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OCHIJENU-ACHARU, UKUBILE
PG/MSC/Ph.D/99/27191
INTERNAL AUDITING AS AN INSTRUMENT OF INTERNAL
CONTROL IN THE LOCAL GOVERNMENT SYSTEM: A STUDY OF
IDAH LOCAL GOVERNMENT COUNCIL, KOGI STATE, NIGERIA
Public Administration and Local Government
A THESIS SUBMITTED TO THE DEPARTMENT OF PUBLIC ADMINISTRATION AND
LOCAL GOVERNMENT, FACULTY OF SOCIAL SCIENCES, UNIVERSITY OF NIGERIA
NSUKKA
Webmaster Digitally Signed by Webmaster’s Name
DN : CN = Webmaster’s name O= University of Nigeria, Nsukka
OU = Innovation Centre
2010
UNIVERSITY OF NIGERIA
2
INTERNAL AUDITING AS AN INSTRUMENT OF
INTERNAL CONTROL IN THE LOCAL GOVERNMENT
SYSTEM: A STUDY OF IDAH LOCAL GOVERNMENT
COUNCIL, KOGI STATE, NIGERIA
BY
OCHIJENU-ACHARU, UKUBILE
PG/MSC/Ph.D/99/27191
DEPARTMENT OF PUBLIC ADMINISTRATION
AND LOCAL GOVERNMENT
UNIVERSITY OF NIGERIA, NSUKKA
DECEMBER, 2010
3
TITLE PAGE
Internal Auditing as an Instrument of Internal Control in the
Local Government System: A Study of Idah Local Government
Council, Kogi, State, Nigeria
A Thesis Presented to
Department of Public Administration and Local Government
University of Nigeria, Nsukka.
By
Ochijenu-Acharu, Ukubile
Pg/msc/Ph.D/99/27191
Supervisor: Prof. Fab. O. Onah
December, 2010
4
CERTIFICATION
This is to certify that this research work was carried out by OCHIJENU Acharu,
Ukubile in the Department of Public Administration and Local Government,
University of Nigeria, Nsukka.
………………………… …………………
Professor Fab. O. Onah Date
Supervisor
………………………… …………………
Professor Fab. O. Onah Date
Head of Department
………………………… …………………
Dean of the Faculty Date
………………………… …………………
External Examiner Date
5
APPROVAL PAGE
This work has been approved by the Department of Public Administration and Local
Government in the Faculty of the Social Sciences University of Nigeria, Nsukka.
By
………………………… …………………
Professor Fab. O. Onah Date
Supervisor
………………………… …………………
Professor Fab. O. Onah Date
Head of Department
………………………… …………………
Dean of the Faculty Date
………………………… …………………
External Examiner Date
6
DEDICATION
THIS WORK IS DEDICATED TO ALMIGHTY GOD AND MY LATE FATHER
CHIEF NATHANIEL EGUDA OCHIJENU
7
ACKNOWLEDGEMENT
It is proper t acknowledge and all Sundry that may have contributed greatly to
the outcome of this work, because the success of the work is attributed to several
factors, some of which are obviously out side the Sphere of my effort. But for Space
and time it is not possible.
Nevertheless, I must acknowledge with deep appreciation the priceless effort/
contributions of my Supervisor, Professor Fab. O. Onah, his intellectual constructive
criticisms streamlined this research work to what it is. I remain eternally grateful.
Dr. Tony Onyishi, for your love and support, I say thank you. I cannot afford
to forget the moral and academic benefits derived form Prof. Okoli, Prof. (Mrs.) R.C.
Onah, Prof. Chikelue Ofuebe; Dr. Tony Onyishi, Prof. (Mrs.) C. Oguonu and Prof,
N.N. Elekwa. Their individual and collective efforts saw me through the rigours of
learning in this Ivory Tower (UNN).
To my treasures, Mrs. Ejura Ukubile Ochijenu, Master Ojo-Ajogwu Nabor
Eguda, master Eguda Marvelous Eguda, Ibechile Favour Eguda (Mama G), Ayide B.
Eguda and Master Oba David Eguda, I say thank you for your patience and love.
To those whose name are not mentioned because of time and space, I say
thank you all and may the Almighty God reward you people abundantly Amen.
Above all, I thank the Almighty God for his love and protection over the year.
Ochijenu-Acharu, Ukubile University of Nigeria, Nsukka
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ABSTRACT
The importance of sound and effective audit of the finance of Local authority cannot
be over Stressed. With out effective auditing, the polices adopted by the Local
authorities in a great variety of fields may not be capable of successful implementation
and sometimes even provide stimulus to the implementation of policies. This research
work is an attempt to find out how internal auditing is an instrument of internal control
in the Local Government System in Nigeria. The work is divided into five (5)
Chapters. Chapter one deals with the introduction to the work. The review of the
relevant existing literatures on internal auditing, Statement of Hypotheses definition of
key concepts, data collection method and analysis one contained in chapter two three
deals with the ethnographic setting and historical background of the study are – Idah
Local Government Area. While chapter four contains presentation and analysis of data.
Finally chapter five contains the summary of the work and drawn conclusion with
suggested recommendations deemed necessary for the improvement of internal
auditing in the Local Government System in Nigeria.
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TABLE OF CONTENTS
Title Page - - - - - - - - - i
Certification - - - - - - - - ii
Approval Page - - - - - - - - iii
Dedication - - - - - - - - - iv
Acknowledgment - - - - - - - - v
Abstract - - - - - - - - - vi
Table of Contents - - - - - - - - vii
CHAPTER ONE: INTRODUCTION - - - - - 1
1.1 Background to the Study - - - - - 1
1.2 Statement of Problem - - - - - 2
1.3 Objectives of the Study - - - - - 3
1.4 Significance of the Study - - - - - 4
1.5 Scope and Limitation of the Study - - - 4
CHAPTER TWO: LITERATURE REVIEW AND METHODOLOGY 6
2.1 Literature Review - - - - - - 6
2.2 Hypotheses - - - - - - 22
2.3 Operationalizaiton of Key Concepts - - - 22
2.4 Method of Data Collection and Analysis - - - 24
2.5 Theoretical Framework of Analysis - - - 25
CHAPTER THREE: ETHNOGRAPHIC SETTING/ADMINISTRATIVE
STRUCTURE OF IDAH LCOAL GOVERNMENT COUNCIL 26
3.1 Introduction - - - - - - - 26
3.2 Geographical Location - - - - - 26
3.3 The Historical Background of Idah Local Government
Ethnic Origins - - - - - - 28
3.4 Industrial Prospects - - - - - 34
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3.5 The Status of Women in the Igala Society - - 36
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS - 37
4.1 Introduction - - - - - - 37
4.2 Test of Hypotheses and Discussion of Findings - - 38
CHAPTER FIVE: SUMMARY, CONCLUSION AND
RECOMMENDATIONS - - - - - 47
5.1 Summary - - - - - - - 47
5.2 Conclusion - - - - - - 48
5.3 Recommendations - - - - - - 49
BIBLIOGRAPHY
11
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
The importance of sound and effective audit of the finance of local
authority cannot be overstressed. Without effective auditing, the policies
adopted by local authorities in a great variety of fields may not be capable of
successful implementation. But where there is proper auditing it can usually
facilitate implementation and sometimes even provide stimulus to the
implementation of policies.
