure in the office.

Senator Evans Enweren, Senator Chuba Okadigbo and Senator Adolphus Wabara

were also relieved of their positions as Senate President of Nigeria due to corrupt

practices as reported by various media institutions across the country. Without public

opinions through the mass media, it would have been difficult to make these political

leaders and others culprits to be accountable and responsible for the various corrupt

practices that they committed while in office.

2.1.8.3 Ethical Accountability: Ethical accountability is the practice of improving

overall personal and organizational performance by developing and promoting

responsible tools and professional expertise and by advocating an effective enabling

25
environment for people and organization to embrace a culture of sustainable

development, Dwivedi (2012). Ethical accountability may include and/or involve the

individual as well as small and large businesses non-profit organizations, research

institutions and academics and government. According to Laouri and Alex (2012) it is

unethical to place an action for social change without excavating the knowledge and

wisdom of the people who are responsible for implementing the plans of action and

the people whose lives will be affected”.

2.1.8.4 Political Accountability: Political accountability is the accountability of

the government civil servant and politicians to the public and to legislative bodies

such as a congress or a parliament, Dwivedi (2012). The political office holder of any

rank should be accountable to the electorate (that is, the people) he has been elected

to serve. This is obtainable during periodic elections through which the people decide

whether to retain or throw out the incumbent office holders political executives by

refusing to vote for such incumbent based on his/her performance while in office (Ola

and Effiong, 1999). In a few cases, recall elections can be used to revoke the

electoral mandate of an elected official. Generally, however, voters do not have any

direct way of holding elected representatives to account during the term for which

they have been elected. Additionally, some officials and legislators may be

appointed rather than elected. Constitution or statue can empower a legislative body

to hold their own members, the government and government bodies to account. This

can be through holding an internal or independent inquiry. Inquiries are usually held

26
in response to an allegation of misconduct or corruption. The powers procedures and

sanctions vary from country to country. The legislature may have the power to

impeach the individual, remove them or suspend them from office for a period of

time. The accused person might also decide to resign before trial, (Bruce, 2012). The

constitution of the land provides for check and balances between the executive and

the legislature. The legislature watches and checkmates the executive through

legislative process while the executive through its veto power could check the

excesses of the legislature.

2.1.8.5 Administrative Accountability: Internal rules and norms as well as

some independent commissions are mechanisms to hold civil servants within the

administration of government accountable. Within department or ministry, first,

behaviour is bound by rules and regulations; Secondly, civil servants are subordinates

in a hierarchy and watchdog units to scrutinize and hold department accountable;

legitimacy of these commissions is built upon their independence as it avoids any

conflict of interest. Apart from internal checks some watching unit accepts complain

from citizens, bridging government and society to hold civil servants accountable to

the citizens, (Bruce, 2012). Institutionally, local governments across the nation have

well documented statutory and administrative procedures for ensuring due process in

the administration of local government, particularly finance. The financial

memorandum (FM) provides a very detailed framework to guide budgeting, planning,

accounting procedures, and general financial management in the local government. In

27
addition to the provisions of the financial memoranda, the State governments

routinely issue circulars and guidelines from time to time to guide financial

administration in their local government. Some States even make it mandatory for

local governments to get clearance in order not to incur expenditures beyond certain

thresholds (Abubakar, 2010). The administrative class can also be made accountable

for their actions through the executive, legislative and judiciary controls. In Nigeria,

the budget monitoring and price intelligence unit, a new institution with mandates to

promote transparency in government financial transactions and to establish open

and competitive tender management for government contracts through the due

process mechanism was established during Obasanjo‟s administration. Through a

process of contract award review, oversight and certification, the government has

reaped huge savings estimated at hundreds of millions of dollars (Familoni, 2005). In

the same vein, Independent Corrupt Practices and Other Related Offences

Commission (ICPC) were also set up on September 29th 2000 as the hub of Nigeria‟s

fight against corruption. The commission is to receive complaints, investigate and

prosecute offenders. It is also to educate and enlighten the public about bribery,

corruption and related offences and the need to avoid it in the course of performing

their official duties (Aiyede, 2006).

The Economic and Financial Crimes Commission (EFCC) has also been established

to fight corruption. Its focus is to combat financial and economic crimes. The

commission is empowered to prevent, investigate, prosecute economic and financial

28
crimes and penalize offenders. It is also charged with the responsibility of enforcing

the provisions of other laws and regulations relating to economic and financial crimes

(Aiyede, 2006). Other sources of control could include the Nigerian Public

Complaints Commission.

2.1.8.6 Legal Accountability: Legal accountability is usually enforced through the

Courts and tribunals and, other quasi-judiciary institutions. In developed countries of

the world such as Britain, France, USA and others, they ensure that everyone, whose

conduct is questionable in one form or the other, is subjected to legal accountability

regardless of the person‟s social or political status in the society. According to

Alukuro (1999) the domain of public accountability in Nigeria is governed by the

provision of legal and administrative document. The constitution of the Federal

Republic of Nigeria, the finance (control and management) Act 1958, the Audit Act

1956 and financial regulations, general orders (civil services rules) civil service

regulation etc.

2.1.8.7 Government Accountability: According to Kolache (1990), government

has reported on financial accountability, including compliance with spending

authorities. This information continues to be important, particularly given concerns

about the debt and deficit, but government is responsible for much more. It has an

obligation to make program choices and deliver these programs and services in the

best interest of its citizens. These decisions go beyond financial consideration to

include issues such as fairness and at the same time the citizen who support or use

29
this programs want to know that the government is actually achieving what it

intended to and that they are getting value for money for that period. To the above

understanding of such issues, legislations and citizens need to know what government

intend to achieve and why, and what it is actually achieved. To be accountable it

should explain if and why its result differ from what was intended and what action it

took. Information such as this would be derived from management system geared for

result.

2.1.9 Local Government. Local government as a concept has created excitement

within the scholarship and practicing world of administration. It has attracted the

attention of many scholars within the academia who have seriously analyzed and dig

deep into the meaning, genesis and the need for its existence within all political

arrangements of the world (Akindele et al., 1997; Akindele, 1995). Adeyeye (2000:)

reviewing the definitions of T.J.O. Hickey and Montague Harris, argue that, the

concept of local government has been given different meanings by different scholars.

As a matter of fact, Hickey cited in (Adeyeye, 2000) depicted local government as

“the management of services and regulation of functions by a locally elected council

which is officially responsible to them, under statutory and inspectorial supervision of

central legislature and executive, but with enough financial and other independence to

admit of a fair degree of local initiative and policy making”. On the same token,

Montague Harris in (Adeyeye, 2000), defined

local government as, “government by local bodies, freely elected which while subject

30
to the supremacy of the national (or state) government are endowed in some respect

with power, discretion and responsibility which they can exercise without control

over their decision by the higher authority” To Hugh Whalen, however, the following

characteristics are the main features of local government: a given territory and

population, an institutional structure for legislature, executive and administrative

purposes, a separate legal identity, a range of power and functions authorized by

delegation from appropriate central of intermediate legislative and within the ambit of

such delegation, autonomy including fiscal autonomy. Aransi (2000) re-echoed the

opinion of Halidu Abubarkar who defines local government as governmental

administrative units‟ closet to the people, or in general parlance, the grassroots. Local

government according to him acts as: Veritable agent of local service delivery,

mobilizes of community based human and material resources, and organizers of local

initiatives in responding to a wide variety of local needs and aspirations. Local

government also provides the basic structures and conditions for grassroots

participation in democratic process. Erero (1997: 208) quoting the guidelines for

Local Government Reforms in Nigeria defined local government as: Government at

local level exercised through representative council established by law to exercise

specific power within defines areas. These power should give the council substantial

control over local affairs as well as the staff and institutional and financial power to

initiate and direct the provision of services and to determine and implement projects

so as to complement the activities of the state and federal government in their areas

31
and to ensure through the active participation of the people and their traditional

institutional local initiative and response to local needs and condition maximized. The

aforementioned definitions illustrate that local government is that tier of government

closest to the grassroots people. It is that level of government found below the state

government in the federal-state-local government structure prevalent in the Nigerian

federal governmental arrangement as of today (Aransi: 2000).

