Showing posts with label Public Sector. Show all posts

Friday, 31 December 2021

THE CHALLENGES OF INTERNAL AUDIT FUNCTION IN THE NIGERIAN PUBLIC SECTOR

(A STUDY OF KADUNA STATE MINISTRY OF FINANCE)

ABSTRACT

This research work deals with the challenges of internal audit function in the Nigerian public sector with reference to Kaduna state ministry of finance. The objective of this study has been to evaluate the internal control system in the Nigerian public sectors, to ascertain the non- implementation of routine audit report and the lack of proper segregation and assignment of duties. In recent times, a combination of forces has led to a quiet revolution in the profession. Government moving towards democracy must demonstrate accountability in the use of public money and efficiency in the delivery of service. In many cases internal control system are weak, staffs are poorly paid making them unmotivated, coupled with non-implementation of routine audit report by appropriate authorities. The Responses from staffs were analyzed using relevant statistical tools from which three hypothesis were formulated and tested using Z-test statistics, while questionnaire were analyzed in tabular form using simple percentage. It was discovered that the internal audit is facing a lot of challenges which includes inadequate staffing, lack of independence, lack of facilities to carry out audit function and also poor funding. As a result of some of these challenges the effectiveness of the internal audit in the Nigerian public sectors, has been hindered as well as the organizational change it can bring to its environment. I recommend that for internal audit to be effective, it must be a completely independent group, adequately funded and equipped with qualified internal auditors as well as sufficient opportunities for internal auditors to become qualified.

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Internal audit had been defined “as an independent appraisal function established within an organization to examine and evaluate its activities as a service to the organization”. Internal auditing is a process generally adopted towards ensuring and safeguarding of resources and promoting operational efficiency in organizations. The responsibilities for effective internal auditing normally rest on with the internal auditors who in turn rely a great deal on the soundness and effectiveness of internal control system.

The business world is developing so in the complex nature of the organizations. This complexity of modern organizations and hence the management has led to the much broader role at the internal audit. The role of internal audit is fast moving from mere checking of documents and physical duties to analyzing the ability of organization to react to changing circumstances.

Auditing for the public sector is aimed at prevention of mistakes, shortcomings and misdeeds in the public administration. The internal audit has become a good control measures that can foretell all the incidence of fraud and misappropriation of fund in government ministries if properly put in place.

1.2 STATEMENT OF THE PROBLEM

Many business organizations are rapidly assuming complexity resulting to remarkable reliance to internal audit and management as a wider range area of control. In spite of the existence of internal audit departments in organizations, it is often argued that the rate of fraud and misdeeds is still on the increase, particularly in the public sector. Some people argues that the internal auditors are creating more problems than they are solving, others see it as tools for witch-hunting and therefore sees them as unnecessary evil.

The internal control system in Nigeria public sector may be insufficient based on some predicaments.

Lack of proper segregation and proper assignment of duties as well as shortage of qualified staff to carry out internal audit and accounting duties.
Lack of implementation of routing audit report by appropriate authorities.
Inadequacy of internal control system leading to improper investigation.

The above reasons greatly affect the effectiveness of internal audit in the public sector. This gives the researcher the impetus for undertaking a study on this study with a view coming up with solution of those challenges.

1.3 OBJECTIVES OF THE STUDY

The objective of this research is to examine the challenges of internal audit function in Nigeria public sector organization.

The research project is expected to achieve the following objectives:

To ascertain the lack of proper segregation and proper assignment of duties as well as shortages of staffs to carry out audit duties.
To ascertain reasons for improper implementation of routine audit report by appropriate authorities.
To evaluate the internal control system in the Nigerian public sector.

1.4 RESEARCH QUESTIONS

The following are the various research questions. They are as follows:

1. Are there challenges of internal audit function in the Nigerian public sector?

2. Are the impacts of Nigerian public sectors on the internal audit function?

3. Can public organization do with an internal audit function?

1.5 RESEARCH HYPOTHESES

The following hypotheses were found relevant to the above stated problems and objectives, and thus tested in this study.

Hypothesis i:

HO: The inadequacy of the internal control system in Kaduna state ministry of finances not the motive for the trials of the internal audit.

HI: The inadequacy of the internal control system in Kaduna state ministry of finance is the motive for the trials of the internal audit.

Hypothesis ii:

HO: The lack of proper segregation and assignment of duties as well as shortages of staff to carry out audit duties does not influence the effectiveness of the internal audit.

HI: The lack of proper segregation and assignment of duties as well as shortages of staff to carry out audit duties influences the effectiveness of the internal audit.

Hypothesis iii:

HO: The lack no of implementation of routine audit report by appropriate authorities.

HI: There is lack of implementation of routine audit report by appropriate authorities.