Auditing is therefore defined as “the examination of financial statements
of an organization for the purpose of determining their substantial accuracy”. It
could be further described as examination by an auditor of the evidence from
which the financial accounts and balance sheet of an organization have been
prepared in order to ascertain that they present a true and fair view of the
summarized transactions for the period under reviews and of the financial state
of the organization as at the date ended; thus enabling the auditor to report
thereon. This is in the case of external auditing.
The auditor despite examining the books, accounts and vouchers of the
establishment may go further in examining the actual assets held by the
organization.
12
Internal auditing is a series of process/technique through which an
organization’s employee ascertains for the management by means of firsthand
on-the-job observation whether established management controls are adequate
and effectively maintained. It also reveals whether financial and accounting
records reflect actual operations and cash divisions or other unit is carrying out
the plans, policies and procedures for which it is responsible.
Internal auditing therefore is an independent appraisal activity within an
organization for the review of operations as a service to management (Stettler,
1977).
1.2 STATEMENT OF THE PROBLEM
In Nigeria, the oil boom of the early 1970’s increased the funds available
to the public sector, hence the local government system in Nigeria as a third
tier government is expected to perform more crucial role(s) for the citizenry at
the grassroots level. Regrettably however, the Nigerian Local Government has
encountered serious internal problems which handicap the achievement of its
goal(s).
Mismanagement, misappropriation, fraud, etc. have become more
conspicuous as some of the factors which limit the normal processes of the
system. Apart from the notable problems above, the local government system
has been characterized of late with prebendal politics: The system has been
13
used by the politicians as a means of enriching themselves and as such has not
been able to meet its basic objective of provision(s) of social amenities to the
people at the grassroots level.
Based on the above, the following questions are raised:
1) How does lack of qualified manpower affect effective or efficient
operations of the Internal Audit in the local government?
2) What is the relationship between the character of the Nigerian State and
poor performance of Internal Audit in Idah Local Government Council?
3) Does lack of equipment hinder the effective operations of the Internal
Audit in Idah Local Government Council?
1.3 OBJECTIVES OF THE STUDY
The general objective of this study is to x-ray the nature, effectiveness
and efficiency of Internal audit as an instrument of internal control in the Local
Government System in Nigeria. Specifically the study aims at the following:
i) To identify the internal control system of the Nigerian Local
Government.
ii) To ascertain the nature of Internal Audit Unit and the extent of
compliance with established policies, plans and procedure.
iii) To investigate the connection between the Internal Auditor and the
Chief Executive.
14
iv) To find out the effect of number (iii) above on the practice and
effectiveness of the Internal Auditor, and
v) To recommend ways of improving the Internal Audit System in order to
reduce or exterminate the incidence of mismanagement,
misappropriation and fraud in the Nigerian Local Government System.
1.4 SIGNIFICANCE OF THE STUDY
This study is important in many ways: First, in view of the increased
funds available to the local government and its expected role(s) to the citizenry
at the grassroots level which remain a far cry, it is important, therefore, that a
study of this nature be carried out with a view to making useful discoveries
concerning the process of improving internal auditing and financial control in
the local government system.
Secondly, to serve as a helping tool for other researchers who may wish
to make inquiry into the factors that mitigate against internal auditing and
financial control in Nigeria.
1.5 SCOPE AND LIMITATION OF THE STUDY
Considering the large scope of auditing and financial management, the
time limit, the heavy financial involvement in research and the host of other
factors that inhibit research in Nigeria; it is imperative therefore to limit the
15
scope of this study to internal auditing and financial control in the Nigerian
Local Government System with Idah Local Government Council as the area of
survey.
As mentioned above, emphasis will be on basic but other concealed
problems that have militated against effective/efficient internal auditing as
instrument of internal financial control in Idah Local Government council in
Kogi State.
16
CHAPTER TWO
LITERATURE REVIEW AND METHODOLOGY
2.1 LITERATURE REVIEW
It is essential that we have a fair knowledge of the content of the topic,
and this knowledge is gained by reviewing some general works on the topic.
For a good work to be achieved, literature review is a very crucial aspect of
research that cannot be overlooked.
Although literature on government accounting and auditing is very
scanty, this possibly could be because of the lack of cohort existence among
government Accountants (quite unlike their commercial counterparts), and the
apparent reason that independence of government accounting and auditing is
not very easy to establish. However, reasonable efforts have been made to
review a few that are available and that of commercial auditing where
necessary and applicable.
According to Howard (1982) internal audit is “a review of operations
and records, sometimes continuous, undertaken within a business by a specially
assigned staff”. Where there is an internal audit department or unit this may
form a valuable part of the whole system of internal control and according to
its efficiency or otherwise may influence considerably the conduct of the audit.
He further stated that internal auditing is carried out with a view to
seeing that the system of operation is adhered to and that the internal control is
17
as efficient as possible and that economies consistent with efficiency are
applied to the business.
Taylor & Glazen (1978) described internal auditing in their statement as
the responsibilities of the internal auditors as “the independent appraisal
activity within an organization for the review of accounting system and other
operations as basis for protective and constructive services to management”.
Millichamp (1984) defined internal auditing as “an independent
appraisal activity within an organization for the review of operations as a
service to management: it is a managerial control which functions by
measuring and evaluating the effectiveness of other control. He further stressed
that internal auditing involves such activities as:
a) Reviewing and appraising soundness, adequacy and application of
accounting, financial and operating controls;
b) Ascertaining the extent of compliance with established policies, plans and
procedures;
c) Ascertaining the extent to which organization’s assets are accounted for,
and safeguarded from losses of all kinds;
d) Ascertaining the reliability of accounting and other data developed within
the organization; and
e) Appraising the quality of performance in carrying out assigned
responsibilities.
18
Section 123(1) of the 1979 Constitution of the Federal Republic of
Nigeria stipulated measures for the control of public funds. These include the
auditing of public accounts and appointment of Auditor-General. Sections 125
and 126 of the 1999 Constitution (Nigeria) dealt with the same matter.
Ogunna (1996:37) observed that auditing of local government accounts
is a crucial aspect of the financial management and effective control
mechanism. The final accounts which are given in annual statement of
accounts of the local government are subject to audit. In Nigeria, in the past,
this was carried out by the State Government Auditor-General and his staff.
Following the Babangida Administration’s reforms aimed at giving autonomy
to local governments, the local government accounts are now audited by the
Local Government Auditor-General of a State and his staff. Ogunna further
stated that auditing of local government funds is a powerful financial control
mechanism which ensures that the scarce financial resources are prudently and
judiciously managed to effectively fulfill the functions allocated by law to the
local governments.