These definitions put together clearly show the important of the local government

institution to the functional existence of the Nigerian federation. This is because the

numerous needs of the citizen at the grassroots level can only be met by this same

institution. However, the extent to which these needs can be effectively met by ways

of responsive service delivery is predicated on the level of transparency and

accountability of functionaries of the institution. And, the only way to attain these

positive variables and their usually accompanying corruption-free service delivery is

to institutionalize the culture of accountability at this level of the Nigeria‟s political

landscape.

2.1.10 Local Government in Nigeria.

The 1999 constitution of federal Republic of Nigeria specifically establishes local

government administration as the third tier of government. According to Awotokun

(2001), the main functions of a local government as stipulated in the fourth schedule

of the 1999 constitution are as follow:

1. The consideration and the making of recommendations to a state commission on

32
 economic planning or any similar body on:

i. The economic development of the state population in so far as the areas of

authority of the council and of the state are affected;

ii. Proposal made by the said commission or body;

2. Collection of rates, radio and television licenses;

3. Establishment and maintenance of cemeteries, burial grounds and homes for the

destitute.

4. Licensing of bicycles, trucks (other than mechanically propelled trucks), canoes,

wheel barrows and carts;

5. Establishment, maintenance and regulation of slaughter houses, slaughter slabs,

markets, motor parks and public conveniences;

6. Construction and maintenance of roads, streets, street lightings, drains and other

public highways, parks, gardens, open spaces, or such public facilities as may be

prescribed from time to time by the House of Assembly of a state;

7. Naming of roads and streets and numbering of houses;

8. Provision and maintenance of public convenience, refuse disposal;

9. Registration of all births, deaths and marriages;

10. Assessment of privately owned houses or tenements for the purpose of levying

such rates as may be pre-scribed by the House of Assembly of a state;

11. Control and regulation of:

I. Out-door advertising and boarding;

33
II. Movement and keeping of pets of all description;

III. Shops and Kiosks;

IV. Restaurants, bakeries and other places for sale of food to the public;

V. Laundries; and Licensing, regulation and control of sale of liquor.

Secondly, the functions of a local government council shall include participation of

such council in the government of a state as regards, the following matters:

i. The provision and maintenance of primary adult and vocational education;

ii. The development of agriculture and natural resources, other than the exploitation

of minerals; the provision and maintenance of health services;

Other functions as may be conferred on a local government council by the House of

Assembly of the State It could be seen from the foregoing that, two groups of

functions are set for local government to perform and the primary objectives of

establishing local government is to provide a means of making available a number of

services stated in the constitution to meet the needs of the people at local level

However, the performance of local government in Nigeria has been largely below

expectation. The political Bureau (1987), in its report pointed this out when it noted

that despite the strategic importance of local government to the national development

process, it contribution has been minimal, in spite of enormous resources that have

been committed to ensuring that it enormous significantly to national development

process. Local government is often seen to be synonymous with the provision of

services to the grassroots people. In effect, a local government may only be said to

34
have performed well, if a substantial proportion of the people being services are

satisfied with it performances. The Nigeria position according to Ola and Tonwe

(2009), show that there is a wide gap between the expectations of people vis-à-vis

what the local government are able to offer. Many communities in Nigeria do not

really feel the impact of local government institution in terms services delivery.

The public clearly consider that the local governments have failed in the performance

of their primary duties, namely service delivery and resources mobilization

(collection of fees and rates) on both dimensions the public assessed performance

poorly. Local government is created to ensure meaningful development of the

grassroots through participatory approach. Regrettably, this is not the case, instead of

discharging their functions as development centers, local government have acquired

notoriety for corruption, fiscal indiscipline and overall irresponsibility (Agbo, 2010).

It has become high temples of corruption and crass mismanagement where combined

effect of graft and inefficiency are proudly showcased by the officials (Ekawu, 2007).

Alleged corrupt practices include: misappropriation of funds, inflation of contract

sums, over-invoicing of goods, unauthorized withdrawals, reckless virement and

outright embezzlement (Agbo, 2010). The effect of corruption in the local

government council is somehow negative in the sense that it destroyed culture of

accountability and transparency and development at this level is hindered.

2.1.11 Local Government Internal Auditor

Although the internal auditor in local government councils is accountable and

35
responsible to the chairman of the local government, he has some power in the course

of carrying out his duties effectively;

i. Power to disapprove any proposed expenditure approve by accounting officer.

ii. Power to query the executive expenditure.

iii. Power to write to the external auditor on the state of affairs of the local

government, especially on financial matters.

iv. Power to check all financial transactions of all departments in the local

government.

Stamp (1999) observes that internal auditor could only discharge his duties with a

considerable degree of independence, complete independence is not possible for the

internal auditor because he cannot divorce himself completely from the management,

similarly, Settler (1970) observes that the internal audit department often lacks the

necessary cooperation it needs from not only the staff of other departments, but

sometimes even from the management. Humband (1976) observes that people

generally see an auditor as a middle aged, spare, wrinkled, intelligent, cold, passive,

non-committal, person with eyes like cold fish, polite in contact but at the same time

calm and composed as a concrete post.

2.1.12 Audit Control in Local Government

The state Auditor-General carries out the auditing of local government accounts,

which is in accordance to section 151(11) of the local government laws. The auditor

general measures the integrity of the local government councils. The audit queries

36
from the internal auditor general for a local government are always kept in the

register of audit correspondence. The register specifies how queries have been dealt

with and the ones still outstanding. The register of the audit correspondence must be

placed once each month before the financial and general purpose committee for

consideration.

2.1.13 Audit of Local Government Financial Reports.

According to Gupta (2005), the objectives of audit of local government accounts are

to ensure: that there is provision of funds for the expenditure duly authorized by a

competent authority; that the expenditure is in accordance with a sanction properly

accorded and is incurred by an officer competent to incur it; that payment has, as a

fact, been made to the proper person and that it has been so acknowledged and

recorded that a second claim against government on the same account is impossible;

that the charge is correctly classified and that if a charge is debit able to the personal

account of a contractor, employee or other individual, or is recoverable from him

under any rule or order, it is recorded as such in a prescribed account; that in the case

of audit of receipts sums due are regularly recovered and checked against demand and

sums received are duly brought to credit I the accounts; that in the case of audit of

stores and stock, where a priced account is maintained, stores are priced with

reasonable accuracy; that the articles are counted periodically and otherwise

examined for verification of the accuracy of the quantity balances in the books and

that the total of the valued account tallies with the outstanding amount; and that

37
expenditure conforms to the general principles which have, for long, been

recognized as standards of financial propriety. The office of the Auditor- General

for Local Government was established from the state Auditor-General in 1989 to

primarily undertake the audit of books and accounts of local government councils and

their investments. The Public Accounts Committee of the State House of Assembly is

responsible for overseeing the report of the Auditor-General as established in Section

125(5) of the 1999 Nigerian Constitution. The Public Accounts Committee and the

Office of the Auditor General for local government together represent the external

control function in the financial administrative process of local government

operations. Section 125 of the 1999 constitution stated that the Auditor-General is

required to be appointed for the state and local governments, thus required to

perform the following functions: audit the public accounts of the state or local

governments and offices and acts of the relevant government units and submit the

audit report of the House of Assembly of the state within 90 days of the receipt of the

Accountant-Generals financial statement; certify accounts payable to the state and

local government by federal government for the federation account or as grant in aid

and provide a list of qualified external auditor for local government audit and fees to

be paid. The financial memoranda stipulates that the main books of accounts to be

kept by the treasury of a local government can be: the cashbook can be maintained in

accordance with the provision of the financial memoranda; the daily and monthly

abstracts and monthly summary of revenue and expenditure prepared from journal,

38
receipts and payment vouchers; and the journal which can be maintained in

accordance with provision of the financial memoranda chapter 20. The auditor is

responsible for the examination of the books and accounts of the local government to

give an opinion whether it gives true and fair view of the council.

