CHAPTER ONE

INTRODUCTION

1.0 Introduction

The question of how to increase efficiency and positive results in audit work in the public sector is a perennial problem in Nigeria, and one that is increasingly worrying the generality of the Nigerian people. This concern has grown more pressing in recent years, given the expanding scope of government expenditure, the proliferation of public institutions, and the recurring incidences of financial misconduct in state and federal agencies. The public demand for transparency and responsible governance has made auditing an indispensable pillar of public financial management.

The response by successive Nigerian governments has been to upgrade the quality of audit staff and widen the powers conferred on audit institutions in the public sector. There is a recognized need for the training of audit staff in modern techniques of auditing, which are more effective and result-oriented, rather than restricting them to the traditional methods of tick-and-turn, which are inadequate and outdated. Samuel and Rufus (2024) noted that transparency in the Nigerian public sector remains critically hampered by weak institutional oversight, emphasizing that modern audit techniques must be adopted to fill the gaps left by conventional compliance-based approaches.

Public sector auditing is centered on ensuring the proper and efficient use of public funds, the development of sound financial management, the orderly execution of administrative activities, and the communication of information to the public through the publication of objective reports. Since these functions are necessary for the stability and development of the nation, there is need to map out the machinery and methods of carrying out these functions effectively so as to achieve desired results. Akinyemi and Hassan (2023) affirm that public financial accountability in Nigeria remains a critical governance challenge, noting that fiscal responsibility mechanisms must be reinforced through robust auditing frameworks to curb the misuse of public resources.

In the past, the emphasis of an audit was on traditional methods, which have been mainly compliance audits seeing that all books and records comply with laid down procedures and regulations. But now, there is the need for a shift of emphasis to the modern concept of effectiveness and efficiency, often referred to as Value for Money (VFM) auditing. Awodiran et al. (2024) observed that the high incidence of mismanagement of government resources in Nigeria has hindered development, leading to issues such as non-execution of budgeted contracts, contract inflation, infrastructure deterioration due to budget misappropriation, understating of revenue, and policy inconsistency. These systemic failures underscore the critical need for a transition from compliance-focused auditing to performance-oriented audit methodologies.

Based on these issues, the researcher undertook this study to empirically examine auditing as an aid to accountability with reference to the Enugu State Post Primary School Management Board (PPSMB). The increasing incidence of fraud and misappropriation of public funds and property by accounting officers and chief executives in this institution raises a critical question as to whether auditing plays any meaningful role in ensuring proper accountability in the state public service.

Auditing is meant to control, deter and detect any fraud or misappropriation of public funds or property by officers entrusted with such duties. It is because of this onerous task that the Enugu State audit department was established to appraise the work of those entrusted with the responsibility of accountability. Solomon et al. (2023) assessed the effectiveness of internal control systems on fraud prevention and detection in selected public institutions in Ekiti State, Nigeria, and found that effective internal controls, when complemented by rigorous audit practices, significantly reduce fraudulent activity in public sector establishments.

Government undertakes various transactions through its representatives or agencies, and as such, those representatives are required by law to give account of their stewardship. To achieve this purpose, the Constitution of the Federal Republic of Nigeria provides for audit departments both at the federal and state levels. Section 125(1) of the 1999 Constitution provides that there shall be an Auditor-General for each state of the federation, appointed in accordance with the provisions of Section 126 of the constitution. Subsection (2) states that the public accounts of a state and all offices, ministries, parastatals, and courts of the state shall be audited by the Auditor-General for that state, who shall have access to all books, records, returns, and other documents relating to those accounts.

Subsection (3) of this constitutional provision further clarifies that the Auditor-General is not authorized to directly audit government statutory corporations, agencies, commissions, and authorities, but shall: (a) provide a list of qualified external auditors from which those bodies shall appoint their auditors; (b) provide guidelines on the level of fees to be paid to external auditors; and (c) comment on their annual accounts and auditors' reports thereon. Additionally, subsection (4) provides that the Auditor-General shall have the power to conduct periodic checks of all government statutory corporations, agencies, commissions, and authorities.

Despite all these constitutional provisions and safeguards, there is still a persistent existence of fraud and misappropriation of public funds and properties by those entrusted with their management. Nadirsyah, Indriani, and Mulyany (2024) identified the central role of internal audit in public sector governance, arguing that the internal audit function must not merely serve as a compliance mechanism but must actively prevent and detect fraud through continuous monitoring and risk assessment frameworks. Political interference, inadequate funding, and poor implementation of reforms have been identified as key factors undermining audit effectiveness in Nigeria (Adeyemo & Oni, 2023; Ali-momoh et al., 2024).

