CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND
OF THE STUDY
Every
sector of the economy both the private and the public sector has its own
objectives and goals to achieve. For the public sector of the economy, their
goal is to satisfy the social needs of the citizens and in the effort to
achieve these purposes, auditing more often, play a vital role.
The
size and scope of these sectors have sometimes made it clear for the executor
to exercise personal and first hand supervision of operation. It is in this
light that value for money audit established by management is initiated, for
any organization to carry out its business efficiently and effectively, there
must be some factors that must be put in place for the smooth running of the
organization like materials, machines, human labor and money e. t. c.
Auditing
is seen to play an intermediary function in between management and the
resources of the organization. It is also fundamental to any business either
the public or private sector, which will help the business to keep its adequate
financial records. These financial records are kept in response to the demand
by a system control which requires that the business enterprise must be carried
out in an orderly manner, ensure adherence to management policies, safe guard
the assets and secure possibly the completeness and accuracy of the records.
Irrespective of these facts of system of control established by the management
of the organization, fraud still thrives.
In
the early 1970s, the role of the state auditors began to change dramatically.
Changes began in USA, Canada, and in several European countries. The
representative of the people started demanding information on the efficiency and
effectiveness of public expenditure.
In
Nigeria no specific legislation has been put in place to empower auditors to
carryout value for money audit. However, the 1999 constitution section 88 (2)
empowered both the two federal house and the state house of assembly to conduct
investigation to expose corruption, inefficiency or waste on the execution or
administration of law within the legislative competence and in the disbursement
or administration of fraud appropriated by it.
Therefore,
fraud control has become increasingly important to managers of various
governments in an organization. In general, financial statements fraud has
always weakened investors’ confidence in both private and public sector investment.
This is because 1 fraud against an organization reduces the net income by 1 and
services to be provided to people in the case of public sector.
However,
value for money audit will be wildly concerned with the economy and efficiency
of an organization and the effectiveness of achieving its desired objective
thereby controlling fraud to evaluate the effectiveness of the internal control
system within the organization.
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