2.1.14 Source of Local Government Revenue

External sources of finance are used here to refer to revenue that accrues to the local

government outside the ones that are generated internally, for example, the statutory

grants and loans. According to schedule 2, Part II section 4(1) of the 1999

constitution, the house of assembly may, subject to such conditions as it may

prescribe, make provisions for the collection of any tax, fee or rate, for the

administration of law, providing for such collection by a local government council.

Similarly local government has other sources of income such as taxation, licenses and

investment.

2.1.15 Financial Control in the Local Government

According to Bello-Imam (2007) local government in Nigeria assumed the role of

third tier government, and this status certainly requires enough revenue to be

maintained. The revenue, which is derived from the 20% share of federation account,

10% share of the state, internally generated revenue as well as a large pool of internal

revenue available to each local government, must have established and sustained

financial control, which still ensure meaningful development for the local government

in the country. According to Bonye (1995) Financial control operating in the local

39
government are of two categories, namely;

i. The internal and

ii. External controls

An internal financial control refers to the checks and balances established either by

the local government councils. While external control relates to the control

mechanisms used on the local government by the state and federal government.

Bonye further mentioned that, the responsibility for internal financial control is

mostly vested in the local government councils. The council is expected to maintain a

system of control to ensure accuracy and reliability of records and eradicate fraud,

extravagance and waste. In order to ensure that, local governments perform their

duties effectively, the following statements and reports must be placed before it on a

monthly basis;

i. The monthly reconciliation of accounts showing the position at the end of the

previous month.

ii. The bank reconciliation statement as at the end of the previous month.

iii. The revenue collection chart

iv. A report on account of revenue

v. A report on the cash-flow situation showing probable receipts and estimated

payment for each month of the following three months.

vi. A statement showing progress in the collection of revenue under the various main

heads as compared with the estimated amount.

40
2.1.16 Nigerian Local Government and the Constraints to Culture of

Accountability

The discussion on institutionalization of culture of accountability in Nigeria‟s local

government administration would not be complete without considering the constraints

imposed on the polity. These constraints according to Idachaba (2006) include the

multiples loyalties and primordial instincts in ethnic societies. More than any other

level, cultural constraints are more dominant at the family clan, village and ethnic

group levels. And, all of these have negative multiplier effects on the activities and

performance of the local government officials. As a matter of fact, the multiple

loyalties in the larger society emphasize the use of particularistic criteria instead of

universalistic criteria, thereby resulting in opaqueness and lack of accountability

(Idachaba: 2006). The successful institutionalization of culture of accountability in

Nigeria’s local government has been impossible to some extent due to some of

these constraints. This has led to a diminishing trend in accountability at

grassroots governance. Financial accountability in local government is monitored

through external audit carried out by an independent Auditor-General of local

governments. While all states have an Auditor-General, everywhere local government

has been emasculated by inadequate manpower, poor budgetary provision, lack of

official support from state government and absence of up-to-date annual accounts to

work on. While many local governments lack internal capacity to keep good records

and ensure that, annual audits are carried out on schedule, some wilfully resist

41
submitting their accounts for audit (Barkan et al., 2001). Onah and Amujiri (2010)

illustrating the diminishing trends of accountability in Nigerian local government, as

follows: Accountability in local government in Nigeria is a form of rhetoric. The

more emphasis is placed on it, the more it becomes a no matters in the practice of

office holder in Nigeria local governments. Instead of accountable leaders, most local

government officers prefer to display provocative wealth, which they go through

criminal disservice and institutionalized stealing and corrupt practices. It is this

particular lack of accountability in local government in Nigeria that is responsible for

the recent agitation for abolition of local government in Nigeria.

Over the past decade, under elected civilian administrations, local government

councils in Nigeria have received substantial revenue allocations without always

providing commensurate services or infrastructural developments. This gap could be

attributed to corruption, interference by State governors and States Houses of

Assembly in the local government administration and ineffective accountability

mechanism, including, lack of free and fair electoral processes which would have

enabled the electorate to oust non-performing politicians from office

(Afrobarometer :2008). Corroborating the view of Afrobarometer, Farida Waziri the

EFCC boss in Onwuemenyi (2008) observed thus: “Unfortunately, local government

officials have not left their hands unsoiled in this regards. It is with regret that I am

forced to observe the local government of the good old days has become a mere

memory of times gone by. The paralysis that pervades local governments today is

42
widespread. Local government have become so far removed from the lives of people

to a point where some chief executives of local councils no longer reside in the

domains they were elected to administer. They drive to council headquarters in their

jeeps from the State capitals of Federal Capital Territory, pay salaries and share other

monies and disappear until it is time to share the next subversion. Corruption has

been described as a major cause of comatose state of local government administration

in Nigeria, and a major hindrance to good government (Onwuemenyi: 2008). It has

been identified as one of the problems confronting effective local government

administration in Nigeria, also non- adherence to provisions of the financial

memorandum (FM), conspicuous consumption of the part of the local officials,

lifestyles that are not commensurate with official sources of income, imposition of

leaders on the local government through corrupted political process and low wages of

local government officials (Ali: 2008). Along this line Farida Waziri the EFCC boss

in Onwuemenyi (2008) depicted thus: ...Waste of government resources at the council

level had reached monumental proportions. The local government council in the

country could not explain the mismanagement of over N3.313 trillion allocated to

them in the last eight years. ...a whopping sum of N3, 313,554,856,541.79 was

allocated to local government across the country. These revelations is not surprising

in that virtually all local government chairmen are stooge of the State governor and

they must be responsible and accountable to their god fathers rather than being

answerable to the electorate. Moreover, the absence of mechanism for participation,

43
consultation, complaints and accountability in local government administration

demonstrates that their officials are distant from the people they are elected or paid to

serve (Afrobarometer, 2008). This has continued to be a reoccurring problem in local

government administration in Nigeria. Institutionalizing the Culture of Accountability

in Local Government Administration in Nigeria Culture plays a critical role in

governance. It defines the values, roles, norms and, expectations of right and wrong

and/or proper and improper behaviors of members of society. It ensures transparency

and accountability at several levels of governance such as family, village, local, state

and federal government (Idachaba: 2006). Culture has a strong influence in defining

the relationship between citizen and government and between the political leaders and

the electorate. Along this line, Ikejiani Clark in Otubanjo (2006) contended that, “a

genuine political community is one in which the rule, objectives and modalities of

government and politics are internalized and sanctioned by its entire citizens”. This

according to Gundu (2010) can be achieved through the following:

i. Re-sensitization of ethical values and principles;

ii. Training and orientating in ethical value and standards;

iii. Promotion of leadership by example at grassroots.

iv. Promotion of administrative accountability through relevant codes of conduct,

laws, and rules, public service reform, establishment of Integrity and Moral

Rectitude Watchdogs (within and outside the Public Service).

v. Provision of avenues for whistle-blowing as well as measures to protect whistle-

44
 blower.

vi. Application of local government financial memorandum, civil service rule and

public enlightenment against corruption by ICPC and other anti-graft agencies.

