PERFORMANCE AUDIT IN ENGENDERING PUBLIC ACCOUNTABILITY OF THE PUBLIC SECTOR ENTITIES IN NIGERIA

PERFORMANCE AUDIT IN ENGENDERING PUBLIC ACCOUNTABILITY OF THE PUBLIC SECTOR ENTITIES IN NIGERIA

The aim of this study is to evaluate the need for performance audit in engendering public accountability of the public sector entities in Nigeria, identifying factors inhibiting proper Accountability, and recommending a probable solution.

CHAPTER ONE

Background of the Study

Due to the widespread public demands for transparency in governance and the global outcry against corruption in recent times, accountability has now become of serious concern in many countries including Nigeria.

Accountability in the public sector throughout the world is giving serious attention because the government is the highest spender of public funds. The general public is increasingly requiring public office holders to be more accountable by a demonstration of effective use of public assets and funds in the delivery of services and pursuit of government objectives (Obazee, 2006).

The Nigerian society is filled with stories of wrong practices such as stories of ministerial and extra- ministerial departments frauds, embezzlements and setting ablaze of offices housing sensitive documents and corruption are found everywhere in the country (Okwoli, 2004)

In Nigeria today, highly placed government functionaries do not see any need for judiciously expending public funds, thus erroneously believing that it is their share of the national cake (Oladipupo, 2005).

Lack of accountability in the public sector creates opportunities for corruption with its attendant negative consequences. For instance, through corruption the commonwealth of Nigerians is being diverted by a few, leaving the nation at a loss. Due to the poor culture of accountability, corruption has become a way of life in Nigeria; to the extent that it is trite to say that officials are not only corrupt, but corruption is official. The scandalous revelations of large scale corruption and mismanagement of public funds by government officials contained in the audit report recently released by the office of the Auditor General of the Federation on the Accounts of the Federation of Nigeria for the year ended 31st December 2009 lends credence to this assertion

The standard of living of ordinary Nigerians is continuously depreciating. The percentage of Nigerians living in poverty had risen from 54.4 percent in 2004 to 69 percent in 2010 representing approximately 112.518 million Nigerians living in abject poverty – defined as living on an income of fewer than 1 USD a day. Despite being the largest crude oil producer in Africa and the 20th largest producer in the world, the country ranked 158 out of 177 countries surveyed in the United Nations Development Programme (UNDP) 2011 Human Poverty Index. The income inequality coefficient has risen from 0.429 in 2004 to 0.447 in 2010 indicating that inequality increased by 4.1 percent nationally. This means that the rich are getting richer and the poor getting poorer in the country. (Nigeria, 2012; UNDP, 2011).

The unemployment figure rose from 19.7 percent in 2009 to 23.9 percent in 2011 translating to over 25 million unemployed people. There is also a general lack of access to infrastructure facilities: for example, an estimated 100 million Nigerians are without access to electricity while the remaining number of people receive a low or irregular supply.

Nigerians are suffering amid plenty. Nothing typifies bad governance more than the fact that despite being the sixth crude oil exporter in the world, Nigeria is a net importer of refined petroleum products; and her government expects her citizens to pay the international price for petroleum products. Generally, top government officials ride roughshod over the people and care little about their welfare. They indulge in sheer conspicuous public consumption at the expense of their poverty-stricken people.

Senator Dahiru Kuta, who is chairman of Nigeria’s senate committee on Federal Character and Intergovernmental Affairs, was reported to have disclosed that corruption in the country’s public sector accounts for over N3 trillion(N160 = USD 1) loss annually (Daily Sun, Friday, November 4, 2011, p. 7).

It has become so imperative to evaluate the performance of the public sector entities in Nigeria to help the governments and public policy-makers who are at this time experiencing a rising level of public debt. The public debt issue is not only currently present, but also extends to a longer future time, and this has an effect on future public budgets and future generations of Nigeria.

It is therefore high time to sensitize the necessity for public sector entities to really give value for money and to effectively implement performance on all levels of the public sector and to exterminate situations of speculative performance and embrace sustainable performance.

This study seeks to evaluate, the need for performance audits in ensuring the accountability of the public sector entities to the people.

1.2 Statement Of Problems

There is a constant and amplified chorus of disapproval by the concerned citizens of Nigeria, on the level of government’s wastage in public spending, corruption, high recurrent expenditures, cost of governance, and poor budget performance by the various governments in Nigeria since 1999 till date.

There have been increasing tendencies of political and media propaganda by most political and elected public office holders in the delivery of democratic dividends. The level of massive looting and corruption among public office holders keeps on rising. Nigeria has continuously been rated by the Transparency International (TI) among the most corrupt country in the world for many years consecutively since 2001 due to the collapse of public sector accountability and the weak supreme audit institutions.

There are frequent ministerial scandals and public agitations of the inability of the executive to turn things around, and given the available human and material resources in Nigeria, there is an increasing demand for performance audits and the need for accountability of public sector entities in Nigeria.