1.6 SIGNIFICANCE OF THE STUDY

The project intended to bring to light the challenges of internal audits department in the Nigerian public sector with a view of coming up with possible ways to overcome such challenges.

The research work will be of vital importance to the government, bringing to light the challenges hampering the efficiency of the internal audit and how these challenges can be tackled.

The research work will also be of significance to the management or head of department of various government ministries and public corporations so as to see the importance of effective internal control system and the discharge of their responsibilities to the internal auditors as a yardstick to improve organizational performance. It is also necessary for the internal auditors to understand their loopholes so that necessary adjustments could be made to enhance their efficiency.

1.7 SCOPE OF THE STUDY

The scope of this research work in the Nigerian public sectors as a whole specifically the internal audit and accounting department, with particular interest in the Kaduna state ministry of finance.

1.8 LIMITATION OF THE STUDY

The limitation to this research work is the lack of adequate information from the senior staff of the ministry considering such information as “Top Secret”. In ability to have access to vital documents in the ministry considering such document as confidential.

1.9 DEFINITION OF TERMS

In every study, there are some terms that are frequently used; also in the course of this study the following terms relating to the subject matter will frequently be used.

FRAUD: This is defined as criminal deception in an act of acquiring other people money kept in one’s possession deceitfully.

INTERNAL AUDIT: A.H. Millichamp defined internal audit as “an independent appraisal function within an organization for the review system of control and quality of performance as a service to the organization”. The objective is to examine, evaluate and report on the adequacy of internal control as a contribution to the proper economic efficient and effective use of resources.

INTERNAL CONTROL: Internal control is the whole system of control, financial and otherwise, established by management in order to carry on with the business to an enterprise in an orderly manner, ensure adherence to management policies, safeguard its asset and secure as far as possible the completeness, accuracy and reliability of books and other records.

INTERNAL CHECK: Internal check is the aggregate of the check and balance imposed on the day to day transactions in an organization where by the work of one person are verified independently by or is complementary to the work of one another.

MINISTRY OF FINANCE: This is a ministry that is responsible for the administration of government finance [public fund].

PUBLIC SECTOR: consist of all organization whose control lies in the hands of the public and whose objective involves the provision of services where profit is not the primary motive.

Thursday, 19 November 2015

THE CHALLENGES OF MANAGING PUBLIC SECTOR HOUSING ESTATES

ABSTRACT

This project work focuses on the challenges of managing public housing estate with Gwarinpa Housing Estate as a case study. The objectives of the study are to examine the management and maintenance strategies put in place by the management and as well identified the causes and effect of physical obsolescence. Relevant literatures were also reviewed to aid the study ranging from the concept of management to its functions. Reviewed like Thorn Croft (1978). Lawal M.(2000). Jide Babatunde (1996) etc. To prove to this point, the researcher also deemed it fit to adopt questionnaires and field survey in gathering relevant data required for the study. Data were also analyzed in tables using percentages. The findings of this project work revealed that, the profound and exacerbating managerial challenges in the estate is not just insufficient fund and changes of management but that of bureaucracy and to top it all, policy and governmental changes as the major challenges that enfeeble the management of public Housing Estate. The strengthening of managerial capacity, provision of adequate fund to carryout regular maintenance without delay and redressing of political practices that undermine efficient management will go a long way in proffering solution to the above identified challenges.

CHAPTER ONE

1.0 BACKGROUND TO THE STUDY

Shelter is one of the basic necessities of life. It has been tagged second most important need to man after food, It plays an important role in man’s survival and continued existence just like food .It is also considered to be a matter of public as well as private concerned. Provision of adequate housing, affordable, high standard and quality housing that meet the social, economic and political aspiration of the citizenry remains the primary focus of all government all over the world. This is because the fulfillment of this desirable social objective is a key component of sustainable development (Ibem and Amole, 2010) and a measure of the well-being of the people, social ability and work efficient of any organization providing such. According to Leong (2009), housing is a factor impacting on the health, safety, socio-economic and political life of the occupants. In a nutshell, it impacts all aspect of human endeavor. Thus, the state of housing estate and it is environment is an indicator of the level of development, condition and state of the citizenry.

Despite the pivotal role of housing in the socio-economic development of a nation and the life of the people, unfortunately, for over 52 years of independent, Nigeria is yet to attain an efficient and effective public housing management. Majority of the public housing Estates in Nigeria are in a deplorable condition and state of disrepair, due to long period of neglected maintenance. According to Olatubara and Fatoye (2006), Public Housing Estates, when comparing with the existing Private Housing Estates, are known to be lacking the basic management and maintenance culture of the infrastructural facilities/services that are meant to enhance the liveability of such Estate. A poor quality living accommodation according to Brennan (2000), will impact negatively on the physical and mental health of the residents of the Housing Estate. Management and maintenance are primarily undertaken in order to keep or restore every part of the buildings, its contents and its environment in an acceptable condition. This includes but not limited to the carrying out of repairs of works and the replacement/maintenance of facilities in buildings and its environment that are in deplorable condition.