The 1988 Implementation Guidelines on the Application of Civil Service
Reforms in the Local Government Service made it clear that Internal Audit
Unit be established in each local government to provide a complete and
continuous auditing of the accounts and records of revenue, expenditure, plant,
allocated and unallocated stores where applicable. The Instruction furthermore,
19
established Audit Alarm Committee and Office of Auditor-General of Local
Government in each state of Nigeria.
According to Dale (1965:4), “the primary objective of an audit is to form
and express an opinion concerning the truth and fairness of financial
statements”. He posited that the words true and fair are probably the most
important and yet the most ill-defined words for the auditor. They do not
identify a unique picture, they do not mean correct in the mathematical sense
nor even legally accurate. To be true and fair is to be not misleading and to be
understandable by the educated layman. The examination and report of the
auditor adds credibility to the financial statement.
However, to maintain that credibility, the auditor must be independent of
the management. Anything that indicates the involvement of financial interest
in the managing of the enterprise will reduce the effectiveness of the auditor’s
opinion.
On the controls of auditing, the financial memoranda form the most
comprehensive instrument through which an internal management of control of
local government funds are carried out. According to Anambra State Financial
Memoranda, the internal management and control of local government funds
are to ensure that local government funds are properly accounted for in various
accounting books and records described in the Financial Memoranda 21 and to
ensure proper control over local government expenditure.
20
Some scholars are of the view that control exists in local government
with little or no explanation on the effectiveness of the control. Okolo
(1987:33) said that the greatest number of frauds committed in the local
government councils are effected by printing of fake receipts by Revenue
Collectors. Some of these receipts could be so well faked as to look genuine,
and except by chance, an auditor does not ordinarily discover this type of
fraud. Okolo opined further that it is the duty of the Council Treasure to watch
closely the returns of each Revenue Collector. Revenue Collectors appear to be
accounting far less than they should be collecting from a particular source (e.g.
Motor Park Fees). He further said that another area auditor should be on watch-
out, is the employment and use of casual labour: There are known cases where
people placed on council payroll as Road Workers are in fact engaged full-time
on the private farms of some top local council officials. The inclusion of non-
existent casual labourers on the payroll is also a common type of fraud in local
government council, and the auditor has to pay particular attention to this.
Nwosu (1983:28) on his own part said that there is need for an effective
cost control system in Nigerian local government councils. He posited that all
public agencies in Nigeria should adopt effective cost control system which
facilitates attainment of target objectives. Nwosu also suggested that
Programme Planning and Budgeting System (PPBS) serves as both a cost
control system and a management tool for accomplishing better results.
21
Oladimeji (1986:171) picked hole with the state local government
edict(s). According to him, the edict(s) have little to say about the manner in
which the auditor should undertake his task. The provisions in the edict
concentrated mainly on five matters only, viz: disallowance and surcharge,
recovery of surcharges, taking evidence, appeals from decisions of the auditors,
certification by the auditor of the annual financial statement. He also saw audit
report as very vital aspect in the chain of financial management. He opined too
that the entire edifice of financial management in government revolves around
one single theme, the principle of accountability. Accountability is a
comparison of the accounts submitted at the end of the cycle with the budget
made at the beginning – a check of performance against legitimate
authorizations.
Oladimeji pointed out three main objectives of auditing, viz;
1) Assuring that the Annual Finanical Statement produced at the end of the
financial year is a true and fair statement of its financial transactions
during the year.
2) To assure the people that the affairs of the government have been properly
conducted during the year”.
Amaechi (1988:13) observed that in the past, some external audits were
usually carried out two or three years after the end of the financial year to
which they relate. Not only does such a practice run contrary to the provisions
22
which require government and the auditors’ report thereon to be published
within six months after the end of the financial year, but such a long delay
often destroys completely the effectiveness of the provisions relating to
disallowance and surcharge. Where, for example a substantial amount in fraud
has been committed, it is unlikely that those concerned will be stupid enough
and content to remain in post for very long.
In the light of the above, he suggested that there is a strong case for the
external audits of a government financial affair to be partly carried out during
the financial year. This arrangement should enable prompt action to be taken,
when necessary by way of disallowance and surcharge and it also facilitates the
speedy completion of the audit after the end of the year. This will enable an
early submission of the audit report to be made.
Another factor which he pointed as a barrier to effective audit practices
in the public sector is the quality of staff. To him, “Government auditors are
frequently little more than ticking machine with an inadequate understanding of
the transactions, practices and procedures which they are supposed to be
auditing. The tendency has been to check calculations, costs, postings and
entries in books and records but seldom to look beyond the books to question
whether the transactions which purport to have been made, actually took place
and whether the accounting entries are an accurate reflection of such
transactions”.
23
Abdullahi (1977) dealt copiously with internal audit in local authorities.
In his work, he believed that in the past, far too little attention was given to the
internal audit of the local council financial transactions. He stressed that
internal audit is not only a very important aspect of financial control, but also a
most effective aid to financial management. He suggested that the
responsibilities of the Internal Audit Unit will be such that it will need to be
headed by an official of some seniority, a person whose views will be respected
by those to whom he submits reports and recommendations to. He also thinks
that in due course, once the Internal Audit Unit is firmly established and has
demonstrated its capacity to undertake the functions of an auditor, then the
functions should be extended to monitoring the use of resources in the pursuit
of the defined objectives of the local government. At this stage, the unit will
start to carry out management audit functions. In this regard, “the Internal
Audit Unit will sometimes need to work with the cooperation and involvement
of a spending department, at other times it maybe preferable that the Audit Unit
should work in isolation”.
In view of the great importance of finance in any organization, one of
the policies that must be clearly established is who within the enterprise is
charged with financial responsibility. Hugh (1987) opined that the incumbent
of such responsibility should religiously accept the fact that the best system of
24
public finance and financial management is that which secures the maximum
social advantage from the operations which it conducts. This calls for two
major economic tests for social advantage: Improvements in the production and
improvements in the distribution of what is produced. This in government
organization is measured in terms of services. Hugh believes that “the two tests
are complementary and where they are not given majority consideration, that
industry is not making the required progress and its expenditure may not be
justifiable”.
Wariboko (1980) was of the view that the idea of ensuring ministerial
financial responsibility be extended beyond the mere civil service audit queries
to management audit. In essence he is saying that there should be a shift from
proper bookkeeping (steward accounting) to proper control of public resources.
The object of management audit of public institutions and ministries will
be to ascertain whether or not economic resources of government organizations
are used by their management in the economic way to produce results in
accordance with the goals of the country. He believed that “this kind of
auditing is not new. However, what is new is its introduction in the public
sector economy”.
25
Koleade & Dean (1985) delved deeply into the problem(s) of financial
management in the Nigerian public sector. They argued that the role allotted to
Nigeria government accountants have been too narrow and that there is a lack
of financial managers both in number and quality. They epitomized audit as an
indispensable aspect of financial accountability. They however, regretted that
in spite of the important role audit plays in effective financial management, it
has not been fully developed and accorded its place of honour in the Nigerian
public sector.
