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IMPACT OF INTERNAL CONTROL SYSTEM ON THE EFFECTIVE MANAGEMENT IN GOVERNMENT MINISTRIES

 

CHAPTER ONE

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 THE 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:

What are the impacts of the internal audit unit in the ministry of finance? What are the relationships of the practical application of internal control in Kaduna state ministry of finance? What are the needs for internal audit unit in government ministries? 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.

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. Public: this is any activity concerned with the society in general. 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. Accounting officer: He is the officer who is responsible for controlling vote in a ministry or department. Auditor: An auditor is an independent expert who has sufficient expertise to asses the information on which he is asked to reports. 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. 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. 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. Government revenue: This refers to income generated by government through different sources such as tax, rates, court fines etc.  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. 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. 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.   

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