1.1 BACKGROUND OF THE STUDY
The need for effective internal control measures as tools for
transparency, probity and accountability in the management of public
resources cannot be over emphasized. This starts from the fact that
right from the creation of the world, means in-seniority cannot be
compromised. As a result of that, there is need to make rules or laws
guiding financial management or internal control for proper discharge of
Thus, internal rules and regulations, financial laws, constitutions,
criminal coders, audit Act of 1958, appropriate Act, treasury circulars
and Audit circulars, represent steps forwards in trying to control man’s
management of public resources.
Corruption in Nigeria has earned for itself official recognition.
The level of corruption has become so alarming that Nigeria’s reputation
is being denoted abroad. This informs the reasons for the formation of
anti-corruption Act by the present government headed by president
Olusegun Obasanjo whose seal on the issue assisted in the early drafting
of the anti-corruption will which later passed into law, having gone
through the legislative process. The law to be cited as prohibition and
punishment of bribery, corruption and other related offences act is
meant to curb all forms of social, economic, politically corruption that
has continually (hinder the growth of the ratio undermine public
accountability, transparency and probity in the management of public
The act is to be implemented through independent corrupt practices
and Allied offences commission to be headed and composed of men and
women of high integrity and transparent honesty to be appointed by the
president, subject to the approval of the relational Assembly. However,
experience in the past has shown that more often than not, those
entrusted with the duty of enforcing or preserving any state law break
and undermine such laws. This has been described as ‘Nigerian” factor?
The installation of an efficient internal control mechanism into the
public sector management are important steps assuring the general public
the accountability and transparency of public officials for their
stewardship as custodians of public resources.
1.2 STATEMENT OF PROBLEMS
The term mismanagement, misappropriation, misapplication and
embezzlement are synonymous Mismanagement or misappropriate is the
unauthorized, improper and unlawful use of fund or other properties for
purpose other than that for which it is intended.
To give impression that fraud, embezzlement, misapplication of public
fund suit because of lack of internal control, in government as claimed
by the conference of the federal and state auditor general in Nigeria
in their preface to “exposure daft” on public sector, internal control
standard in May 1998 was uncharitable. The internal auditor passes
salaries vouchers. Therefore, fraud and mismanagement of fraud does not
exist because of absence of internal control but because operators have
decided to set the control aside for selfish immediate benefit,
irrespective of its consequence to a local government or the nation.
The following are issues, which lead to fraud and misappropriation of local government(s) fund:
1. Borrowing of funds for capital projects, only to be
misappropriated by the three wise-men-chairman, secretary and treasurer.
2. Misrepresentation of actual receipt of funds from federal accounts and VAT receipts.
3. Questionable overhead expenditure on security.
4. Illegal overhead expenditure.
5. Payment of council funds fictitious projects.
6. Payment of council fund for the jobs not recounted.
7. Over pricing by works officers of direct labour job contracts.
8. Misappropriation of local government(S) fund through collusion of chairman, secretary and treasurer.
Inflation of salary bills by the three wise-men.
Misappropriation of special greats from the federal or state or their agencies.
The above issues account for nearly 100% of the cases of fraud and misappropriation of fund from local government.
1.3 OBJECTIVES OF THE STUDY
In view of the over view of the study and statement of problems
already discussed, this work aims at achieving the following objectives:
i. To identify the problems and the causes of the problems of internal control in the local government(s).
ii. To evaluate the roles played by the management in resolving
the inadequacy or ineffectiveness of internal control towards the
achievement of planned objectives of the local government(s) council.
1.4 SIGNIFICANCE OF STUDY.
Internal control is an indispensable instrument in the management of
an organization but it is regrettable that there is little or no
internal control system in most local government s and ministries. With
reference to the above local government, actual losses of millions of
Naira occur every year and that is why there is a need to order a full
research work in it. This study will therefore go a long way to
contribute in appreciating the effectiveness of internal control in
controlling the safe guarding of assets and generation of reliable
financial information. An understanding of this will certainly
suggesting the effectiveness and adequacy of internal control existing
in the local government and departments.
The findings and conclusions would definitely be of help to those
interested in making policies and decisions in the local government(s)
and organizations. In summary, this study will recommend internal
control measure to be adopted by government officials and minimizing the
imminent losses suffered due to inadequate internal control in local
government(s). this research work will also serve as an addition to an
existing literatures in subject matter of the effectiveness of internal
control local government.
