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+ Corresponding author 
© 2016 Conscientia Beam. All Rights Reserved. 

 

 

 

AUDITING PROCEDURES AND PROCESS IN THE PUBLIC SECTOR 

 

 

Musa Success Jibrin
1+ 

Ofor Theresa Nkechi
2
 

Success Blessing Ejura
3
 

 

1,2Accountancy Department Anambra State University, Uli, Nigeria 
3Banking and finance Department Kogi State University, Anyigba, 
Nigeria 
 

 
(+ Corresponding author) 

 ABSTRACT 
 

Article History 
Received: 13 October 2016 

Revised: 14 December  2016 

Accepted: 18 January 2017 

Published: 6 March 2017 

 

 

 

Keywords 
Public resources ulitilisation 

Accountability  

Stewardship 

Accounting officers. 

 

 

This paper examines the impact of auditing in the public sector. It delved into the 

perspectives of functional auditing in the public sector in view of the continue quest for 

accountability placed on the accounting officer. The accounting officers must, as a matter 

of facts and professionalism, carry out his role and responsibility in such a way that 

affairs of resources placed under his control are properly accounted for and stewardship 

report rendered periodically to the public for performance assessment. Procedure in 

public sector brings out the essence of accountability in the public sector and the 

resultant stewardship accounting. The paper commences with the paper keywords, 

introduction, and the body of the presentation, observations, summary and conclusions in 

order for the researcher to drive home his point. 

 

Contribution/ Originality: This paper examines the impact of auditing procedures and process in the public 

sector. It will serve as reference materials for future researchers and update the previous studies as well filling the 

existing gap in literature. 

 

1. INTRODUCTION 

The management and control of public sector fund has been a consistent concern to the masses.  In recent times, 

the number and monetary value of public sector activities have greatly increased (Alastair, 2008). With this increase 

there is an added demand for accountability of the accounting officers.  There is need for public officials and 

employees who manage such resources and activities to render adequate accounts of their stewardship to the public 

(Khan, 2006).  The public is to receive reports of accountability so as to assess the performance of those officials 

entrusted with public resources/fund. 

Accountability is an inherent concept in the governing process of any nation and her public investments is not an 

exception (Alastair, 2008).  The need for public accountability has caused demands for more information about public 

sector programs, projects and services (Khan, 2006). In Nigeria, the law requires that accountability reports be 

produced by public officials and other persons entrusted with public resources.  The citizens as well as the lawmakers 

entitled to know whether government resources are handled in compliance to lay down rules and regulations (Sen, 

Financial Risk and Management Reviews 
2016 Vol. 2, No. 2, pp. 43-50 
ISSN(e): 2411-6408 
ISSN(p): 2412-3404 
DOI:  10.18488/journal.89/2016.2.2/89.2.43.50 
© 2016 Conscientia Beam. All Rights Reserved. 

 

 

 

 

http://crossmark.crossref.org/dialog/?doi=10.18488/journal.89/2016.2.2/89.2.43.50


Financial Risk and Management Reviews, 2016, 2(1): 43-50 

 

 
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© 2016 Conscientia Beam. All Rights Reserved. 

1999). Not only this, the public also deserves to know whether public expenditures, projects, program  and services 

are carried out economically, efficiently and effectively to achieve stated objectives.  Internal audit is a large and 

significant part of the financial control of State and its investment (Dike, 2002). Auditing is one of the elements of 

accountability.  Its practices and procedures will ensure accountability in no small measure.  In the Public Sector, 

efficiency accuracy and integrity can only be achieved through audit procedure (Dye and Rick, 1998). This article 

will attempt to examine the audit procedure in the Public Sector, its role and suggest improvements. 

 

1.1. What is Audit? 

The term „Audit‟ originated from the Latin verb audire i.e to hear.  Audit dates back to ancient time.  In fact  audit 

is as old as man.  The first audit took place in the Garden of Eden when God asked man to give account of his 

stewardship towards God‟s commandment. (Gen.3v9-24) and man was driven out of the Garden. 

According to Tanzi (1998) auditing is an act, it is defined as the examination by an auditor of the financial record 

and other evidences from which the financial statements and Balance Sheet has been prepared so as to be able to form 

an independent opinion as to whether the accounts under review have given a true and fair view of the 

organization/entity. 

The American Institute of Certify Public Accountant (AICPA) defined Auditing as “an examination intended to 

serve as a business for an expression of an opinion regulating the fairness, consistency and conformity with accepted 

accounting principles or statutory prepared by a corporation or any other business entity for submission to the public 

or to interested pirated. 

