EFFECTIVE INTERNAL AUDIT AS A PANACEA TO EFFICIENT LOCAL GOVERNMENT ADMINISTRATION IN NIGERIA. (a study of selected Local Government Areas in Imo state)

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Globally the role of auditing is being appreciated for its avowed operations and activities. Ihe and Umeaka(2006:370) defined auditing “as a process carried out by suitably qualified auditors during which the accounting records and the financial statements of an organization are subjected to examination by an independent auditor with the main objective of expressing an opinion in accordance with the relevant terms of appointment purpose” they also noted that the objectives of auditing were grouped into two

a. Primary objective: the auditor (one who carries out audit operation) is to report whether the financial statements shows a „true and fair view‟ of the financial affairs of the organization during the period under review and s end date.

b. Secondary objective: This concerns the detection of frauds and errors and the prevention of frauds and errors

The crux of this research work however is based on internal Audit – which is a very important aspect of auditing, how the internal audit unit of the government can be made effective in order to assist in the efficient administration of local Government Areas (LGA). Internal Audit as defined by Chukwu L. C. (2011: 28) is “an independent appraisal of activity within the organization for the service of accounting, financial and other business practice

as a protective and constructive aim of management”. He further opined that,

internal audit is a type of control which functions by measuring and evaluating

the effectiveness of other types of control. Anosike. C. K (2009:29) noted that

the primary objective of internal audit, is to promote utmost efficiency and

security in conducting business, in our case, the business or operations of the

Local government areas. Azubike (2005:83) enumerated the features of internal

audit as follows:

a. Independence: it is carried out by independent personnel through appointed

by the management.

b. Appraisal Function: it appraises the activities of other. Example, reviewing

the system of checking employee expense claims.

c. Management Service: Plans and controls work according to management

policies, so that information used by the management is complete and

reliable.

d. It is carried out skillfully and with due care.

e. The Findings, conclusions and recommendations are communicated

promptly and efficiently.

He also noted that internal audit seeks for effectiveness, economic and

efficiency. Effectiveness here: means achieving the program objective or goals.

Economy means operating at the lowest possible cost. Efficiency implies

effectiveness in outputs, avoidance of accessory waste of resources.

With effect from 1979, the constitution of the Federal Republic of Nigeria accorded local government a higher status, as a third tier of the government where it now enjoys relative autonomy from the state deriving also its powers from the constitution and not surviving by the whims and caprice of d state as provided in the guideline for local Government perform in Nigeria 1976. Following this development the status of the local government in Nigeria is that of a corporate entity, which can sue and be sued, also has perpetual secession.

The Guideline gave the principal aim of local government as

I. Grassroots political development and consciousness.

II. Embark on and encourage self-help project

III. Deliver social services to rural dwellers

IV. Provide primary education and health care to its inhabitants.

V. Engage in economic planning to foster rapid development of the areas.

VI. Collection of rates, radio and television licenses

VII. Establishment maintenance and regulation of markets, motor par]k]s and public conveniences

VIII. Naming of roads and streets and numbering of houses.

IX. Registration of births, deaths and marriages.

X. Establish a two-way communication between the people and the government.

Therefore, the requirement of financial resources to effectively and efficiently translate the administration of the above functions to service delivery which will impact on the local people is crucial. In view of this enormous resources at the disposal of the local government and obvious financial management ineptitude of the political in the areas of fraud, maladministration, misappropriation of pubic fund, etc, there is need an independent arbiter. To check these excesses, hence the need an internal audit.