1.3 Aim and Objectives of the study

The aim of this study is to evaluate the need for performance audit in engendering public accountability of the public sector entities in Nigeria, identifying factors inhibiting proper Accountability, and recommending a probable solution.

Other specific objectives include:

1. Ascertain the relationship between effectiveness and responsibility of public sector entities in Nigeria.
2. Ascertain the relationship between environment and responsibility of public sector entities in Nigeria
3. Evaluate the relationship between equity and responsibility of public sector entities in Nigeria
4. Evaluate the relationship between effectiveness and responsiveness of public sector entities in Nigeria
5. Ascertain the relationship between environment and responsiveness of public sector entities in Nigeria
6. Evaluate the relationship between equity and responsiveness of public sector entities in Nigeria

1.4 Research Questions

In conducting a performance audit in which the objectives focus on program effectiveness, economy, and efficiency, this study seeks to answer the following questions such:

1. What is the relationship between effectiveness and responsibility of public sector entities in Nigeria?
2. What is the relationship between the environment and the responsibility of public sector entities in Nigeria?
3. What is the relationship between equity and responsibility of public sector entities in Nigeria?
4. What is the relationship between the effectiveness and responsiveness of public sector entities in Nigeria?
5. What is the relationship between the environment and the responsiveness of public sector entities in Nigeria?
6. What is the relationship between equity and responsiveness of public sector entities in Nigeria?

1.5 Research Hypothesis

1. Ho: There is no significant relationship between effectiveness and responsibility of public sector entities in Nigeria.
2. Ho: There is no significant relationship between the environment and responsibility of public sector entities in Nigeria
3. Ho: There is no significant relationship between equity and responsibility of public sector entities in Nigeria
4. Ho: There is no significant relationship between effectiveness and responsiveness of public sector entities in Nigeria
5. Ho: There is no significant relationship between environment and responsiveness of public sector entities in Nigeria
6. Ho: There is no significant relationship between equity and responsiveness of public sector entities in Nigeria

 1.6 Scope of the Study

This study focussed on performance audit and accountability of public sector entities in Nigeria.

All public entities can be covered; as a result, the study will focus on some selected public sector entities around the southern part of Nigeria.

1.7 Limitations of The Study

Difficulty in selecting the method of data analysis is a major constraint of the study.

1:7 Significance Of The Study

The study will highlight the need for performance audits in engendering public accountability of the public sector entities in Nigeria. It will also help in identifying factors inhibiting proper accountability and recommending a probable solution.

It is also important to scholars in understanding the relationship between performance audit, accountability, and public sector entities in Nigeria. The study also aims at revealing the need for improvement among public entities in Nigeria, so as to meet up with the demands and yearnings of the teeming population of Nigeria in line with modern and current amenities.

1.8 Definition Of Terms

Performance Audit

According to the Organization of Supreme Audit Institutions (INTOSAI) Code of Ethics (1998), performance audit can be seen as “an audit of economy, efficiency, and effectiveness with which the audited entity uses its resources in carrying out its responsibilities”.

Responsiveness

The 2015 World Public Sector Report (WPSR), titled Responsive and Accountable Public Governance, presents the need for public governance to become more responsive and accountable in order for the State to lead the implementation of a collective vision of sustainable development. Social and technical innovations are providing an opportunity for the social contract between the State and the citizenry to shift towards more collaborative governance.

Responsibility

Preston (1992) says it means holding public officials responsible for their actions. Accountability, according to Lawton and Rose (1994), is a process where a person or group of people are required to present an account of their activities and the way in which they have or have not discharged their duties. By inference, a person is held accountable for not only his/her actions but also inactions.

Economy

The economy in this case means the minimization of resources (input) used to undertake particular measures, given that the cost reduction does not affect the quality of the final product (output).

Efficiency

Efficiency Is the relationship between the services/goods produced and the resources used to produce them. An efficient operation produces the maximum output for a given set of resources input or it has minimum input for any given quantity and quality of services and goods produced.

Effectiveness: Is how well a program or activity is achieving its objectives (www.kpmg.co.za)

Environment

According to the KPMG audit firm, it refers to sustainable development which means meeting the needs of the present generations without compromising the ability of future generations meeting theirs.

Equity

Also according to KPMG audit firm, this refers to fairness and impartiality in the use of public funds i.e. is the selection procedure for beneficiaries of funds fair and void of influence.

Ethics

This refers to the qualities of honesty and integrity in personal conduct and devotion to duty as manager of public funds. When all government projects are well executed in relation to the 6E’s above, there will be an improvement in people’s economic welfare bringing about happiness and satisfaction.

1.9 Organization Of The Study

The rest of this paper is as follows: chapter 2, we discuss the related literature.  Chapter 3 discusses the research methodology. Chapter 4 discusses data presentation and analysis. Chapter 5 discusses the finding, conclusion, and recommendation.