This study is therefore aimed at appraising the functions of the Enugu State audit department as they relate to the Post Primary School Management Board, examining the problems affecting its efficient performance, and offering practical suggestions to enhance its effectiveness. The researcher also seeks to examine the major causes of fraud and misappropriation of public funds in the state public service and to propose useful remedial measures to address the situation.

1.1 Background of the Study

In an oral interview with the Chief Internal Auditor of the Enugu State audit department on the origin of the audit department, it was noted that 'the audit department is as old as Nigeria itself.' The present Enugu State audit department has its roots in the colonial administration. At that time, there was a single audit institution for the entire federation, known as the colonial audit. The colonial administration had its representatives in Nigeria, who were directly responsible to the Crown. The country was divided into four administrative regions East, West, North, and South and each region had its own audit department, though still under the control of the colonial administration. This gave rise to what became known as regional audits.

Section 1 of the Eastern Nigeria 1958 Constitution provided for a Director of Audit for the region, whose office was to be a public service office. In 1976, there was a further creation of states in the country. The old Eastern Region was divided into, among others, Anambra State and Imo State, and following this division, each of the new states established its own audit department with a Director of Audit.

Section 118(1) of the Constitution of the Federal Republic of Nigeria 1979 provided that the Director of Audit of a state shall be appointed on the recommendation of the State Service Commission, subject to confirmation by the House of Assembly of the State. Following the creation of Enugu State in 1991 and its recognition as a distinct entity under the 1999 Constitution the state was empowered under Section 125(2) of the 1999 Constitution and Section 4(2) of Chapter 13 of the Auditor Law to establish its own audit department, including in respect of post-primary school management. This audit function is headed by the State Auditor-General, with other members of staff responsible to that office.

In contemporary Nigeria, the role of state audit institutions has continued to evolve in response to changing governance demands. Iredele and Olanrewaju (2025) conducted a case study of Nigeria's public accountability and supreme audit institutions in the Lagos State Civil Service, finding that while legal frameworks provide adequate mandates for audit institutions, practical effectiveness is often limited by resource constraints and institutional pressures. These challenges are equally applicable to Enugu State and its constituent public institutions, including the PPSMB.

The Post Primary School Management Board (PPSMB) in Enugu State is the governmental body responsible for the administration and management of public secondary schools in the state. As a public institution funded through federal grants, state subventions, and internally generated revenues, the PPSMB is constitutionally required to maintain proper accounts and render transparent financial reports. However, the administration of such boards across Nigeria has been marked by recurring cases of financial irregularities, staff payroll fraud, and mismanagement of school funds (Chukwuemeka-Nworu, Chukwuji & Ocho, 2025). These challenges necessitate the kind of robust audit examination that this study sets out to conduct.

1.2 Statement of the Problem

There has been a widespread pattern of poor accountability in state public service agencies, companies both public and private. This calls for proper and thorough audit mechanisms and for the effective functioning of the machineries established by governments and companies to exercise control over funds. Auditing is widely regarded as a medium for ascertaining the true financial position of establishments and for ensuring that resources are deployed in the public interest. Despite this important role, accountability in the Nigerian public sector has not proved adequate, and this researcher seeks to find out whether auditing is actually serving as an effective aid to accountability in the specific context of the Enugu State PPSMB.

The problem is further compounded by documented systemic weaknesses in Nigeria's public sector audit environment. Abubbakar et al. (2024) noted that although enhanced auditor independence has strengthened oversight by regulatory bodies, the extent of independence is often undermined by government influence over audit appointments and reporting mechanisms. Similarly, Adetula, Ejededawe and Egbekun (2024) found that the independence of supreme audit institutions is critical to the mitigation of financial fraud in Nigeria, but that political pressures frequently compromise the objectivity of audit reports.

Within the education sector specifically, Chukwuemeka-Nworu, Chukwuji and Ocho (2025) established that financial accountability and auditing are significant predictors of quality education delivery in public institutions in South-East Nigeria, finding that where audit processes are weak or non-existent, educational outcomes are adversely affected and public funds are more susceptible to misappropriation. This nexus between auditing quality, financial accountability, and service delivery in education underscores the significance of this present study.