No amount of external presence will make an entity administratively
efficient unless the entity itself is properly managed and controlled. The latter
mentioned authors recognized this point when they accorded “internal control
system the most important building block in an efficient system of financial
management”.
The Public service Review Commission (1974) was set up to examine
(among other things) “the organization, structure and management of the
public services”. One of the areas of which Commission reported was financial
management. The Commission found several defects on the field of internal
control.
26
Under the heading, Over-checking, the Commission observed that
“checking in the civil service is excessive and indeed is almost carried to a
point regardless of cost. For instance, it was found that payroll data were first
checked by staff independently of those who prepared the original data, and
then subjected to a 100% internal audit before payments are made”.
The view of the Commission was that internal audit should not be use
dto carry out routine day-to-day checking but should be an independent means
of reviewing systems of control. The Commission drew particular attention to
the overlap and duplication of checking which was carried on in ministries and
departments by:
a) “The department’s own staff;
b) Internal Audit Staff on continuous 100%;
c) External Audit Staff on a test check basis; and
d) By the Treasury Inspectorate Division of the Ministry of Finance”
The report showed that in certain ministries, the whole system of
accountability had broken down. In these cases, no specific answer(s) could be
given to audit queries. The bodies most affected were the Ministry of Defence
(in particular, the Army), and the Nigerian Police; the concept of public
accountability was less familiar to these bodies than to many other ministries.
It transpired that the Auditor-General’s Staff had been driven away from
27
auditing the accounts of some Army Units and in some cases, physically
harmed.
The shortcomings of that of the Army included improper maintenance of
accounting records, non-attachment of documents/literatures to support
expenditure, failure to adopt public sector tender procedure, etc. The findings
of the commission concerning the Policy were that “unpresented cheques made
out of fictitious names were used to exhaust budget allocations that would
otherwise lapse, and that such dishonest accounting methods are fraught with
serious consequences”.
The 1988 Implementation Guidelines on the Application of the Civil
Reform in the Local Government Service have enforced the manner in which
auditors should undertake its tasks; it provides for the guidelines on Audit
Queries and Sanctions, Codification of Offence(s) and Sanction(s) contained in
Section 25,
Ayorinde (1999:10) observed that auditors’ interest in an organization’s
system of internal control are basically for the following specific objectives, as
to:
i) determine whether the control environment is conducive to the
maintenance of a reliable system of accounting and control procedures;
28
ii) consider management’s ability to make informed judgements and
estimates that are necessary in the preparation of financial statements;
iii) assess the incentive and opportunities for internal misrepresentation or
distortion of financial statements by management;
iv) assess whether management has sufficient and reliable information for
effective control of the business, and such information used effectively;
v) identify the key indicators, reports and procedure that management uses
to control the business and which may be relevant for audit purpose; and
vi) identify the impact of particular control environmental factors, both
favourable and unfavourable on the risk of material mismanagement in
the financial statements
Dayo (1999:2-3) stressed that auditing function include examination and
evaluation of the authenticity and reliability of a firm’s business documents
and records. It also involves making inquiries to ascertain that the financial
statements on which the auditor is reporting and which have been prepared for
these records display true and fair view of the state of affairs at the end of the
year. An auditor therefore, is responsible for the examination of set of books of
accounts presented to him in order to ascertain the true positions of the books
of accounts for the period under review, and according to the information and
explanation given to him.
29
Adeniyi (19998:3) on his own part pointed out that there are basic
objectives that can be accomplished through the audit function. The audit
objectives are to disclose whether an organization and its accountable officials
are:
a) Operating with financial integrity;
b) Providing financial statements that fairly reflect financial condition and the
method of operation;
c) Safeguard assets;
d) Operating efficiently and economically;
e) Complying with government regulations, statues, contracts, provisions and
regulatory requirements;
f) Providing accurate and responsibility-oriented operating information; and
g) Operating effectively.
Adeniyi further stated that audit may have multiple objectives; however,
those establishing the audit objectives should carefully weigh the costs of
conducting audits to accomplish specific objectives with the value of financial
or service benefits to be achieved.
Ojo (1999:1) noted that the present environment is a very dynamic one.
Government activities have increased considerably and the need for
accountability in every facet of governmental organizations have also become a
30
household word. On the other hand, the focus of government auditing is
changing. Auditing is no longer merely concerned with the appropriateness of
financial records and compliance with legal requirements. Now, the auditor is
also called upon to assess the efficiency and effectiveness of programmes and
activities. These additional responsibilities according to Ojo are not only new,
they are also challenging.
Chapter 30 of the Financial Instructions of the Imo State Government
stressed that the accounting officer of a ministry or (non-ministerial)
department will ensure that subject to the availability of staff, an Internal Audit
Unit shall be established to provide a complete and continuous audit of the
accounts and records of revenue, expenditure, plant, allocated and unallocated
stores where applicable. The existence of an Internal Audit Unit will not divert
any member of the ministry or department of the individual responsibilities
placed upon him, neither will it obviate the necessity for normal departmental
check.
The Instruction also placed some restrictions in the duties of internal
audit staff. It states that “the staff of the Internal Audit Unit may not be
employed within the ministry, department or unit, on accounting duties or on
the internal check of accounting records or in answering of the Director of
Audit Reports and Queries”. Furthermore, an officer will be precluded from
31
taking up the duties of internal audit staff if he has previously been engaged on
accounting or internal check duties within the ministry, department or unit over
the period to be covered by the internal audit.
The import of the provisions of the Financial instruction is that the
establishment of an Internal Audit in every ministry or non-ministerial
department is not a sine qua non. This is true because the inclusion of the
conditional clause “subject to the availability of staff” confirms that.
Nevertheless, the duties of an internal audit department to management
generally has no substitute and therefore, its establishment in any organization
is a necessity.
Ikpessi (1988:4) observed that the desire of governments and tax payers
to be assured of the selflessness of the operators serving their interest that
auditing (internal) appeared on the business scene much later than auditing in
the public accounts. For instance, in business sector, “the companies Act, 1968,
directs every company to keep proper books of accounts in respect of all sums
of money received and expended”. It further requires such books to be
examined together with the summaries therein and the latter reported on
annually by statutory auditors.
32
2.2 HYPOTHESES
The study shall be guided by the following research hypotheses:
a) Lack of qualified manpower affects the effective and efficient operations of
the Internal Audit Unit in the local government.
b) The character of the Nigeria State is not a function of poor operations/
performance of the Internal Audit in the local government system.
c) Non availability of working equipments limits the effective operations of
Internal Audit Unit in the Local Government Council.
2.3 OPERATIONALIZATION OF KEY CONCEPTS
Internal Auditing
According to Millichamp (1994:445), internal auditing is an
independent appraisal function established by the management of an
organization for the review of the internal control system as a service to the
organization. It objectively examines, evaluates and reports on the adequacy of
internal control as a contribution to the proper, economic and efficient and
effective use of resources.