1.5 STATEMENT OF HYPOTHESIS.
For the purpose of this research work, the following assumptions were made:
1. Ho: There is an effective internal control measure in local governments.
Hi: There is no effective internal control measures in local governments.
2. Ho: Internal control is effective in the local government’ segregation of functions.
Hi: Internal control is not effective in the local government’ segregation of functions.
3. Ho: Government officials apply existing internal control measures in the performance of their duties.
Hi: Government officials do not apply existing internal control measures in the performance of their duties.
4. Ho: Government official employ competent persons to work in various government departments.
Hi: Government official do not employ competent persons to work in various government departments.
1.6 SCOPE AND LIMITATIONS OF THE STUDY
Internal control is very wide in scope and is in exhaustive in the
sense that it touches all facets of organizational structure. The scope
of this study is limited to one local government council “Igbo Etiti
local government” which is one of the local government in Enugu state.
The limitation is posed by the time factor. The time allowed for the
project both for the theoretical and field work or practical work is too
short still run concurrently with the class activities.
Secondly, some of the respondents did not co-operate with the researcher and also financial constraints.
1.7 DEFINITION OF TERMS
1. TRANSPARENCY: This implies that the custodian of public
wealth should always recognize their obligation to submit to public
enquiry of their stewardship any time willing and ready to appear
before the public enquiry and examination.
2. ACCOUNABILITY: The obligation of an employee, agent or
other person to supply a satisfactory report, often periodic of action
or of failure to act following delegated authority.
3. PROBIT: Probity implies uprightness of character or that an officer is of high integrity.
4. FRAUD: The successful practice of deception with the intention of cheating or injure another.
5. STAFF COLLUSION: A secret understanding between two or
more staff to take, advantage of another with object of depriving him of
a right or property.
6. EMBEZZLEMENT: The fraudulent appropriation of property
lawfully in ones custody, as of cash or security try a cashier or
trusted or of stores by a stock clerk.
7. ETHICS: Ethics or ethical conduct within a profession is a special application of the ideal conduct.
8. ANTI-CORRUPTION BILL: This is a proposed law drafted by
the executive and submitted to the legislative for passage into law. If
passed, it is intended to eradicate corruption in Nigeria.
9. CORRUPTION: A State of change from a sound to a putrid
state, dishonesty, open to bribery, not genuine and full of errors.
10. FINANCIAL MEMORANDA: This is document with a codified
set rules and regulations which provide detailed guideline and
instructions on the financial accounting and store procedures to be
followed in the administration of financial affairs and material
management of each local government.
11. FINANCIAL INSTRUCTIONS: Financial instructions are
rules and regulations bind up in a book called financial
regulations. The book outlines the manner by which the government
finance and accounting arrangements are regulated.
12. APPROPRIATION ACT: This is an act of the Nation or
State Assemblies which state sources of government revenue and how these
revenues will be spend within a stipulated period of time usually one
13. SEGREGATION OF DUTIES: This means separation of
duties or functions between departments and individuals such that no one
person handles a particular transaction from the beginning to the end.
14. INTERNAL CHECK: It is defined in the statement of auditing
standard as the allocation of authority and work in such a manner as to
afford checks on the routine transactions of day to day work by means
of the work of one person being proved independently by another.
15. INTERNAL CONTROLE: It means whole system of controls
financial and otherwise, established by the management in order to carry
on the business of the enterprise in a n orderly and efficient manner,
ensure adherence to management policies, safeguard its assets and secure
as far as possible the accuracy and reliability of its records.
Aguolu Osita FCA (1998) Fundamental of Auditing, Rex Charles
and Patrick Ltd.
David N. Richuite (1982) Auditing Concept and Standard by South
West Publishing Co. Ohia.
Wilson Uchenna Ani (2001) Government and Public Sector Accounting
Eric L. Kohler, A Dictionary of Accounting, Fourth Edition.
Onyia Leo-Effective internal Control Measures as Tool for
transparency, probity and
Accountability in the Management
of Public Resources.
Being a Paper, Presented to a two-day Seminar on Modern Trend and
Emerging Roles of treasury and Audit Management in Internal Control
management in Government, August 2000.