CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Traditionally,
most of our constitution and institutions arrangement has been the management
and accounting of public funds. As a result of this, various rules, regulations
and instructions are instituted to guide public officers in the proper conduct
of the finance entrusted in their care. The constitution generally sets out
total financial management and accounting of the public funds which has been in
demand to the public sector more so the rendering or proper stewardship of
income and expenditure of public funds.
Management
involves responsibility of effective and economically planning and regulation
of the operation of the operation of an enterprise which entails controls of
the established pattern of accountability over receipts and expenditure of public
funds. Public funds should be use for the public purpose so as to obtain proper
value for money spent.
Government
in the recent times believes at the demand of public financial management that
is by ensuring that all financial transaction are properly document and
conducted in accordance with providing rules and regulation, but this has
proved wrong because public funds can be and quite often sophisticated and
embezzled within the frame work of laid down procedures through inflated
contract and over statement of bills and the accounting system. The value of
law or the system of the organization or the management that do not know and do
their works. This work seeks to look into problems and stewardship being
carried out.
1.2 STATEMENT OF PROBLEM
This research embarked upon is an
impact of internal control system on government ministries i.e. the importance
of internal control system in government ministries.
This is so because the importance of
an internal control unit in government ministries is for the verification of
accounts, check cases of fraud and embezzlement within the ministries. But in
recent times most of this controls are no longer functioning as it seems
inevitable resulting to misappropriation of funds in such ministries.
The study would address the following
research problems:
1.
What are the impacts of the internal
audit unit in the ministry of finance?
2.
What are the relationships of the
practical application of internal control in Kaduna state ministry of finance?
3.
What are the needs for internal audit
unit in government ministries?
4.
What are the measures to be taken to
provide useful recommendations where necessary to the study as related?
1.3 OBJECTIVES OF THE STUDY
The
objective of the study is to re-examine and re-asses the general financial
administration and control system as regard the ministry over revenue and
expenditure. It is also to take the various measures, techniques and
professionalism used to check the activities of the ministry in such away as to
give it the desired attention, remuneration and compensation. More, so as
related to the execution, the research is intended to result in determining the
effectiveness, efficiency and economical utilization of source resources using
public opinion as part of financial administrative control techniques so as to
achieve the desired result. The result will help in harmonizing the
relationship of the ministry and public so that proper utilization of the
public funds is achieved.
The
research work carried out the impact of internal control system for effective
financial management in the Kaduna State Ministry of finance. The following
objectives are the bases for the ministry;
i. Analyzing the
impact of an internal audit unit in Kaduna
state ministry of finance.
ii. To relate the
impact to its practical application in Kaduna State Ministry of Finance.
1.4 RESEARCH HYPOTHESIS
The research is intended to
investigate the impact of internal control system in the circumstances of
embezzlement and fraud detection in the ministry of finance.
Therefore the data to be collected in
this exercise will be used to test the following hypothesis.
H1:
Effective internal control system can help to prevent and detection of fraud in
the finance ministries.
H0:
That effective internal control system may not help to prevent and
Research is poised to confirm true or
otherwise, to achieve this purpose the research has formulated the above
hypothesis. That the general financial management and control system as regard
revenue and expenditure is effective, efficient and technical. Also the general
financial management and control system as related to the public opinion is
inadequate, ineffective, and this lacks improvement in its operation
achievements which will hinder general development.
detect fraud in the ministry of finance.
1.5 SIGNIFICANCE OF THE STUDY
The
importance of the study is not related to the general public wishing to known
that improvement would be made of the system where there are loop holes. It
also seeks to identify problems associated with the general financial
management and control system in order to help in harmonizing relationship of
the inadequate financial resources with the general development. It will help
in planning, controlling, modeling analyzing and decision making.
The
internal audit unit is the most integral part of the internal control system in
the organization. Therefore, there is need for proper organization of the
internal and audit system. This research work will give a prospective view as
to how the internal audit could be organized in order to keep the activities in
order.
This study
will also be of help to the ministry and other related organizations as to show
errors and frauds and other irregularities could be easy or easily detected and
prevented. It is a strong feature of any successful business. An organization
could be easily detected and prevented. It is a strong feature of any
successful business. An organization with in effective internal control system
will find it very difficult to protect and properly manage its funds.
