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CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND OF THE STUDY

It is generally agreed that finance is the main stay of any economy, be it public or private sector. It is equally true that no meaningful development could be achieved without finance and proper management, as a result of this, many organizations establishes difference systems of control or ensure smooth running of their business of which internal auditing is an integral part. Basically, internal auditing ensures that all activities of the organization are carried out by employees according to laid down procedures.

The introduction of new technologies e.g. the  invention of computerized audit system which posed challenges to the internal audit staff and their work, the update of their knowledge to meet with these challenges in the face of manipulation of these to perpetrate fraud is desirable. Moreso, the requirement of new auditing standards will make the staff of internal audit to update their knowledge and adjust to the current practice. Auditing as a key factor in controlling every kind of organization with financial and economic aspect serves as a sort of checks and balances in the financial and administrative procedure of any organizational setup. Apart from explaining the concept of auditing and it’s operations, emphasized  is laid on the problem areas in the account of governance, accounts maintained by  the government and procedures involved in auditing government accounts. The need for maintaining and adequate, effective and  efficient internal audit system, therefore cannot be over emphasized especially in days like these  when Nigeria economy is with effort in ensuring that wastage, pilferage, misappropriation and checked or avoided and to ensure that asset are being secured.  
1.2   STATEMENT OF THE PROBLEM
i.      Often management of public sector and internal audit department function are seen as contradictory rather then complementary.
ii.     Internal audit department which is set up to ensure adherence to management policy may not achieve their main objective because of interference and undue influence by top management.
iii.    That the internal audit adequately equipped with.
iv.    That better and well-trained professional should be employed for efficiency and effectiveness.
1.3   OBJECTIVE OF THE STUDY             
i.      To identify the problems in internal audit department of public sectors.
ii.     Finding ways of improving on the internal audit of public sector.
iii.    To explain the meaning and significance of internal audit as an aid to public sector.
iv.     Assist other researcher to obtain useful information that will serve as input for further research work.  
1.4   RESEARCH OF HYPOTHESIS
Considering the problem definition of this study and it’s objectives. The following hypothesis are developed to be tested in this project.
Hi: Internal audit is of importance to aid management of public sector performances.
Ho: Internal audit is not importance to aid management of public sector performances.  
1.5   RESEARCH QUESTIONS
The following research questions are used as a guide to collect information.
i.          How is the account of state ministry being audited?
ii.         What are the procedures involved in caring out audit of the state ministry?
iii.        What are the problems being encountered by the auditors in auditory state ministry?  
iv.         Is there any laws binding the auditing of account of the state ministry?          
1.6   SIGNIFICANCE OF THE STUDY
The significance of this study is to enable the researcher to know:
a.     If internal audit within an organization is effective for internal control system.
b.     Whether internal audit in public sector organization complies with sector management policies, law and regulation.
c.     If internal audit in public sector organization will help to defect minimization fraud in an organization (State Ministry).
d.     Some procedures, techniques add principles involve in auditor government parastatals.
1.7   DEFINITION OF TERMS
In the course of writing this project, there are some technical terms used that needs to be understood very well before a project can have a good meaning to the reader, these terms include the followings:
AUDIT: Is the independent examination of the financial statement of an enterprise and the expression of an opinion of such financial statement by an appointed auditors as to whether it shows true and fair view of the state of affairs of the enterprises in accordance with the terms of his agreement, the observation of statutory regulation and professional requirement.
AUDIT REPORT: Generally refers to any written report by an auditor in accordance with the term of his appointment. It is an medium through which are auditor expresses his opinion.
INTERNAL CONTROL SYSTEM: A system within an organization designed to provide reasonable checks regarding the achievement of the organizational objective.
IRREGULARITY: Is the intentional distortion of financial records and report for what ever purpose.
FRAUD: The use of deception to obtain an unjust or illegal financial advantage.
ERROR: Unintentional misstatement in or omissions of amounts or disclosures from an entity’s accounting records or financial statements.
ILLEGAL ACTS: Refers to any act that is contrary to law.
PUBLIC SECTOR: Is all organization, which are established, being operated and controlled by the government on behalf of the public.

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