Furthermore, Ariyo-Edu (2025) found in a study of public sector institutions in North Central Nigeria that internal control systems have a strong influence on fraud deterrence, with particularly significant associations recorded for whistle-blowing policies, ethics enforcement, and accountability mechanisms. These findings suggest that strengthening the internal audit function of institutions like the Enugu State PPSMB could significantly reduce financial irregularities.

Nnah and Ine-Tonbarapa (2023) studied public sector audit practices and accountability of federal public enterprises in Rivers State, Nigeria, and found that the effectiveness of audit practices was significantly hampered by inadequate staffing, poor remuneration of auditors, and failure to implement audit recommendations problems that are likely to mirror those experienced in the Enugu State PPSMB. It is against this background that this study investigates auditing as an aid to accountability in the Enugu State Post Primary School Management Board.

1.3 Objectives of the Study

The fundamental objective of this investigation is to determine whether auditing is actually an aid to accountability, with specific reference to the Enugu State Post Primary School Management Board. The secondary objectives include:

1. To identify the various sources of funds available to the PPSMB in Enugu State and examine how these funds are generated.

2. To assess how prudently, efficiently, and effectively those entrusted with managing these funds discharge their responsibilities.

3. To examine how the various funds generated by the PPSMB in Enugu State are utilized in day-to-day administration, and to suggest additional avenues through which the PPSMB can generate more funds in the future.

4. To evaluate the perspectives of junior workers and stakeholders on the utilization of available funds and the extent to which these perceptions affect staff performance and productivity.

5. To examine the challenges facing the internal audit department of the Enugu State PPSMB and recommend measures to enhance its effectiveness.

6. To assess the role of auditing in detecting and deterring fraud and misappropriation of funds within the PPSMB.

1.4 Research Questions

The following research questions guide this study:

• How do the PPSMB authorities obtain their funds, and what is the nature of these funding sources?

• How are these funds prudently managed and accounted for within the PPSMB?

• Are there additional sources of revenue, apart from federal and state government grants, available to the PPSMB for generating income?

• What efforts are being made by the PPSMB to identify and exploit such revenue sources?

• To what extent has auditing been effective in ensuring accountability and preventing financial fraud within the PPSMB?

• What are the major challenges facing the internal audit department of the Enugu State PPSMB, and how can they be addressed?

1.5 Research Hypotheses

In order to arrive at a reasonable conclusion in the study of auditing as an aid to accountability, it is necessary to formulate a set of testable hypotheses based on available data. The following hypotheses are to be tested in this study:

Hypothesis One:

H₀: Federal grants, state subventions, and local rates constitute the major sources of generating revenue for the PPSMB.

H₁: Federal grants, state subventions, and local rates do not constitute the major sources of generating revenue for the PPSMB.

Hypothesis Two:

H₀: PPSMB authorities make proper use of the approved yearly estimates/budget.

H₁: PPSMB authorities do not make proper use of the approved yearly estimates/budget.

Hypothesis Three:

H₀: The staff strength of the PPSMB is sufficient to generate adequate revenue for the organization.

H₁: The staff strength of the PPSMB is not sufficient to generate adequate revenue for the organization.

Hypothesis Four:

H₀: Auditing serves as an effective aid to accountability in the Enugu State PPSMB.

H₁: Auditing does not serve as an effective aid to accountability in the Enugu State PPSMB.

1.6 Scope of the Study

The scope of this study is centered on the usefulness of auditing in the public sector, with the specific title 'Auditing as an Aid to Accountability,' with particular reference to the Enugu State Post Primary School Management Board (PPSMB). The study covers the period from 2019 to 2024 and focuses on the internal and external audit processes of the PPSMB, including the role of the Enugu State audit department in examining the financial records and activities of the board. The study also covers the problems of the internal audit department in the public services of Enugu State, including challenges of staffing, funding, independence, and implementation of audit recommendations, as well as proposed solutions to these problems.

The geographical scope is limited to Enugu State, and the institutional scope is confined to the Post Primary School Management Board as a representative public sector institution. While the findings may have wider implications for audit practice in Nigerian public secondary education management, generalizability to other states or sectors will require further investigation.

1.7 Significance of the Study

The significance of this study is multifaceted and can be examined from both practical and academic perspectives.

1.7.1 Practical Significance

For audit practitioners, this study will be of great value as it explores their areas of operation in depth and examines the constitutional and statutory provisions that empower audit functions in the public service. It will also illuminate the practical challenges auditors face in performing their duties effectively within the constraints of the Nigerian public sector environment.