33
Vouching
This refers to the examination of books of accounts of an organization
by an internal auditor with a view to ascertaining the mathematical accuracy in
the recording of such transactions, so as to enable the auditor to commence his
audit work. It is not the duty of the auditor to vouch transactions; it is the work
of an accountant in an organization, but where there is no accountant, the
auditor can undertake such function. It is also a term used to describe the
examination of documentary evidence that is available to support the
authenticity of transactions entered in the organization’s records.
Internal Control
Internal control refers to the whole system of controls, financial and
otherwise, established by the management in order to carry on the business of a
company or organization in an orderly and efficient manner, ensuring
adherence to management’s policies, safeguarding the assets and securing as
far as possible the accuracy and reliability of the records.
Audit Programme
This is the itinerary of duties prepared by an internal auditor as a guide
to helping him undertake audit duties. The internal auditor shall prepare audit
programmes which, when not in use shall be carefully kept under lock and key,
34
to guide those undertaking internal audit duties in accordance with the
provisions of Financial Memoranda.
Audit Alarm
This is an alarm raised by an internal auditor of a local government or
other organizations on the misappropriation or irregular expenditure by the
Council or Chief Executive that are not in line with the financial instruction or
guidelines. He reports immediately to the Auditor-General for Local
Government at the State level who will direct the State “Audit Alarm
Committee” to investigate into the matter.
2.4 METHOD OF DATA COLLECTION AND ANALYSIS
In this study both primary and secondary sources of data collection is
employed to gather information.
Primary Sources
This consists of observation, interviews and personal experience of the
researcher in the Local Government Council. The researcher acted as a
participant observer in the data collection. As a staff of the local government,
the researcher has been in the system and therefore ascertain the quality of
35
information offered/collected. This is added to the personal experience of the
researcher, which is an important method of data collection.
Secondary Sources
Under the secondary sources of data collection, data was sourced via;
a) Textbooks
b) Government publications, like Official Guidelines, Financial Memoranda,
Constitutions, Gazettes, etc.
c) Journals and academic papers.
d) Newspapers and magazines.
Method of Data Analysis
Since data gathered cannot be utilized in their raw form, data collected
through the various sources mentioned earlier were analyzed using the content
analysis, which draws inferences from data to reach conclusions. This method
according to Holsti (1986:60) is a technique for making inferences by
systematically and objectively identifying specified characteristics of the
subject matter.
36
CHAPTER THREE
ETHNOGRAPHIC SETTING OF IDAH LOCAL
GOVERNMENT AREA
3.1 INTRODUCTION
Idah Local government derived its name from the ancient town of
IDAH, (meaning where every thing ends) the cradle fountain and citadel of
Igala tradition and culture. It is the traditional home of the Igala people and the
seat of the Atta Igala – the paramount monarch of the Igala people.
With the local government reform of 1976, the former Idah Division
became known as Idah Local Government Area. In 1989 Ofu Local
Government Area was carved out of the then Idah Local Government Area,
and the present Idah Local Government Area came into being in October, 1996
when two Local Government Areas - Ibaji and Igalamela- Odolu were carved
out of the defunct Idah Local Government Area.
3.2 GEOGRAPHICAL LOCATION
Geographically, Idah Local Government Area is at the South East of
Kogi state and is located at the right bank of River Niger. It shares common
boundaries with Igalamela-Odolu Local Government Area to the North and
east, Ibaji Local Government Area to the South and Edo State to the West. Idah
is the headquarter of the Local Government and seat of the Igala Kingdom.
37
Idah Local Government Area is largely populated by Igala and mixed with
other heterogeneous Nigerian ethnic group like the Nupes, Yorubas, Bassa,
Igbo, Hausas, Igbira and the host of others.
Idah Local Government Area has a total population of about seventy
nine thousand, seven hundred and fifty five (79,755) while Igalamela/Odolu
Local Government Area has a total population of one Hundred and twenty
seven thousand five hundred and seventy two (127,572) and Ibaji Local
Government Area has a total population of both male and female of about one
hundred and fifty seven thousand and forty eight (147,048).
(Source: Government Official Gazette)
Topography:
Idah Local Government is located in tract of land to the lower reaches of
the east of the Niger. Over 70% of the population of the Local Government are
subsistence farmers.
The Local Government Area lied within the warn humid zone of
Nigeria. There is a distinctive wet-dry season dichotomy. The wet season lasts
from about April to the end of September to early October while the dry season
lasts from about October to about the end of March or early April. Rainfall can
be heavy and effects of the harmattan can be severe, especially from about
November.
38
Idah Local Government is watered by two rivers; River Niger and
Ocheche River and many streams such as Edeke, Iyoloko, Inachalo, etc. The
vegetation is essentially the guinea savanna type with mixed deciduous forest
patches. The low land riverine areas are flooded seasonally making it possible
for the growing of paddy rice and controlled fish farming in ponds that are
owned on individual or clan basis. The potential for building large artificial
fish farms is assured.
3.3 THE HISTORICAL BACKGROUND OF IDAH LOCAL
GOVERNMENT-ETHNIC ORIGINS
Idah is the traditional home of the Igala people and the seat of the Igala
people and the seat of the Igala Kingdom, hence the ethnic origins of the
people of Idah Local Government is synonymous to that of the Igala people.
The actual origin of the Igala people of Idah Local Government like most other
Nigerian peoples is not quite certain. Some say that they migrated from Benin,
some say from Ile-Ife and some still from Jukunland (Kwararafa). The present
Atta, Agabaidu Aliyu O. Obaje as quoted by Yusufu Etu says that the Igala
came from southern Yemen, passed through Ethiopia (where there is an ethnic
group called the Gala) and through the then (medieval times) Empire of Mali,
to Jukun land and finally to their present location, issues about exact origins of
people cannot be taken too rigidly and with too much assurance since it is a
39
matter of time and space much of which is lost in unrecorded oral tradition.
Perhaps what should interest us today more than ethno-genesis is whether the
Hausa people came from Baghdad or the Yoruba from heaven opened up at Ile-
Ife (or from Egypt according to Dr. Lucas) or whether the Tiv came from
South Central Africa and the Igbo from Israel, should not be overemphasized
in the present scheme of things. Our interest should be focused on good virtues
and lessons derivable from the past experiences of our people and our present
capabilities to build and improve upon the achievements of the past. And this is
the objective of the Igala people in the present dispensation where modernity
and development are being emphasized within the content of the socio-cultural
base.
The Igala people of Idah Local Government speak the language bearing
the same name-a language classified by linguistic experts as belonging to the
lower group of the Niger-Congo family. As a result of the strong linguistic
affinities, Dr. Femi Akinkugbe of University of Lagos has recently classified
Yoruba, Itsekiri and Igala as belonging to what she calls the proto-Yoroboid
sub-group in the main Kwa group. The language itself is undergoing scientific
study and recent efforts by Dr. Tom Miachi, Yusufu Etu and the late Professor
R.G. Armstrong have enhanced understanding of aspects such as the
orthography (now being systematized) as well as tone marking. Today, Igala
orthography is one of the only twenty-seven or so orthographies recognized by
40
the National Educational Research and Development Council of the Federal
Ministry of Education, as having got an acceptable orthography, out of about
three hundred main languages that exist in Nigeria today (Etu, 1996).