Zabra (2010), emphasizing the role of public scrutiny and ethical standard in

institutionalizing the culture of accountability at public offices reaffirms that, public

scrutiny is a very important instrument for sustaining accountability and trust in public

life and public officers, especially the elected officials, should be subjected to higher

scrutiny except with regard to personal life and standard; and ethical standard as an

effective way of sustaining democracy. In the same vein,

Babaginda (2010) observed that, the prerequisite for good governance include

participation, consensus building, accountability, transparency, responsiveness,

effectiveness and efficiency, equity, inclusiveness, performance and respect for rule

of law. He went further to contend that, it is imperative for the electorate to build

public confidence in political office holders because they are entrusted with enormous

responsibility by the electorate and vested with broad decision making powers that

affect the lives of the people. He further observed that: “Most developing nations are

showing elements of weak governments, institutional and high profile ethical feature

as well as increasing inability of governments to deliver on key deliverables such as

poverty eradication, employment generation, economic development, security and

general improvement in the lives of the people. And politicians and public servant

must demonstrate high ethical standards by being transparent, accountable and

45
trustworthy, consistent in character, courageous and dedicated and committed to

duty”. The Independent Corrupt Practices and other related offences Commission

(ICPC) in their bid to enforce the culture of accountability in local government

administration observed that; several petitions sent to the Commission concern local

government officials and a profile of the criminal cases shows that over a quarter of

the accused persons are local government officials (Agbo, 2010). Consequently, the

Commission in its effort to institutionalize the culture of accountability at grassroots

governance designates a training initiative to achieve the following objectives:

Refresh participants‟ knowledge of the ICPC Act; and other anti-corruption laws and

provide skills and strategies for institutionalizing integrity in their localities;

Understanding the local government administration and the anti-corruption crusade;

adopting best practices and mechanisms to reduce corruption and formulating

strategies for institutionalizing integrity through the establishment of Anti-Corruption

and Transparency Units (ACTUs); enlistment of interested persons in the

commissions National Anti Corruption Corps; and educating the local populace on

ills of corruption (Agbo: 2010). Local Government Integrity Initiative (LGII) was

also designed by ICPC to inculcate demonstrable integrity into governance at the

local government level, change adverse public perception of local government and

usher in a culture of integrity through commitment to standards, values, advocacy of

integrity, open administration, accountability and transparency (Agbo, 2010). This

initiative is designed to brand local government system as integrity compliant and

46
 generate ethics and integrity - consciousness in the local government system and set a

standard of integrity that an organization must subscribe to and comply with in local

government administration (Agbo, 2010).

2.2 Empirical Review

Studies have been done about the effectiveness of internal auditing and their

evaluation, and hence this area calls for more studies. Al-Twaijry et al. (2003)

examined internal auditing in the Saudi Arabian corporate sector using the institutional

theory. The data were collected by a mixed method based on a 78 usable questionnaire

were collected from directors of internal auditing and 15 interviews were conducted. In

addition, a shorter questionnaire was collected from 10 partners and 23 managers of

audit firms, and 13 interviews were conducted with some of them, to ascertain their

perceptions of internal auditing. Their study included the following independent

variables:

(1) internal audit independence,

(2) professional proficiency of internal auditing,

(3) scope of internal auditing, and

(4) management of the internal auditing.

Their findings showed that internal auditing in the Saudi Arabian corporate sector is not

well developed. Where internal auditing was mainly concentrated on compliance audit

rather than performance audit, shortage of resource and qualified staff, have restrictions

on their degree of independence. The study’s results also highlighted that managers

47
sometimes do not implement the recommendations of internal auditing.

Furthermore, the authors suggest that further research is necessary to evaluate internal

effectiveness accurately because factors used in this study may have acted to reduce

the value of internal auditing. Goodwin (2004) conducted a comparison between the

role of internal auditing in the public and private sectors, in Australia and New

Zealand. The data collection was done using a survey questionnaire, and taking a

sample of 120 chief audit executive. These questionnaires were classified as 85 from

Australia and 35 from New Zealand whereas, according to type of sector were

classified as 32 private sector organizations entities in Australia and 16 from New

Zealand, giving a total of 48 private sector organizations while public sector

organizations totaled 72, with 53 Australia and 19 New Zealand. The comparison

included:

(1) organizational status,

(2) size of internal audit and percentage outsourced,

(3) nature of internal audit activities

The author highlights that the internal auditing in the public sector has a higher status

than in the private sector. Although, the two sectors often outsource internal audit work,

public sector organizations are more likely to use an external auditor for these services.

Furthermore, there is no significant difference between internal auditors in the two

sectors in terms of their interaction with external auditors. Mihret and Yismaw (2007)

identified some factors that could have a significant impact on the internal audit

48
effectiveness, based on a public sector higher educational institution in Ethiopia as

case-study using a model developed for the analysis. These factors include:

1) internal audit quality;

2) Management support;

3) The organizational setting; and

4) auditees' attributes.

Their findings indicate that both the internal audit quality and management support

have a strong influence on internal audit effectiveness.

The researchers also suggest a need for future research to understand the internal

audit effectiveness by using other variables. Yee et al. (2008) examined the

perception of Singaporean managers about the role and the effectiveness of internal

auditing. The data were collected using an interview format from a sample of 25

different organizations. Managers in these interviews were classified into four generic

categories, based on seniority, experience, and decision-making autonomy. These

categories: 18 directors, 22 financial controllers, 20 mid-level managers, and 23

general executives (who work below the mid-level managers), giving a total of 83

interviews. The findings of the study indicate that the senior managers (the directors

and financial controllers) to be generally satisfied with the professionalism and

effectiveness of the internal auditors, and appreciate the presence of an internal

auditing in the organization. The authors recommend the need to explore the role and

effectiveness of internal auditing. Arena and Azzone (2009), attempted to understand

49
the organizational drivers of internal audit effectiveness in the light of recent changes

in the „mission‟ of internal auditing and its central role in corporate governance using

a questionnaire survey, and took a sample of 153 Italian companies. The

independent variables were:

1) the characteristics of the internal audit team,

2) The audit processes and activities of internal audit and

3) The organizational links. Their findings indicate that the internal audit

effectiveness increases when:

a) The ratio between the number of internal auditors and employees grows the

chief audit executive is affiliated to the IIA;

b) the company adopts control risk self-assessment techniques, and c) the audit

committee is involved in internal audit activities.

Moreover, the authors highlight the need for more detailed analysis to understand

the impact of internal auditors‟ competencies on internal audit effectiveness.

In a related study,

Ahmad et al., (2009) attempted to explore the significance of internal auditing in the

Malaysian public sector. Their findings based on a questionnaire distributed to 99

participants including directors of internal audit and internal auditors indicate that; 1)

inadequate support from top management; 2) lack of knowledge and appropriate

training on effective auditing approaches for internal auditors; and 3) the level of

acceptance and appreciation to internal audit by management has a significant impact

50
on the internal audit recommendations implemented, and the existence of negative

perception to internal audit leads to nullify its contribution in organizational goal

achievement. The researchers suggest a need for future research in both public and

private sectors in Malaysia by field survey method. Without a doubt, the findings of

the studies above opened up a whole new area for research, and recommended the

need for more research on the internal audit effectiveness especially in developing

countries where more attention should be given (Al-Twaijry et al., 2003; Mihret &

Yismaw, 2007; Yee et al., 2008; Arena & Azzone, 2009; Ahmad et al., 2009).

