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EFFECTIVE INTERNAL CONTROLS MEASURES AS TOOLS FOR TRANSPARENCY, PROBITY AND ACCOUNTABILITY IN THE MANAGEMENT OF PUBLIC RESOURCES

CHAPTER ONE

INTRODUCTION

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 responsibilities. 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 resources. 
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. 
9.     Inflation of salary bills by the three wise-men. 
10.   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.  ACCOUNTABILITY:      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.  PROBITY:    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 year.
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 CONTROL: 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. 

REFERENCES
Aguolu Osita FCA (1998) Fundamental of Auditing, Rex Charles and Patrick Ltd. Nisno. David N. 
Richuite (1982) Auditing Concept and Standard by South West Publishing Co. 
Ohia. Wilson Uchenna Ani (2001) Government and Public Sector Accounting I, Immaculate Publications. Eric L. Kohler, A Dictionary of Accounting, Fourth Edition.

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