Occupation
About 70 percent of the people of Idah Local Government Area are
peasant farmers, while others are engaged in trading, hunting, black-smiting
and weaving.
Culture
The people of Idah Local Government Area revere and hold their
tradition and rich cultural heritage in high esteem, which is often blended with
warm hospitality that earns the people a prominent place in the realm of
respectability and entertainment on observance of Igala culture.
The culture of the Igala people in Idah Local Government Area is very
much similar to the culture of most other Nigerian people, especially those
from the geographical Middle-Belt, southwards to the coast. Cultural practices
such as in kingship, funeral ceremonies, beliefs, marriage, masquerading,
modes of dress, body adornment, etc. are very similar to those of other
Nigerians in the sub-region mentioned above. For instance, the egwu
masquerades of Igala are similar and indeed are related to egwugwu or nmanwu
of Igboland, the egwugwu of Asaba (Delta State) the Alekwu afia of the Idoma,
41
the eku of Ebira, the gune and the Ndeako gboya of the Nupe but for some
slight differences. The Ogani festival performed at Idah is also celebrated in
the southern parts of Plateau State, especially the Umaisha and parts of
Nassarawa areas.
In spite of the differences in worshipping God, the people of the area
exhibit a high sense of religious tolerance and they very much cherish their
culture as the umbilical cord that binds them together and thereby promoting
unity and mutual understanding.
Prominent among the cultural festivals observed in the Area include the
“Ocho” festival and the “Ogaigainyi” pre “Ocho” festival organized annually
toward the end of the dry season. The festival serves as a forum for
revival/exhibition of the people’s style and ways of life. It is usually exhibited
in the presence of the Attah Igala as the Chief custodian of Igala culture. Other
cultural festivals in the area include the Ogani Angwa festival, the nine royal
masquerades headed by the dignified Ekwe Idah.
There are numerous masquerades of significance, the most notable
amongst them are Egwu-Afia (a highly respected clan masquerade), Acholabi
and Onoko of Ogenegwu.
Tourist attractions in the area includes the Oma-Odoko statue at
Inachalo-Princess Odoko daughter of Attah Idoko who was sacrifieced and
buried at Inachalo Idah to save the Igala people from the Igala-Apah (Jukuns)
42
war and Inikpi statue-Princess Inikpi who was also sacrificed and buried at Ega
by the River Niger in Idah to save the Igala people from the Igala-Benin war
during the regign of the father Attah Ayegba Oma-Idoko. Other tourist
attractions include.
The Ubiogba cliff of the river Niger;
The ancient defence moat at Idoma-Idah;
Ocheche, cliff steps at Ubomu;
Odogo tome, at the Attah-Igala’s palace Idah;
The uncooked fishes at river Inachalo etc (Okwoli, 1973).
Marriage
Marriage is universal and important institution in the world and in Africa
in particular. Marriage in most Igala societies is a kingship affair. It is an
agreement between two groups. The rule of exogamy upholds in Idah Local
Government Area. A mate is selected not from the lineage. There is incest
taboo and people who have blood relationship (consanguinity relationship)
cannot marry. Marriage is also prohibited between “Oma-One” and “Adu”
(free-born and slave).
Marriage in Idah is characterized by a series of presentations that is,
payments, gifts or services. These constitute the bride wealth, Igala being a
patrilineal society Idah is patriarchal. This means that the husband has
43
overwhelming power over the children. This concept of patrilineality affects
the status of women in most African societies.
Common grounds for divorce in the area include, disloyalty,
incompatibility, barrenness and infidelity among others.
In conclusion, marriage in Igala is an important institution because
through it, network of kingships are created. Through it children born are
legitimized. Finally it ensures that society does not go into extinction.
Religion
Christianity and Islam are the dominant religion in the area. In spite of
the difference in worshiping God, the people of the area exhibit a high sense of
religious tolerance and they very much cherish their culture and tradition as the
umbilical cord that binds them together and thereby promoting unity and
mutual understanding amongs them. Because of their belief in custom and
tradition, the practice of Islam and Christianity does not prevent them from
observing the tradition of the area. For instance the titled men (Ama Ajofe) in
spite of their various religious beliefs observe the biddings of the tradition.
According to Boston (1968) the Eguola and Adokpulu and jointly responsible
for the royal burial ground, “Ojaina”, and the former is also in charge of a set
of nine “Okwute” representing dead kings. Eguola and Atebo were jointly
responsible for the offerings made to the royal ancestors during the annual Egu
44
festival. These title holders in spite of their Islamic beliefs still observe the
tradition.
However, factors of social change like Christianity, Islam, education and
the incorporation of Western political and economic structures into the
traditional systems have altered the status some how.
3.4 Industrial Prospects
Agriculture
Land ownership – Land is owned by the “Olopu” or “Onu-Ane”,
provided you are a free male born of the family or clan you have a right to the
use and/or ownership of the part of the land.
Food production – Food production in Idah Local Government Area is
primarily subsistence. Agricutlrue is not mechanized and simple tools such as
hoes, machete, ploughs, etc. are used. The people of the area are large
producers of palm products and as such offer raw materials to oil mills and
allied industries. The lowland riverine areas of the local government are
flooded seasonally, making it possible for the gorwing of paddy rice and
controlled fish farming in ponds that are owned on individual or clan basis. The
potential for building large artificial fish farms is also assured. Other cereals
are also grown in the area. There is abundance of fruit trees such as mangoes,
45
Ogborno, cashew and citrus which thus provide opportunities for establishment
of profitable packaging and processing cottage industries in the area.
The Local Government Area is equally blessed with rich and in
exhaustive forest resources, some of which are being exploited by the existing
Saw Milling and Wood industries.
Notable among the species of forest trees found in the area are Iroko,
Apa, Obeche, Mahogany, etc.
Economy
The strategic position of Idah on the bank of the River Niger, and partly
the large production of palm produce and some other cash crops made the town
one of the centres for trade and commerce during the colonial administration
up to the late 1960s.
According to Jackson (1972), “each town is distinctive in its attributes. It
has merged through time as a product of the complex interplay of many forces.
It has a physical site and there is a raison d’etre for the first use of this location
for purposes of settlement”. The above statement is true of Idah. Okowli (1973)
has explained the commercial importance of Idah, thus, “the emergence of Idah
as an important commercial trading centre dated back to about 1857 when the
Royal Niger Company established trading posts at Idah and Gbagana along the
rivers Niger and Benue”. Other firms like UAC and John Holt followed later.
46
The establishment of Palm Produce Board with one of the major centers at Idah
was another supporting factor for its commercial nature then.