Furthermore, these studies have used different approaches to investigate the internal

audit effectiveness. For example, Twaijry et al., (2003) adopted ISPPIA as a guideline

to investigate and determine internal audit effectiveness, while Mihret and Yismaw

(2007), Arena and Azzone (2009) and Ahmad et al. (2009) developed their own

models to determine internal audit effectiveness. However, the few following lines

will discuss some points that relate to it. In Mihret and Yismaw‟s (2007) study, as in

all case studies, the generalization of the conclusions was limited. In both studies

Arena and Azzone (2009) and Ahmad et al. (2009), the management support has been

considered as an independent variable. Arena and Azzone‟s (2009) findings indicate

that the effectiveness enhances when the audit committee is involved in internal

auditors‟ activities while Mihret and Yismaw (2007) consider the effective

communication as part of the internal audit quality that is a strong variable

influencing the effectiveness of internal auditing. 2009) and Ahmad et al. (2009)

51
 developed their own models to determine internal audit effectiveness. However, the

few following lines will discuss some points that relate to it. In Mihret and

Yismaw‟s (2007) study, as in all case studies, the generalization of the

conclusions was limited. In both studies Arena and Azzone (2009) and Ahmad et al.

(2009), the management support has been considered as an independent variable.

Arena and Azzone‟s (2009) findings indicate that the effectiveness enhances when

the audit committee is involved in internal auditors‟ activities while Mihret and

Yismaw (2007) consider the effective communication as part of the internal audit

quality that is a strong variable influencing the effectiveness of internal auditing.

2.3 Theoretical Framework

2.3.1 Agency Theory: Agency relationship could be defined as a contract among the

organization owner(s) and its top management. Managers work with the organization

as agents to perform some service on behalf of owners who delegate some decision

making authorities to managers. These authorities could be misused by managers to

meet their own personal interests. Therefore, the existence of the audit committees,

and the external and internal auditors will help the organization in enhancing their

performance, and also will ensure that the management carries out its plans according

to procedures (Adams, 1994). Peursem and Pumphrey (2005) considered internal

auditors as agents and monitors for a variety of the internal audit users that include the

board, audit committee and senior management. Agency problems could occur when

the board or its audit committee is inefficient, and hence, the senior management is

52
likely to be a powerful influence over the internal audit. This complex web creates an

inherent dilemma for the internal audit: how can it carry out their monitoring role over

management if it is ineffective itself? Internal auditors often are employed by senior

management, but at the same time, they are also agents of the board and audit

committee who trust in the internal auditors‟ ability to evaluate senior

management’s works. However, internal auditors may have varying motives to act

against the board of directors‟ interests and its audit committee and these motives

include financial rewards from managers, personal relationships with them, and the

power of senior management in shaping the future position of internal auditors and

their salaries. In such a work environment, internal auditors as agents may have an

incentive to be bias of information flows, which leads to new concerns of the board

and audit committee about their trust on the internal auditors‟ objectivity, and

preventing such threats of objectivity becomes necessary for the board and its audit

committee.

Internal auditors as agents must perform audit processes at the professional level

requiring education and professional certifications, experience, and other

competencies needed to perform their responsibilities perfectly. Having internal

auditors with such requirements and the existence of training programs for internal

auditors, would increase the confidence level of the board and audit committee in the

internal auditor competence. At the same time, internal auditors, by proving their

duties in accordance with the professional level, can refute charges of neglecting their

53
duties. The internal audit department works are achieved under supervision of the

chief audit executive who is the main responsible individual for putting the internal

audit plan, reporting internal audit findings and following-up internal audit

recommendations. The organization members are required to evaluate the internal

control system (SOX, Section 404, 2002), and in order to achieve this requirement

they depend on the internal audit department. During this evaluation, internal auditors

should collect sufficient and reliable evidences that will support their assessment of

the internal control system. The existence of such evidences will increase the

confidence level of organization members on the works performed by the internal

audit. Hence, internal audit department performance is a crucial requirement for

organization members to consider internal auditors as agents. Internal auditors, as

agents of the organization members, need their support. The existence of an effective

audit committee in the organization enhances internal audit independence and also,

reduces senior management interferences either in internal audit scope or its

performance. For example, the problem related to the ability of senior

management’s influence over the future employment and salaries of internal

auditors will be resolved by having an audit committee as the absolute authority for

appointment and removal of the chief audit executive. Another clear example of

organization members‟ support occurs when senior management asks all departments

to accomplish the internal audit recommendations.

Based on the above discussion, it can be seen clearly that the agency theory is a

54
useful theory which can explain the relationship between some variables of the study,

and it is relevant to be embedded in the development of this research conceptual

framework.

2.3.2 Institutional Theory: Institutional theory explains how organizational

structures and practices are shaped through changes induced by normative pressures,

including both external and internal sources such as laws and regulations, or by the

professions (Zucker, 1987; Mihret et al., 2010). Similarly, Arena and Azzone

(2007) identified the following external forces that impact both individuals and

organizations:

1) laws and regulations (coercive isomorphism);

2) choices of other organizations (mimetic isomorphism); and

3) consultation or professional bodies (normative isomorphism).

Several previous studies in internal audit have adopted an institutional theory

(AlTwaijry et al., 2003; Arena & Azzone, 2006; Arena & Azzone, 2007; Mihret et al.,

2010). AlTwaijry et al. (2003) adopted the isomorphic perspective to investigate

internal audit in Saudi Arabia, and the institutional theory is employed to explain their

findings regarding the establishments of internal audit and the role of the government in

promoting their development. Similarly, Arena and Azzone (2006) focused, on the

coercive isomorphism, to investigate the development of internal audit in six Italian

companies as a multiple case study. Their findings confirmed that the adoption and

development of internal audit were impacted by the coercive, mimetic and normative

55
pressures. More recently a study by Arena and Azzone (2007), based on survey

involving 364 Italian companies, found that the isomorphic pressures have a significant

impact on the companies' support of internal auditing. The researchers suggest a need

for future research to address the internal audit effectiveness by using institutional

theory. Mihret et al. (2010) argue that there is a positive relationship between

compliance with ISPPIA and organizational goal achievement, and this relationship

could evaluate internal audit effectiveness. Based on the above discussion, it can be

seen clearly that, the institutional theory is a valid theory for internal audit effectiveness

in both developed and developing countries; and it is a useful theory, which can explain

the relationship between some variables of the study, and it is relevant to be embedded

in the development of this research conceptual framework.

2.3.3 Communication Theory: In accordance with the needs of the IIA as the

professional body that takes care of internal auditing, several studies such as by

Davidson (1991), Quinn and Hargie (2004) and Golen (2008), confirm the importance

of and the need for effective communication skills in all organization functions.

Studies done by Lewis and Graham (1988) and Smith (2005) suggested some ways to

improve these communication skills. Previous studies by Hahn (2008) and Golen

(2008) discussed communication barriers and how they can be overcome. At the same

time, several previous studies have dedicated their work to communication in

organizations. These studies evidenced that, effective communication and

interpersonal relationships between managers and staff have a strong contribution to

56
improve profitability, and productivity; and it leads to higher quality of services and

products, and reduction in costs (Clampitt & Downs, 1993). According to both IIA

Standards and previous studies, the study of effective communication in internal

auditing is necessary, and hence this study should consider the communication theory

for its achievement. Davidson (1991) confirms that, all auditors can benefit from

knowledge of current communication concepts, and even those who believe they are

good communicators need to work consciously on assessing, improving, and

applying their skills. Davidson’s communication theory is based on three basic

truths about communication. These are:

(1) it is impossible not to communicate;

(2) communication is a multilevel phenomenon, and

(3) message sent does not always equal message received.