For the management of the PPSMB and similar public institutions, the study highlights the need to put adequate internal control systems in place and to ensure that audit recommendations are implemented promptly. Nadirsyah, Indriani, and Mulyany (2024) demonstrated that the key role of internal audit in public sector governance is not merely detection but prevention, and this study will help management understand the proactive value of a well-resourced audit function.

The study will also demonstrate that adequate remuneration of audit staff reduces the risk of collusion and misappropriation. As noted by Awodiran et al. (2024), improving the remuneration and fringe benefits of auditors enhances their efficiency and integrity in carrying out their duties a finding directly relevant to the Enugu State context.

Government policymakers at both the state and federal levels will benefit from the study's recommendations on how to strengthen accountability mechanisms in public secondary school administration. With Nigeria's education sector receiving billions of naira annually from government allocations, ensuring that these funds are managed transparently is essential to improving educational outcomes.

1.7.2 Academic Significance

Academically, this study contributes to the growing body of literature on public sector auditing and accountability in Nigeria. It adds to the empirical evidence on the relationship between auditing practices and financial accountability, specifically within the sub-sector of public secondary school management an area that has received relatively limited scholarly attention compared to tertiary institutions and federal ministries.

The study also provides useful reference material for students and researchers who wish to investigate similar topics in other states or sectors. The research questions, hypotheses, and methodology employed in this study can serve as templates for further investigations into audit effectiveness in other Nigerian public institutions.

Furthermore, this study contributes to the theoretical discourse on stewardship theory and agency theory as they apply to public sector accountability in developing countries. As Akinyemi and Hassan (2023) argued, public financial accountability frameworks must be continually assessed and reformed in light of emerging governance challenges, and this study provides empirical grounding for such assessments.

1.8 Limitations of the Study

Like all empirical research, this study is subject to certain limitations. First, the study is limited to the Enugu State Post Primary School Management Board and may not be fully representative of other public boards or agencies in the state or in other Nigerian states. Second, the reliance on questionnaire data and interviews may introduce response bias, as respondents may give socially desirable rather than accurate answers. Third, access to financial records and audit reports may be restricted by bureaucratic processes or institutional reluctance, which could affect the comprehensiveness of the data gathered.

These limitations notwithstanding, the researcher has made every effort to ensure the reliability and validity of the study by triangulating data sources and using established research instruments. The findings should therefore be interpreted in the context of these acknowledged constraints.

1.9 Operational Definition of Terms

It is important to define some of the professional terms and language used in this work in order to make it easily understandable to readers from other disciplines.

Public Fund: This refers to the government's independent accounting entity comprising a self-balancing set of accounts recording cash and other resources, together with all related liabilities, segregated for the purpose of carrying out specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations.

Audit: The International Standards of Auditing (ISA) defines an audit as a systematic, independent, and documented process for obtaining audit evidence and evaluating it objectively to determine the extent to which audit criteria are fulfilled. In the context of the public sector, an audit is an examination of financial statements and the underlying books and records of a public institution, resulting in an opinion on the fairness and accuracy of those statements (Ajembi, 1995; Adetula, Ejededawe & Egbekun, 2024).

Accountability: This is the obligation of persons or entities entrusted with public resources to report on how those resources were used and to be answerable for their decisions and actions. Samuel and Rufus (2024) describe accountability in the public sector as the process by which elected officials and appointed officers provide explanations regarding the origin and utilization of public resources under their control.

Internal Audit: This refers to an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluating and improving the effectiveness of risk management, control, and governance processes (Nadirsyah, Indriani & Mulyany, 2024).

External Audit: This is the examination of the financial statements of a public institution by an independent audit body or the Auditor-General, whose opinion is rendered in an audit report to the relevant legislative or oversight body.

Compliance Audit: This is a type of audit carried out to ensure that all books, records, and financial transactions are in agreement with laid down procedures, regulations, and legal provisions. While compliance auditing remains foundational in public sector audit practice, modern auditing has expanded beyond this to include performance and value-for-money auditing.

Value for Money (VFM) Audit: This is an audit methodology that assesses whether public resources have been utilized with economy (minimizing costs), efficiency (maximizing outputs relative to inputs), and effectiveness (achieving intended outcomes). Awodiran et al. (2024) identify VFM auditing as a critical tool for combating mismanagement and improving service delivery in the Nigerian public sector.