However, with the abolition of the Palm Produce Board, the commercial
fame of Idah became a thing of the past. Consequently, the growth of Idah in
business began to decline. One striking observation about Idah now is that it is
a lock-up-town- the only accessible route into and out of Idah for now is the
Ankpa-Anyangba-Idah road. The above problem is a very big factor militating
against commercial activities in Idah and its environs. But this is not to say that
commercial activities in Idah is dead totally, it is in a very low level.
Industrial Incentive
As part of the local government drive to encourage and attract
prospective investors to the area, adequate provision has been made for easy
requisition/ allocation of land for industrial purposes.
47
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
4.1 INTRODUCTION
This chapter deals with the testing of hypothesis as set out in chapter two
(2). The data and information for this analysis were gathered from one hundred
and fifty five (1550 respondents. One hundred and five (105) are from the six
departments of the Local Government Council. Thirty (30) respondents out of
the sampled population came from the State Auditor General for local
government office, while twenty (20) respondents are from the Ministry for
Local Government and Chieftaincy Affairs – Supervisory ministry of Local
Government council.
Information were also gathered from Government Publications like
Official Guidelines, Financial Memorandum, constitutions, Gazettes, etc.
Journals, Academic Papers, Newspapers and Magazines were also consulted.
The selection was purposive in order to ensure that the main population
concerned with the subject mater under consideration were covered.
For clarity therefore, content analysis of the responses from the
respondents, documentation and observation will be made in the order of the
hypothesis.
48
4.2 TESTING OF HYPOTHESIS
4.2.1 Hypothesis One; (Discussion of Findings)
Lack of qualified manpower affects the effective and efficient operations
of the Internal Audi Unit in the Local Government.
According to Obasi (2002) the performance of the Audit Department is
affected by poor management, poor manpower disposition reflected in
inadequate staffing, defective staff deployment or placement, dearth of right
caliber of manpower, ineffective or greedy leadership and lack of motivation.
Commenting on the manpower problem of the local government, Amucheazi
(1976) said it all when he noted that:
… even though the new (Local Government) reform
has great potentials for mobilizing the grassroots, there
are problems arising from the non-availability of the
right caliber of personnel both as councilors and as
administrative and technical staff.
From the interview instrument the following data was gathered, the
secretary of the local government on whether there were qualified staff in the
Audit Unit of Idah Local Government, replied that the staff on ground still
needed more training to enable them cope with the innovations in technology
and the complexity of governance. On their specific qualifications he
maintained that the majority had Ordinary national Diploma, Higher National
49
Diploma (HND) and Bachelors degree. The Head of Personnel management
(HPM) also had similar views: he opined that the staff were not qualified
enough to embrace the growing challenges. He maintained though that they
had been training their staff through seminars, workshops and universities. He
however maintained that there was still need to train more staff especially
people handling professional activities as Accountants and Auditors. He further
identified the following flaws in manpower training and development in the
local government system. They include:
Absence of articulate and clear-cut policy on manpower development.
Use of wrong personnel or non-professionals as training officers.
Use of poor training methodology characterized by faulty diagnosis of
training needs, use of bias criteria ranging from “God-fatherism” to other
informal ties as bases for selection of trainees, stereotyped training
programmes or courses which hardly address the changing needs of the
local governments.
Non-commitment of some training officers who displace commitment in
favour of economic “fallout” from training exercises.
Lack of interest and seriousness on the part of some trainees/participants
who merely perceive attendance to training programmes (especially
50
those involving distant trips) as a source of periodic harvest of Naira in
the guise of allowance.
Others include delay in appropriate redeployment or non-redeployment
at all (where this is necessary) of trainees after training. And award of training
contracts to the so-called) consultants, more for the much desired 10% than the
real objective and meaning of training which explains why the local
government cannot critically evaluate the services of the affected consultants
with a view to dispensing with such services in the event of poor performance.
On whether the job of an auditor or accountant is professional, the
Auditor (Internal) stated clearly that it is professional and thus requires
professionals with requisite training to properly dispense with the job.
Robertson (1979:15) and Olowu (192:140) corroborate this by enumerating
several activities that characterize a profession as follows:
A scientific body of specialized knowledge acquired by
training and formal education; a set of norms which are
regulated and supervised by a body comprising
members of that profession; a specialized skills and
legal recognition; standards of conduct governing
relationship of the professional with clients, colleagues
and the public and a national organization devoted to
the advancement of the social obligations of the
professional organization.
In some advanced countries, UK for instance, Internal Auditing is
professionalized and regulated by the Institute of Internal Auditors (IIA). The
51
traditional role of auditors are being challenged hence audit status and
procedures are being revisited and developed by professional bodies to cope
with high technology environment. Currently there exists an Information
Systems Audit and Control Association (ISACA), which has its focus on
corporate governance of information system as well as information system
auditing (Okpe, 2002). In Nigeria, the problem is that many of the internal
auditors, particularly in government, “who grew from the ranks” do not
posssess requisite academic professional qualifications. This lack of a good
professional backing for internal auditing in Nigeria, not just in Idah Local
Government council made it look like all “all comers” profession and so
contributed greatly to the relegation and bastardization of the profession.
4.2.2 Test of Hypothesis Two: (Discussion of Findings)
There is a significant relationship between the character of the Nigerian
state and the poor operations of Internal Audit Unit in Idah Local Government.
The Director of Local Government (DLG) Idah, on how the nature and
character of the Nigerian State affects the operations of the Audit Unit of the
Local Government, maintained that the country Nigeria is a system and just
like the biological system, anything that happens to one part invariably affects
the entire system. This way the local government is only but a microcosm of
52
the Nigerian political, socio-economic environment and cannot be different
from it.
The Secretary of the Local Government also supports this view by
arguing that whatever happens in the country’s political system runs down to
the local governments. The fact that the country inherited a colonial local
government system can still be seen in the present local government system.
Central to the relationship between the state and the internal audit as a
instrument of financial control is the character of the state. This explains why a
country may have a very weak bureaucracy whereas another has a strong and
virile bureaucracy.
Scholars corroborating the above assertion have characterized state in
Third World formations as neo-colonial in character. The major features of a
neo-colonial state is its external orientation in policy thrust, which in most
cases result in the disarticulation of the economy as the major economic
activities are geared towards extraction of minerals for export rather than
production of goods for domestic consumption. In the specific case of Nigeria,
oil has dominated economic activity since the 1970s producing the classical
dependent capitalist state with all its attendant contradictions (IDEA,
2000:137).
Flowing from the neo-colonial political economy is the parasitism of the
ruling class, whose main source of material wealth and social standing has
53
been the state. Thus the “privatization” of the public sphere by the ruling class,
which has elevated corruption to the guiding principle of governance at all
levels, poses the greatest challenge to the new civil order. With such descent
into military despotism, the legitimacy of the state was grossly undermined, its
primary functions and responsibilities abandoned leading to the collapse of
state institutions and the consequent personalization of the public domain,
including the private use of the public treasury. Corruption became routine
with access to enormous state resources restricted to those who were well
connected to the managers of state institutions.