The challenges bedevilling public sector housing Estates vary with different context and analytical perceptions. The problems of chronic financial crisis, poor maintenance, lack of manpower and strained relationship between public estates residents and the management has been mentioned by (Davidson 1999) as recurring themes of public estate management issues, While Okpala (1977), identified bureaucracy corruption.

This implies that, there is need to look at the management of existing Public Housing Estates in order to restore them back to habitable condition through regular management and maintenance so that the intensity building management becomes higher with its age especially in the face of climatic change and its negative and adverse effects on the building itself, the facilities and the physical environment for sustainable development.

This project work therefore, examines the strategies adopted in the past 19 years for the management and maintenance of stock of building facilities and the environment in Gwarinpa Housing Estate with a view to identify the challenges confronting the effective adoption of the strategies and suggest a good management practice suitable for the Estate and public Sector Housing Estate in Nigeria in general.

1.2 STATEMENT OF RESEARCH PROBLEM

Achieving an optimum returns and also to ensure that the public sector housing is always in good and habitable condition to meet the satisfaction of the owner(s)/occupants is nothing but a mere dream due to the following problems itemized below;.

I. The estate lacks adequate funding since it is tagged a government property.

II. Lack of routine inspection and unskilled management staff due to instability in management from the Government.

III. Changes in government policy and power thereby making the managing agent face changes also.

IV. Delay in carrying out maintenance work on the estate due to bureaucracy corruption and questionable character of staffs.

V. Strained relationship between public estates residents and the management. e.t.c.

1.3 RESEARCH QUESTIONS

The following are very pertinent to the study.

I. What are the strategies adopted by the Authority concerned for the management of the Housing Estate in the past?

ii. How effective are these strategies?

1.4AIM AND OBJECTIVES

The aim of the study is to examine the challenges of managing public sector Housing Estate in Nigeria with Gwarinpa Housing Estate as the case study

To achieve the above aim the following objectives will be pursued;

i. To identify and examine the strategies adopted by the FHA in the overall management of the Housing Estate.

ii. To examine the challenges confronting the effective adoption of the strategies.

iii. To proffer solution to the problems identified.

1.5 SIGNIFICANCE OF THE RESEARCH

The significance of this project work is to critically examine the challenges of managing public sector Housing Estate in Nigeria.

Building requires maintenance in order to enhance their values and life span. After the development of Housing Estate, the problem of management set in. with few years of completion, other problems began if adequate and appropriate strategies are not employed.

Furthermore, people enjoy building houses without considering the management aspect of development and as a result, there has been an increase in the deterioration of building and hence less in value. Also as a result of maintenance negligence, the Housing estate tends to lose its aesthetic nature.

This research will enlightens both government and the general public on the need to engage the services of professionals (Estate Surveyors and Valuers ) in the management of public Housing Estate, so that the aim of developing such Estate will not be defeated.

1.6 SCOPE OF THE STUDY

The study addresses the management of Gwarinpa Housing Estate and it is restricted to Residential properties developed by the Public Authority. This is because the general management is done by the Federal Housing Authority and it also faced more challenges than the privately owned properties.

The project work covers the challenges facing the management and maintenance of the Housing Estate and will be limited to, 3^rd, 2^th and 5^th avenue of the Estate due to its vast nature.

1.7 DEFINITION OF TERMS

i. Management

ii. Maintenance

iii. Housing

iv. Estate

v. Housing Estate

vi. Development

vii. Public Estate

viii. Public developer

ix. Obsolescence

x. Slum

xi. Blight.

I. MANAGEMENT: Allison (1967) defined management as the selection of goals and the planning, procurement, organization and control of the resources for their achievement.

II. MAINTENANCE: Lawal M. (2010) defined maintenance as the whole range of operation necessary to preserve a building with its finishes and fittings so that it continues to provide the same facilities and services which it did at its initial stage of development.

III. HOUSING: Housing extends beyond the concept of shelter. In the word of Abraham (1980) in his book “Housing in the Modern Market” it is not only shelter but part of the fabric of the neighborhoods life and the whole social milieu. It touches on many facts of industrialization, economic activities and development.

IV. PUBLIC ESTATE: Are land and building owned and directly managed by public authorities and those rights of control which public authorities exercise over the estate of the private owners.

V. ESTATE: Udechukwu (2006) defined estate as “A legal entity denoting the character and quality of right that an individual or individuals possessed on a property.