Stewardship Account: This refers to the account required of stewards or agents to render to the persons or bodies they are subject to in managing an organization's affairs. In the public sector context, public officials render stewardship accounts to legislatures, audit bodies, and ultimately to the citizenry.

Misappropriation: This refers to the intentional and unauthorized use, conversion, or theft of property or funds entrusted to a person for a specific purpose. In the public sector, misappropriation typically involves diverting public funds for personal gain or unauthorized purposes.

Post Primary School Management Board (PPSMB): This is a statutory body established by the Enugu State government to oversee the administration, management, and supervision of public secondary schools within the state, including the management of funds allocated for secondary education.

References

Adetula, S. L., Ejededawe, O. A., & Egbekun, E. (2024). The independence of Supreme Audit Institution in mitigation of financial fraud in Nigeria. Asian Journal of Economics, Business and Accounting, 24(1), 114–127. https://doi.org/10.9734/ajeba/2024/v24i11226

Adeyemo, K., & Oni, F. (2023). Political interference and audit independence in Nigerian public institutions. Journal of Public Sector Governance, 12(2), 34–50.

Ajembi, O. A. (1995). Auditing in Nigeria: Principles and practice. Lagos: Emioye Publishers.

Akinyele, T., & Olaniyan, J. (2022). Value for money audits and service delivery in Nigeria's federal agencies. Nigerian Journal of Public Policy, 18(3), 88–105.

Akinyemi, T., & Hassan, M. (2023). Public financial accountability in Nigeria: An assessment of fiscal responsibility mechanisms. Journal of Public Sector Finance, 15(1), 45–63.

Ali-momoh, B., et al. (2024). Inadequate funding and audit capacity in Nigerian public sector institutions. International Journal of Accounting Research, 11(2), 77–95.

Ariyo-Edu, A. A. (2025). Impact of internal control system on prevention of fraud in the public sector in North Central Nigeria. Journal of Accounting, Finance, and Contemporary Management Research, 1(2), 66–83. Retrieved from https://jafacomar.lautech.edu.ng

Awodiran, M. A., Oluwagbade, O. I., Igbekoyi, O. E., Ajayi, B. B., Dagunduro, M. E., & Ige, A. G. (2024). An assessment of value for money audit and public sector performance in Nigeria. International Journal of Economics and Financial Management, 9(6). IIARD. https://www.iiardjournals.org

Chukwuemeka-Nworu, I. J., Chukwuji, C. E., & Ocho, O. N. (2025). Financial accountability and auditing as predictors of quality education delivery in federal polytechnics in South-East Nigeria. Journal of Theoretical and Empirical Studies in Education, 10(2).

Constitution of the Federal Republic of Nigeria. (1999). Abuja: Federal Government of Nigeria.

Iredele, O. O., & Olanrewaju, S. O. (2025). Nigeria's public accountability and supreme audit institutions: A case study of Lagos State Civil Service. FUDMA Journal of Accounting and Finance Research, 3(3), 76–89. https://doi.org/10.33003/fujafr-2025.v3i3.204.76-89

Nadirsyah, N., Indriani, M., & Mulyany, R. (2024). Enhancing fraud prevention and internal control: The key role of internal audit in public sector governance. Cogent Business & Management, 11(1), 2382389. https://doi.org/10.1080/23311975.2024.2382389

Nnah, L., & Ine-Tonbarapa, M. M. (2023). Public sector audit practices and accountability of federal public enterprises in Rivers State, Nigeria. BW Academic Journal, 14. Retrieved from https://www.bwjournal.org

Ojeh, V. N., & Eze, C. (2023). Audit quality and public sector accountability in Nigeria: An empirical review. African Journal of Financial Studies, 6(1), 112–130.

Samuel, O. O., & Rufus, A. I. (2024). Transparency and accountability concerns in the Nigerian public sector. International Journal of Research and Innovation in Social Science. Retrieved from https://rsisinternational.org

Solomon, A. N., Emmanuel, O. O., Ajibade, D. S., & Emmanuel, D. M. (2023). Assessing the effectiveness of internal control systems on fraud prevention and detection of selected public institutions of Ekiti State, Nigeria. Asian Journal of Economics, Finance and Management, 231–244.

Onowu, J. U., Azali, S. I., & Agapia, G. (2025). Public sector audit practices and accountability of government organizations in Nigeria. BW Academic Journal, 2, 90–109. Retrieved from https://www.bwjournal.org

80 PAGES.