Lewis and Graham (1988) mentioned that, communication – as a word - comes from

the Latin word “communicare” which means to make common. Thus, to

communicate is the process of creating a common meaning with someone or some

group. In other words, one person can talk, but it takes at least two people to

communicate. Guo (2009) defines communication as, transfer of meaning or mutual

understanding among at least two individuals to share information about a subject or

issue and arrive at an agreed upon meaning. This confirms the first two points in

Davidson‟s communication theory. Inability to communicate effectively could be

related to inappropriate information or communication complexity. Hahn (2008)

57
confirmed that much information is as bad as little information because it reduces the

receiver’s ability to concentrate effectively on the most significant messages. In such

an environment, internal audit users may have new concerns about their trust for

internal auditors‟ performance. Thus, effective communication becomes necessary as

a solution to this problem. To overcome such communication problems, Hahn (2008)

recommends parties of the communication process to focus and offer only the

necessary information by easy ways - provide meaning to the information rather than

just pass on the message, and keep the information clear and simple to understand and

finally ask for feedback. The existence of effective communication between internal

auditors themselves, internal auditors and auditees, internal auditors and organization

members, without any doubt, is needed to strengthen the internal audit effectiveness.

As has been pointed out earlier, agency theory can explain and cover the importance

of having an effective communication between organization members and internal

auditors as agents to them. However, the importance of effective communication in

this study extends to include the relationship between internal auditors and auditees,

which can be explained under the communication theory. In this study, effective

communication is one of the main factors for the effectiveness, which is measured by

examining the relationship with auditees. However, there are several factors, which

could contribute to the weakness of this relationship such as, accusatory style from

internal auditors or just looking for the auditees‟ weaknesses. Such environment

leads to lack of trust among internal auditors and auditees and creates one of the main

58
communication barriers, which is a lack of trust among sender(s) and receiver(s) in

communication processes (Hahn, 2008). Thus, to prevent such threats, it is necessary

to improve auditees' collaboration with internal auditors. Based on the foregoing

discussion, it is doubtless that, the employment of communication theory in this study

becomes necessary to establish the conceptual framework.

2.3.4 Linking Theories of the Study: Research in auditing has traditionally been

conducted under the framework of agency theory (Pilcher et al., 2011). However,

Mihret et al. (2010) argued that the neoclassical economic theories including agency

theory were the main reason for limited research in internal auditing. They criticized

the assumption that organizational phenomena are only driven by maximizing the

self-interest of individuals, and they confirmed that the behavior of individuals cannot

be abstracted from the social settings. Thus, they suggested institutional theory. The

use of more than theory in combination enables considering social and behavioral

aspects and the economic dimensions. Several previous studies have adopted both

agency and institutional theories (Yamak & Suer, 2005; Christopher et al., 2009; Yaqi

et al., 2012). In this study, while agency theory is mainly employed to understand

economic motives that make internal auditors seek in achieving their personal

interests even if they were against the organization members' interests or

organizational interests, institutional theory informs about the level of compliance

with ISPPIA, and its impact on the companies' support of internal audit. Moreover,

communication theory is used to explain the importance of effective communication

59
between internal auditors and auditees.

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 INTRODUCTION

This chapter examines the methods or approaches of data collection for the study.

This includes the study area, study population, sample size and sampling techniques,

data collection and method of data analysis.

3.2 RESEARCH DESIGN

Research design is plan of how to carry out the research and arrives at a solution to

the problem. This research is a survey research where questionnaire will be

stimulated and distributed to respondents.

3.3 STUDY AREA

The study area was conducted in Maiduguri Metropolitan Council, audit department.

Maiduguri Metropolitan Council area is of the 27 local government areas in Borno

State. It has about 829, 486 population of people (2005 census) Maiduguri

Metropolitan Council as a large industries 24 medium scale industries and 49 small

scale industries (Borno State Executive dairy 2006) the metropolis constitute the main

city of Maiduguri and the surrounding villages. This city as for long time prefers local

functions. Firstly as a provisional headquarters as well as the seat of the native

authority headquarters. Later it served as the state capital for decades as North eastern

state as well as the headquarters of the local administration. When the state capital of

60
Borno state and the headquarters of the Maiduguri Metropolitian council. It is divided

into districts namely old Maiduguri, Yerwa, Gwange and Maiduguri district. The

main language sponken are kanuri, shuwa arab, hausa as well as English to a much

lesser degree. Majority of the people are farmers although there are also traders,

business men and civil servant. The people are majority Muslims with a number of

Christians and even traditional are found.

3.4 STUDY POPULATION

A population is a group of persons, organizations about which information is desired.

The population of this study consist all staff of Maiduguri Metropolitan Council.

3.5 SAMPLE SIZE AND SAMPLING TECHNIQUES

Sample according to probert (1960) is a group element selected from a population by

the definition, the number of element in a sample is less than or at most equal to the

number in population. A sample may consist of just one element statisticians refer to

each element as a sample.

It is usually not possible to study the whole population of a research area of the study

at the same time.

As a result, information from a portion of the population is gathered by one (1) taking

a sample of elements. On the basis of the information gathered from the element,

drawn conclusion about the large group is deduced.

In this study, a sample size of 70 was used. This is order to allow for more coverage

of the study area and to ensure precision in drawing conclusion. Sampling consists of

61
probability and non probability sample.

Probability sample include simple random sampling and cluster sampling Non

probability include convenience sampling, judgment sampling quota sampling. For this

study simple random sampling techniques was use. This is because it is basic type of

probability sampling where even in the relevant population as an equal opportunity of

being selected.

3.6 METHOD OF DATA COLLECTION

Data for this study are mainly questionnaire and interview in this study, questions

will be prepared in the questionnaire form and personal interview with some staff of

audit department of the council will be conducted.

Copies of questionnaire will be distributed to the respondent at their places of work

offices personally by the researcher. This will be asked to fill the require information

at their convenience. A covering letter will be attached to each questionnaire assuring

the respondents strict confidently of their comment and responses

3.7 METHOD OF DATA ANALYSIS

In analyzing the research data collected, a simple stratified tool of analyzing in form

of simple percentage has been employed in analysis made in tabular form while a

statistician tool or testing hypothesis, chi-square (x2) is used to test the hypothesis of

the study.

The formular for sample percentage: X2 = Ɛ (0-e)2/E

Where X2= measure of Discrepancy Existing between observed and expected

62
frequency

0= observed frequency

E= expected frequency

Ɛ = sigma (greek word) major summation.

63
 CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.1 Data Presentation

A total of 70 questionnaires were distributed to the employees of accounting,

administrative and internal audit of Maiduguri metropolitan council. After the

questionnaires were completed by the respondents and returned, they were screened

and sorted out by the researcher. The detail of the returned questionnaires show that

out of 70 questionnaires sent out, 66 only were completed and returned, while 1 was

not returned and 3 were rejected because they were not properly completed. Hence

94.29% of the respondents returned their questionnaires.

4.2 Data Analysis

In this section, the responses to questionnaire are presented and analyzed using the

simple percentage for comparison. The presentations and analysis is as stated below.