VI. HOUSING ESTATE: In the word of Essien G.A (2012) in his Lecture Note “An Approach to Property Development II (Vol. 3)”. “Is an area of land on which many houses are built either by private enterprise or by a public authority”.

VII. DEVELOPMENT: Is the process of generating latent values in land or creating benefits there from by incurring on it costs in the form of labour, capital or management skill (Umeh, 1983).

VIII. PUBLIC DEVELOPER: Nathaniel (1979) cited that public developer deal directly with government involvement in the provision of housing, public properties (Estate) are therefore owned, controlled and managed by Federal, State, Local Government and other public bodies which are set up and functioned under state and their aims is usually based on political, social and economic ground.

IX. OBSOLESCENCE: Obsolescence is refers to as the wear and tear of the fabric of a building. It is a loss in the usefulness of a building and is a deficiency in design layout and equipment (Lawal M. 2010).

X. SLUM: Adetoro S.A and Mbazor D.N (2007) defined it as “An area of advanced blight condition usually requiring cleaning or re-building as the most effective corrective action. It can also be said to be a poor dirty crowded area in an urban area.

XI. BLIGHT: Babatunde J. (1996) described blight as “Premature obsolescence and physical deterioration or other factors that has become undesirable for or impossible for normal development. Blight ranged from simple to complex.

1.9 STUDY AREA

GWARINPA HOUSING ESTATE

Abuja the Federal City of Nigeria is one of the development under taken by the government. The territory is located just north of the confluence of the River Niger and Benue. It is bordered by the state of Niger to the west and north, Kaduna to the northeast, Nasarawa to the east and south, and Kogi to the southwest. It lying between latitude 8.25 and 9.20 north of the equator and longitude 6.45 and 7.39 east of Green which meridian, Abuja is geographically in the centre of the country. The FCT has a landmass of approximately7, 315km2, of which the actual city occupies 275.3km². It is situated within the savannah region with moderate climatic conditions.

On December 12, 1991, a historical event took place; the seat of government was moved to Abuja, replacing Lagos, which is still the country’s most populous city. At the 2006 census, the city of Abuja had a population of 776,298, making it one of the top ten most populous cities in Nigeria. However, Abuja has witnessed a huge influx of people in to the city which has led to the emergence of satellite towns and smaller settlements to which the planned city is sprawling towards; the unofficial metropolitan area of Abuja is well over three million. According to demographic, the population of Abuja’s area as of 2012 is 2,245,000, making it the fourth largest urban area in Nigeria.

GWARINPA HOUSING ESTATE is located within and named after Gwarinpa district of Abuja. The Estate is located at the north-eastern part of FCT and within the municipality area. It is bounded by Wunmpa and Bunkuru district to the north, Dape and Kafe to the west, and bounded by Karimu and Mbora district to south.

Gwarinpa is in Phase III of development plan of Abuja. It became popular when the Gwarinpa Housing Estate in the district said to be the largest Estate in West Africa was built.

The Housing Estate is the largest single estate in Nigeria and one of the largest in Africa. The Estate was built by the administration of late General Sani Abacha in 1994, Via the Federal Capital Development Authority (FCDA) of which the overall development and management contract was handed over to the Federal Housing Estate (FHA). And it is the largest of its kind in Africa. It provides residence for both minority and majority.

Gwarinpa is mainly a residential area though recently, some business especially service oriented business like eateries and banks are springing up rapidly. Most of this business is located on the three major roads which are 1^st Avenue, 2^nd and 3^rd Avenue.

Within Gwarinpa Estate there are some small estates. These include Federal Ministry of works and Housing Estate, War College Estate, Federal Housing Authority Estate (FHA), Citect Villas, Abuja Modern City which is with a population of 1,800 and a housing stock of 3,700. Also, Places near Gwarinpa are Kado, Kubwa, Jahi, Utako, Durumi etc.

The real properties are mainly residential and are managed and maintained by the Federal Housing Authority (FHA) Estate Service Department which is sub-divided into three units as follows: The Town planning unit, the Land Survey unit and Estate Management Unit. The Maintenance of houses, roads, drains, collection of ground rent, all falls within the Estate unit’s jurisdiction.

THE FEDERAL HOUSING AUTHORITY (FHA) was established under Decree No 40 of 1973 (Now Cap 136 of the Federal Republic of Nigeria, 1990). Initially as a public enterprise and given the mandate to prepare and submit proposal periodically to the government for National Housing Programme and to execute such programme as may be approved by government. First, FHA was partially commercialized in 1992 under a triplet performance agreement, which gave the authority operation, authority as a corporate / business concern not under the control of the government. Under the Subsisting National Housing Policy and (2006) FHA was again partially commercialized and given similar role as the 1991 era to develop estates on commercial basis, provides low-income houses and engages in the provision of site and services for all income groups in all the state of the Federation.

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