Auditing might therefore be seen as the scrutinizing or the examination of both accounts of business entity, 

including charities, trusts and professional firms in detail by an Auditor(s) in other to ascertain whether or not it 

presents a true and fair view of the policy statement for a given period (World Bank, 1997). 

The person who examines the record is known and called the “Auditor”.  The auditor is a watchdog of the 

management and owners or stock holders as the case may be (Rose-Ackermam, 1999). 

 

1.2. General Objective of Auditing 

 The primary objective of auditing in any firm is to produce a report by the auditor on the truth and fairness 

of the revenue accounts and the Balance Sheet as at a particular date, so that the users of such information can believe 

in them. However, the amount of such examinations carried out by the auditor depends upon circumstances 

surrounding each case. 

 

1.3. Secondary Objectives of Audit include 

i. to show how errors and fraud can be detected 

ii.  to prevent fraud and errors through the deterrent and moral effect of audit. 

iii.  to provide constructive assistance to management.  The Auditor through his work can make constructive 

suggestions to the managements which may assist them in improving efficiency and profitability of the business.  

 

1.4. Purpose of Public Sector Audit 

 At the Public Sector level, auditing has the following broad objectives: 

1. To determine the truth and fairness of the activities of the State each financial year. 

2. It is to promote accountability, stewardship and transparency in discharge of public service. 

3. Public Sector audit helps to install sanity in service by encouraging accountability, efficiency and effective 

record keeping. 

4. It demonstrates the propriety or otherwise of the stewardship. 

5. Auditing at the Government objects into the examination of: 



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a. Whether the government is carrying out only those activities or program authorized by the legislature and is 

conducting them in a manner contemplated to achieve the objectives intended, i.e Budgetary provisions 

adhered to strictly. 

b. Where the program  or activities are conducted and expenditure made in compliance with legal stipulations 

and requisitions. 

c. Whether the resources of the Public Sector and its agencies including funds, property and personnel are 

adequately controlled and utilized. 

d. Whether all revenues and receipts arising from the operations under examination are collected and property 

accounted for and point out areas of weakness and financial loss. 

e. Whether the Government‟s accounting system complies with principles, standards and related requirements 

prescribed by regulations. 

f. Whether report by Government to legislature and other appropriate bodies disclose properly the information 

required for the purpose of the report. 

g. Errors and mistakes in Government financial transactions or the disbursement of funds as well as the 

financial records keeping by the staff are easily identified. 

 

1.5. General Audit Standards 

The general Audit Standard relates to competence, independence, professional care and quality control. 

 

i. Competence 

The auditor should possess adequate professional proficiency necessary for carrying out his work.  He 

should have a wide knowledge and skill of the theory and practice of accountancy and should be able to ask 

intelligent questions from his clients and their staff when faced with transactions of a technical nature. 

ii. Independence 

The auditor (the audit organization) should be free from personal and external impairments to independence.  

The auditor should maintain an independent status and attitude in reality and appearance.  The aim is to have 

conclusions, opinions, judgments and recommendations that are partial by knowledgeable persons and third 

parties. 

iii.         Due Professional Care 

As much as it depends on him, the auditor should act with due care, skill and diligence in conducting the 

audit and in preparing the related reports.  The auditor is expected to observe the General Audit Standards 

and other relevant laws and regulations when carrying out audit work. 

iv. Quality Control 

It is the responsibility of the auditor to adequately plan and control his work.  He must consider how the 

overall quality of the work carried out within the organization can be monitored and maintained. 

 

1.6. Audit Procedure 

The audit procedure is influenced by auditing standards which are drawn by the professional accountants and 

legal regulations.  The auditing standards often covers the conduct of auditor, the planning, controlling, recording and 

reporting of actual audit work. 

The audit procedure involves: 

1. Obtaining a detailed and clear understanding of the organization. 

2. Assessing the quality of financial reporting systems and controls to see whether the underlying accounting 

records form a reliable basis of the preparation of the statements.  This is done by critically reviewing the 

system of book keeping, accounting and internal control. 



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i. Making such checks, tests and inquiries as he considers necessary so as to form an opinion about 

the reliability of the records as the basis from the preparation of the accounts. 

ii. Comparing the statement of income and expenditure and balance sheet with the underlying records 

to see whether they are in accordance. 

iii. Verifying the existence, ownership and bases of valuation of the assets and assess whether 

liabilities are accurately and fully disclosed. 