Section A: Personal Data

Table 4.2.1: Socio- demographic Distribution of Respondents

1. Gender

S/NO Gender Respondent Percentage

1 Male 36 55%

2 Female 30 45%
64
3 Total 66 100%

2. Age

S/NO Age Respondent Percentage

1 18-25 0 0%

2 26-35 6 9%

3 35 and Above 60 91%

Total 66 100%

3. Marital Status

S/NO Marital Status Respondent Percentage

1 Single 12 18%

2 Married 54 82%

3 Divorce 0 0%

Total 66 100%

4. Educational Qualification

S/NO Qualifications Respondent Percentage

1 WASCCE 0 0%

2 ND/NCE 36 55%

3 B.Sc/HND 30 45%

4 PGD 0 0%
65
 5 MBA 0 0%

6 M.Sc 0 0%

7 Total 66 100%

Source: Field Survey, (2021)

Table 4.2.1 above indicates that 36 or 55% of the respondents were Male, while 30 or

45% of the respondents were Female, 6 or 9% of the respondent are aged between 26

and 35, 60 or 91% are 35 and above. This shows that most of the respondent are aged

35 and above. Also 12 or 18% of the respondent are single, while 54 or 82% are

married and none is divorced or widowed. This means that majority of the

respondents are married. And finally, the above table shows the number of

respondents by qualifications. The data collected indicated that 30 or 45% of

respondents are B.Sc/HND Holders, 36 or 55% are ND/NCE holders, and non among

have WASSCE, PGD, MBA and M.Sc. Therefore, it could be inferred that majority

of the credit officers are ND/NCE holders.

Table 4.2.2: Lack of auditor’s independent could militate against internal audit from

achieving its objectives.

S/No Respondent No. respondent Percentage

1 Yes 12 19

2 No 54 81

66
 Total 66 100

Source: Field Survey, (2021)

Table 4.2.2 indicate that 12 or 19% of the respondent greed that lack of auditors

independent could affect the internal audit from achieving its‟ objectives while 54 or

81% respondent that lack of auditors independence has nothing to do with internal

audit from achieving its‟ objective. That means that most of the respondents are of

the view that lack of auditors independent cannot affect the performance of the

internal audit unit in Maiduguri metropolitan council.

Table 4.2.3: Internal audit does not enhance accountability in local government.

S/No Respondent No. respondent Percentage

1 Yes 12 19

2 No 54 81

Total 66 100

Source: Field Survey, (2021)

In Table 4.2.3, above 12 or 19% of the respondents agreed that there is internal audit

does not enhance accountability in Maiduguri metropolitan council, while 54 or 81%

of the respondents disagreed.

Table 4.2.4: Lack of training for members of internal audit department affects the

formulation and implementation of internal control system.

S/No Respondent No. respondent Percentage

1 Yes 54 81
67
 2 No 12 19

Total 66 100

Source: Field Survey, (2021)

Table 4.2.4: Reviewed that 54 or 81% of the respondents agreed that lack of training

for members of internal audit department affects the formulation and implementation

of internal control system while 12 or 19% disagreed. The above analysis means that

majority of the respondent agreed that lack of training for the members of the

internal audit can affect the formulation and implementation of internal control

system Research.

Table 4.2.5: Do you think those that give account were given exact assurance of

respective offices? During the field study the respondent were also asked if those that

give accountability were given exact assurance of respective offices.

S/No Respondent No. respondent Percentage

1 Yes 30 45

2 No 36 55

Total 66 100

Source: Field Survey, (2021)

Table 4.2.5, indicates that 30 or 45% of the respondents agreed that those who give

accountability were given exact assurance while 36 or 55% said no to the question.

This shows that the number of respondents who said no is more that of those who
68
said yes

Table 4.2.6: Are voucher raised in respect of all payment before they are being

audited?

S/No Respondent No. respondent Percentage

1 Yes 60 91

2 No 6 9

Total 66 100

Source: Field Survey, (2021)

Table 4.2.6 above shows that, 60 or 91% of the respondent agreed that voucher raise

in respect of all payment before payment, are audit while 6 or 9% disagreed. This

indicate that the respondent who agree in respect of the above question are more than

those disagreed.

Table 4.2.7: Attitudes of the administrators and other key officers affect proper

accountability in the local government.

S/No Respondent No. respondent Percentage

1 Yes 60 91

2 No 6 9

Total 66 100

Source: Field Survey, (2021)

Table 4.2.7 indicate that 60 or 81% agreed that attitudes of the administrator and

69
other key officers in Maiduguri metropolitan council affect the proper accountability

in the local government, while 6 or 9% disagreed.

Table 4.2.8: The top administrators of this local government consider internal audit as

an essential tool for enhancing accountability. The respondents were asked if the

administrator of Maiduguri metropolitan council considered internal audit as an

essential tool for enhancing accountability, below were their responses;

S/No Respondent No. respondent Percentage

1 Yes 60 91

2 No 6 9

Total 66 100

Source: Field Survey, (2021)

Table 4.2.8, indicates that 91% or 60 of the respondent greed while 9% or 6

respondents disagreed. This shows that the number of those who agreed is more than

of those who disagreed.

Table 4.2.9: Do you believe that your local government can survive without proper

accountability?

S/NO Respondent No. respondent Percentage

1 Yes 0 0%

2 No 66 100

Total 66 100

70
Source: Field Survey, (2021).

In the above Table 4.2.9 when asked if Maiduguri metropolitan council can survive

without proper accountability 66 or 100% of respondent disagreed. This means that

the local government cannot survive without accountability.

Table 4.9.10: External Auditors used to notice disparities in your organization

budgetary control and implementation. When asked if the external auditors used to

notice disparities in the budgetary control of Maiduguri metropolitan council, the

following were their responses;

S/No Respondent No. respondent Percentage

1 Yes 42 64

2 No 24 36

Total 66 100

Source: Field Survey, (2021)

Table 4.2.10 above indicates that 42 or 64% of the respondents agreed that external

auditors used to notice disparities in your organization budgetary control and

implementation while 24 or 36% disagreed. Which expressly indicates that the

numbers of the agreed are more than that of disagreed

Table 4.2.11: Do you think that general supervision could be the factor of improving

accountability in the local government?

S/No Respondent No. respondent Percentage

71
 1 Yes 54 82

2 No 12 18

Total 66 100

Source: Field Survey, (2021)

Table 4.2.11 shows that 54 or 82% of the respondents agreed that general supervision

could be the factor of improving accountability in the local government while 12 or

18% disagreed.

Table 4.2.12: Are you satisfied with the level of accountability, prudence and

transparency existing in this local government?

S/No Respondent No. respondent Percentage

1 Yes 18 27

2 No 48 73

Total 66 100

Source: Field Survey, (2021)

Table 4.2.12 above indicates that 18 or 27% of the respondents agreed that they satisfy

with the level of accountability, prudence and transparency existing in this local

government while 48 or 73% disagreed. Which expressly indicates that the numbers of

the agreed are more than that of disagreed.

Table 4.2.13: Auditors in this local government work towards achieving the goal of

accountability?

72
 S/No Respondent No. respondent Percentage

1 Yes 42 64

2 No 24 36

Total 66 100

Source: Field Survey, (2021)

Table 4.2.13 above indicates that 42 or 64% of the respondents agreed that auditors in

this local government work towards achieving the goal of accountability while 24 or

36% disagreed. Which expressly indicates that the numbers of the agreed are more

than that of disagreed.

Table 4.2.14: Supervision of receipts and disbursement of cash in this local

government can enhance accountability?