The corollary is that a corrupt state begets corrupt institutions or
bureaucracy. It is not only the Internal Audit Unit that is suffering from this
malaise; the entire system has been eaten up by corruption. And this to a large
extent affects the operations of Internal Auditors/auditing as an instrument of
financial control in the local government system.
4.2.3 Test of Hypothesis Three (Discussions of Findings)
Non-availability of working equipment limits the effective operation of
the Internal Audit Unit in Idah Local Government Council.
From the interview the following was generated: On whether equipment
for work were available and how modern they were, the Secretary of the Local
Government maintained that there was dearth of equipment in the Council and
54
that modern equipments were yet to be fully utilized. He stated that there was
slow transformation from the manual to the electronic, this he blamed on the
entire services which have been slow to embrace information/ technology
revolution. He further stated that their offices were yet to be automated as most
workers were still making use of manual typewriters and other old-fashioned
equipments.
On how the departments were coping with the innovations like the
introduction of computers, fax machines, he maintained that they were
gradually adapting to the innovation, though there was still need for more
equipment for the standard office automation to be achieved. It was further
highlighted that the continued use of manual typewriter was because of the
unreliability of power in the area; this was also a major hindrance to the
complete adherence to the modern equipment or automation. In other countries
of the world today, offices are highly mechanized and automated. The
mechanization and automation of offices permit to a large extent the
substitution of mechanical devices for schematic intelligence work which
confront us with entirely new problems of vocational training and education as
indicated in the first hypothesis of our study.
Office automation or mechanization refers to the adoption of technology
to office activities and encompasses all defined functions of an office (Nfe,
1996). Three phases of mechanization or automation can be identified. First,
55
technology is dominated by dependent machinery. Here, the worker must
provide the raw materials; he starts the machine, directs it, regulates it and
determines thereby the rhythm of work. These machines are still largely like
tools as man dominates them as he dominates his arms and legs.
The second phase consists of semi-independent machines: here the work
processes are largely but not entirely automatic, and the worker still has to lend
some assistance. The third phase is the level of full automation: Here the
worker ceases to be a slave of the machine and performs tasks of a very
different nature regulation, supervision and repairs.
The innovations in technological development are now seriously
affecting the traditional office. It is not enough to state that there is non-
availability of equipment but also of much significance is the fact that even
when the equipments are available, they are vandalized by workers who fear
that they may lose their jobs with the complete automation.
Another important dimension to the above is the issue of computer
literacy and automation. Conventional approaches, methods and techniques of
doing things have rapidly changed due to the advent of computers. Computer
systems comprise the heart of modern equipment, computerization implies the
use of computer to perform all or some aspects of business operations. Internal
auditors need computers and auditing software among other modern working
tools. They need them in the administration and recording of data, particularly
56
by retaining data records, background audit “information and current audit
schedules on computer files (Chambers & Court, 1991:1).
Low computer literacy level however affects the rate of acceptability of
automating the internal audit process in the local government system. While
great energy and resources are being dissipated in computerizing accounting
systems and other business operation, internal auditing receives little or no
attention. The internal auditor in such environment is unable to confront the
computer revolution as the state of the art moves away from manual to
automation. Auditing activities by such auditors are usually done around but
not through the computer system. As explained by Robertson (1999:268),
auditing around the computer means that the auditor attempts to isolate and
ignore the computer treating like a black box and finds audit assurance by
tracing and vouching from output to source documents and from source
documents to output. Auditing through the computer refers to the auditor’s
actual use of the hardware and software to determine the reliability of
operations.
57
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 SUMMARY
This study was subdivided into five chapters, the first chapter on
Introduction extracted three research questions: How does lack of qualified
manpower affect effective operations of the Internal Audit Department in the
Local Government? What is the relationship between the character of the
Nigerian State and poor performance of the Internal Audit Unit? And Does
lack of equipment hinder the effective operations of the Internal Audit Unit in
Idah Local Government?
These research questions formed the specific objectives of the study and
the hypotheses for the study. In order to achieve the objectives, the research
was limited to Idah Local Government in Kogi State. The study was both
empirically and academically significant.
The second chapter dealt with the Literature Review and Methodology.
Under the Literature Review, relevant materials were reviewed. The study
made use of both primary and secondary sources of data collection. And data
collected were analyzed using content analysis. The study also adopted the
structural functional framework as a framework of analysis.
The third chapter on Ethnographic setting of the Case Study dwelt on the
historical background, geographical location of Idah Local Government. All
58
the relevant information on the people of Idah Local Government were
critically utilized to help relate the environment to the subject matter.
Chapter Four of this study on Data Presentation and Analysis was
exercised using the hypotheses. The three hypotheses were tested and
discussions presented on them. This chapter contained the discussions on the
findings generated from the study.
Finally, the fifth chapter on Summary, Conclusion and
Recommendations wrapped up the study. The conclusions were drawn from
the hypotheses tested and recommendations were also made from the findings.
5.2 CONCLUSION
Auditing of Local Government accounts is a crucial aspect of the
financial management and effective control mechanism. In Nigeria, in the past,
auditing was carried out by the State Government Auditor- General and his
staff but today following reforms aimed at giving autonomy to local
government, the local government accounts are now audited by the Local
Government Auditor-General and his staff. This is internal auditing and is a
very powerful control mechanism if properly executed.
However, in order to establish the indispensability of internal auditing as
an instrument of financial control in Idah Local Government of Kogi State, the
following conclusions are raised: lack of qualified manpower affects the
59
effective operations of internal audit; secondly, there is a significant
relationship between the character of the Nigerian State and the poor
operations of the Internal Audit Unit in Idah Local Government. The Nigerian
State being the general environment shapes the institutions and bureaucracy.
And this is because the local government is an open system that interacts with
its environment.
Finally, the third hypothesis, that non-availability of working equipment
hinders the effective operation of the Internal Audit Unit of Idah Local
Government. This findings followed the testing of the hypothesis which was
substantiated both by primary and secondary sources of data. It was discovered
that local government was yet to appreciate the importance of office
automation and even where machines were available, they were either
vandalized or not used by workers who feared that the use of machines and
computer would take over their original functions and lead to loss of job.
5.3 RECOMMENDATIONS
Internal auditing is an independent appraisal function established by the
management of an organization for the review of the internal control system as
a service to the organization. In line with the conclusion, the following
recommendations are raised:
60
1) Manpower training and development in the local government should
articulate clear-cut policy in manpower development. The unit should
avoid wrong use of personnel or non-professionals as training officers.
2) Poor training methodology characterized by faulty diagnosis of training
needs, etc. as pointed out in Chapter four of the study.
3) Government at all levels should support the anti-corruption campaign and
agencies like the Economic and Financial Crimes Commission (EFCC) and
Independent Corrupt Practices and other related offences Commission
(ICPC), to curb corruption.
4) The Audit Unit should be highly mechanized and/or automated because of
the technical and importance of its services.
5) Since professionalism engenders relevance and currency, the audit unit
especially needs to expose its staff to professional training and retraining
programmes.
6) Auditors should be computer-literate and trained to use hardware and
software to determine the accuracy and reliability of their operations.
61
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