1.6 SCOPE
AND LIMITATION OF THE STUDY
This study
work is to look into the relationship at the public with the financial
management control system of the ministry being administered. The subject of
financial management is external or extremely broad and complex, the deficiency
of the field is compounded by the fact that it can be approached in a variety
of ways i.e. descriptive, theoretical, analytical or appreciative; for the
purpose of this project these areas may not be correct completely. A situation
helps greatly in the success of the study, so this study is being under light
and hard financial situation.
Thus, the
study encountered obstacles which militated its scope such as:
- This study
would require a longer period of time than the time allowed for the study.
- Also the
financial situation will make it hard to meet up with the traveling fees to
where vital information is forgotten.
- Also there will
be lack of cooperation from the public and staff concerned. People will
deliberately refuse to give out required information out of ignorance and fear
of revealing the secret of the cheque as pertaining financial data.
The study
being subjected to various newsletters, journal, public broadcasting etc where
vital information is likely to be obtained i.e. in this present democratic
system of government.
Accessibility
to data: the research could not have access to all the needed data from the
organization classified, confidential secret etc. this hindered collecting of adequate
information for the preservation of future data. The books available are
outdated and as such one is forced to rely on external sources for the purpose
of research. This caused a delay in the work of this.
1.7 HISTORICAL
BACKGROUND OF KADUNA
MINSTRY OF FINANCE.
The
historical record of the ministry of finance, Kaduna
dated back to the time of Northern Nigeria Region government with the
headquarters in Kaduna.
When in 1967 the General Yakubu Gowon Administration created 12 states in the
country, the ministry became the North central states ministry of finance.
In 1976,
the state was renamed Kaduna
State without any change
in status and thus the ministry came to be known as the ministry of Finance
Kaduna. The creation of Katsina state out of the distinct Kaduna
state in 1987 brought about a change in status of the state but the ministry
remained as the Kaduna
state ministry of finance.
PRINCIPAL FUNCTIONS
The Kaduna state ministry of
finance is saddled with the responsibilities, which concern aspect of finances
which include, among others, the following:
1. Custody and
maintenance of records of public funds.
2. Disbursement of
funds from the consolidated revenues and other public funds.
3. Maintenance of
records and preparation of annual accounts of the state government.
4. Control of the
state treasury
5. Public debt
servicing and repayment
6. Handles matters
relating to losses of funds and stores.
7. Supervising
ministry as far as issue of finance is concerned in the state.
8. Maintenance of
government vehicles register and serve as centre for central stores purchases.
9. Board of survey
and enquires (including disposal of boarded vehicles, equipment and stores).
10. Stores
administration and management
11. Review of
financial instructions, stores regulation and their enforcement.
12. Control and
deployment of accounting and stores staff including recruitment and training
programmed.
13. Maintenance of
relationship with other state governments and financial institutions.
1.8 DEFINITION
OF TERMS
It is
intended that the following terms are going to be used from time to time in
this book. It is therefore of paramount importance to define the actual
information.
1.
Financial: this
deals with monetary perspective of every transaction; it can also be viewed as
part of government activities which deals with the collection, custodys and
disbursement of public funds.
2.
Public: this is
any activity concerned with the society in general.
3.
Budget: this is
an annual comprehensive report of the state of the national economy. It reviews
old economic and social problems and anticipates new ones. It also surveys the
future project of the economic and transactions problems into goals and
objectives.
4.
Accounting
officer: He is the officer who is responsible for controlling vote
in a ministry or department.
5.
Auditor: An
auditor is an independent expert who has sufficient expertise to asses the
information on which he is asked to reports.
6.
Auditor
report: This is the result of overall examination of accounting
statements of an organization for a particular period using within a financial
year. The auditors report is his findings as whether the statements examined
represents true and fair view of the organizations affairs.
7.
Government
policy: this policy concerns statements official or outline of
governments intended action or program popularly called blue prints which are
usually designed to achieve the goals of the public.
8.
Government
expenditure: this refers to government spending governments’ money
through various ways in order to keep the machinery of government in motion and
to prove the much needed social and economic services to the populace.
9.
Government
revenue: This refers to income generated by government through
different sources such as tax, rates, court fines etc.
10.
Accounting Control and Management: this is
the allocation of responsibility in the areas of checks or routine transaction
by means of work of one person is complementary to that of another or the work
of one’s person being independently proven right or wrong by another.
11.
Internal
Audit: This has to do with the reviews of records and operations
of organization aimed at ensuring reliability of records and efficiency of
operations.
12.
Accounting: This is a
discipline concerned with the recording, analyzing and recasting of income and
wealth of business and other entities. Generally, it records in monetary terms
the flow of economic values between or within the economic entities.