S/No Respondent No. respondent Percentage

1 Yes 48 73

2 No 18 27

Total 66 100

Source: Field Survey, (2021)

Table 4.2.14 above indicates that 48 or 73% of the respondents agreed that

Supervision of receipts and disbursement of cash in this local government can

enhance accountability while 18 or 27% disagreed. Which expressly indicates that the

numbers of the agreed are more than that of disagreed.

73
Testing of Hypotheses; Chi-square (x2) method was used as the statistical tool in

testing the hypothesis formulated for this research work. To avoid getting the result of

the test by chance a 5% level of significance at 95% confidence level was used. The

decision rule is where the computed value of the chi-square (x 2) method is greater

than the critical value at appropriate level of degree of freedom (df), null hypothesis

(H0) will be rejected. The degree of freedom is calculated using the following

formula: Degree of Freedom (df) = (r – 1) (c– 1)

Where,

r = Number of rows

c= Number of columns

The question to be used in testing this hypothesis is From Table 4.2.3, since it is

directly related to the hypothesis formulation.

From Table 4.2.3 above indicates observed Frequency and observed frequency total

Observed Frequency table

S/No Respondent No. respondent Percentage

1 Yes 12 12

2 No 54 54

Total 66 100

Source: Field Survey, (2021)

Observed and Expected Frequency Table

s/n Respondent Observed Expected

74
 1 Yes 12 33

2 No 54 33

Total 66 100

Source: Field Survey, (2021)

X2 = Ɛ (0-E)2/E

Chi-square Computation

X2 = Ɛ (0-E)2/E

= Ɛ(12 – 33)2 / 33 + Ɛ(54 – 33)2 / 33

= 13.36 +13.36

X2= 26.72

Degree of freedom is derived by the use of the formula row-1 multiply by column-1

i.e. (r-1) (C-1) which in this case we have df = (r – 1) (C – 1) From table r = 2, C

= 2. Therefore, df = (2 – 1) (2 – 1) =1 x1= 1

df = 1.

The critical value X2 at 0.05 level of probability at 1 degree of freedom (df) is 3.841.

Therefore, since the captured value X2 is greater than the critical value at appropriate

level of degree i.e 26.72 > 3.841, we therefore reject null hypothesis which state that

“internal audit does not enhance accountability in local government. In conclusion,

since calculated value (26.72) > table value (3.841), the H o is rejected. It is there

75
concluded that internal audit does enhance accountability in Maiduguri metropolitan

council.

76
Discussion of Results and Findings There is internal audit in Maiduguri metropolitan

council headed by the internal auditor appointed by the local government service

commission. The internal auditor ensures that payment are verified, properly vouched

for, and made to the intended party. Similarly, the local government uses the payment

receipts and adjustment vouchers in the discharge of their accounting function.

However the existence of unqualified staff of internal audit and account departments

limits the application and proper adherence to the accounting procedures which is

prerequisite for achieving accountability. Furthermore, it is observed that internal

auditors work towards achieving accountability but attitudes of the top officers of the

local government has been one of the major problems hindering the local government

from achieving accountability in the local government since they consider their order

as a last order and not intending to listen to suggestion from their subordinate.

Similarly, it is discovered that lack of auditors independence is limited to some

extent, since most a times are considered a unit under the finance department. The

study also found that general supervision could enhance accountability in the local

government.

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 CHAPTER FIVE

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

5.1 Summary

The paper has identified the importance of internal audit in the management of

local government resources. Without internal audit, an effective internal control

system that will enhance accountability and effective management of resources

cannot be established. The paper also has made an attempt at identifying and

discussing the problems hindering effective operation of internal control system in

local government. In order to achieve accountability, various controls that can be

put in place safeguard the assets of the local government, ensure compliance with

all the relevant legislation, policies and objective as well as ensure that all the

records are accurate and complete have been discussed.

5.2 Conclusions

In this study, the internal audit function of Maiduguri metropolitan council has

been examined and it was obvious that internal audit enhance accountability in the

local government system, it improve the quality of internal control, prevent fraud

and enhance transparency.

5.3 Recommendations

For effective accountability to be achieved there must be internal control system

with minimum number of weakness. In developing the internal system, the

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following issues should be considered; there must be an adequate separation of

duties, ensure proper procedure for authorization of transactions, a continuous

physical control of assets and records, a one in a while staff rotation, an adequate

documentation and recording of transactions, and clean line authority and

responsibility, there should also be a proper organization chart that ensures

supervision. Similarly continuous effort should be made by the local government to

adhere strictly to the maintenance of accounting records. The local government

should review current training facilities to encourage auditing and accounting staff

to receive professional training in any institution of learning in Nigeria. There

should be prompt collection of all sums due to the local government. Revenue

collectors should report to the immediate superior, any default in payment from

any revenue and issue receipts for all payment made. Lastly, for the internal audit

to enhance accountability there must be independence of internal audit department

from finance and any other department in the local government and it should not

receive influence from any other.

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 APPENDIX I

University of Maiduguri,
Faculty of Management Sciences,
Department of Accountancy,
Maiduguri,
Borno State,
P. M. B, 1069

Sir/Madam,

REQUEST FOR THE COMPLETION OF QUESTIONNAIRE

I am a final year student of the above named institution. I am carrying out a study on
“internal audit as a tool for enhancing accountability in local government in Nigeria:
A Case Study Maiduguri metropolitan council zonal office. “This is strictly an
academic exercise, thus, all information provided will be handled with
confidentiality. Thank you for your cooperation.

Yours faithfully,
HAJJA AJI

16/11/07/01/051

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 APPENDIX II

SECTION A:

PERSONAL DATA

This is purely an academic exercise and every information contained, shall

be treated as confidential. So respondents are employed to be truthful and sincere
as possible.

1. Sex: Male [ ], Female [ ]

2. Age: 20 – 30 [ ], 31 – 40 [ ], 41 – above [ ]

3. Marital Statius: Single [ ], Married [ ]

4. Educational Qualification: OND/NCE [ ], H.N.D/B.Sc. [ ], MSC/MBA[ ],

Others [ ]

5. Years of Experience: 0 – 5 [ ], 6 – 10 [ ], 11 – 15 [ ], 16 and above [ ]

SECTION B: TOPICAL ISSUES

Instruction: Please tick ( ) in the appropriate box to signify your choice of

answer. ITEMS: SA A SD D

1 Lack of auditors‟ independent could militate against internal audit from

achieving its objectives.

2 Internal audit does not enhance accountability in local government.

3 Lack of training for members of internal audit department affects the formulation
and implementation of internal control system.

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4 Do you think those that give account were given exact assurance of respective
offices? During the field study the respondent were also asked if those that give
accountability were given exact assurance of respective offices.

5 Are voucher raised in respect of all payment before they are being audited?

6 Attitudes of the administrators and other key officers affect proper accountability
in the local government.

6. Attitudes of the administrators and other key officers affect proper

accountability in the local government.

7. The top administrators of this local government consider internal audit as an

essential tool for enhancing accountability. The respondents were asked if the
administer of Maiduguri metropolitan council considered internal audit as an
essential tool for enhancing accountability

Do you believe that your local government can survive without proper
accountability?

9. External Auditors used to notice disparities in your organization budgetary

control and implementation. When asked if the external auditors used to notice
disparities in the budgetary control of Maiduguri metropolitan council,

10. Are you satisfied with the level of accountability, prudence and transparency
existing in this local government?

11. Auditors in this local government work towards achieving the goal of
accountability?

12. Supervision of receipts and disbursement of cash in this local government can
enhance accountability?

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