3. Checking a sample of transactions and balances in the accounting records to ensure that the accounts have 

been prepared on sound accounting principles and in accordance with the statements of accounting 

standards. 

4. Review of the present results against those of previous years current years‟ expected result and against the 

results of comparable organizations to ensure whether the result is reasonable and to determine if there are 

acceptable explanations for any unusual trends in activities/results. 

5. Discussing with management (executive) and directors on significant issues within the financial statements. 

6. In concluding, the auditor use his professional judgment to form opinion on the overall picture where the 

Accounts give the true and fair view of the position of the state of affairs of the council during the 

accounting period. 

 

1.7. Types of Audit Relevant to Public Sector 

1.7.1. Internal Audits 

This type of audit implies that the work of audit is carved out by specially assigned staff (Internal Auditor); it 

will normally consist of a reviewing of the operations procedures and records of the business/organization.  The main 

objective of the internal audit is to assure management that the accounting controls are both adequate and working 

effectively in practice.  It is also to secure as much as possible the accuracy and reliability of accounts and to ensure 

the safeguard of its accounts. 

Although the internal auditor is an employee of the organization, nevertheless, there should be an element of 

independence as he carries out his duties since the nature of his work requires it.  The internal auditor directly reports 

to the executive of their organization. 

The major purposes of the internal audit are: 

1. To assure management on accounting matters that the internal check and the accounting system are 

effective in design and operation. 

2. To ascertain and report whether the system of accounting and internal check are adequate and being 

strictly adhered to. 

3. To ascertain that there have been proper authorization of transactions and that liabilities can only be 

incurred by legitimate operation of the business/organization. 

4. To prevent and detect fraud and error through continuous day-to-day examination of the accounting 

records and the operation of the system of internal check. 

5. To facilitate and expedient the annual audit and give information to and corporate with the external 

auditor. 

 

2. FINANCIAL AUDIT 

It is a type of audit that is often conducted in the public sector.  It involves the audit of the financial statements so 

as to provide reasonable assurance on whether the financial statements audited presented fairly the financial position, 

results of operations and cash flows in conformity with generally accepted accounting principles and applicable laws 

and regulations, it also evaluates the soundness of internal control system of the audited organization. 

 



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3. PERFORMANCE AUDIT 

It is an objective and systematic examination of evidence for the purpose of providing an independent assessment 

of the performance of public sector organizations program projects and services in order to improve public 

accountability.  

 It includes the assessment of the economy, efficiency and effectiveness with which the resources of an entity 

had been used in achieving results.  It is otherwise known as value for Money Audit. 

 

4. BOARD OF SURVEY AND BOARD OF ENQUIRY 

The functions of a board of survey are to make a physical examination of stores and stores records to recommend 

how deficiencies or serviceable stores should be dealt with and to assess their causes.  Any stores house which is not 

regularly inspected by a stock verifies should be inspected by a board of survey at least once in each financial year. 

The senior representative of a ministry in a section is responsible for asking for the convening of board of survey 

at the appropriate time.  When applying for a board of survey, he confirms that stores ledgers, tally cards and other 

records are properly maintained and are up to date.  He also confirms that all supporting documents such as issue and 

receipt vouchers, Loans Registers etc. and the particulars of the date of acquisition and the original cost of stores are 

readily available for inspection. 

 

5. CASH SURVEY 

This is one of the many ways by which Audit are carried out.  Cash survey is the supervision by an Auditor on 

the ways the Accountants generally receives or collects revenues on behalf of the state or Public Sectors.  The 

Auditor finds out first and foremost, areas of revenue generation.  He (Auditor) then proceeds to find out the number 

of receipts printed by the government and those issued out to the Accountants and Book keepers (Revenue 

Collectors). 

The Auditor investigates into the revenue collector‟s forms in which revenue receipts collected are recorded.  

The receipts used in collecting revenue are recorded in other columns and the unused receipts are also tabulated in 

different columns. 

 

5.1. Problems of Public Sector Audit 

The following are the problems facing effective Public Sector Audit: 

1. Insufficient staffing  

2. Ineffective and Inadequate Internal Control 

3. Financial Difficulties 

4. Training Incentive 

5. Operational Vehicles Materials and equipments 

6. Accommodation/working Environment 

7. Auditors Independence 

 

1. Insufficient Staffing 

Staff insufficiency is one of the major problems confronting audit at the Public Sector.  Many of the State and 

Government haven‟t enough staff and so we have less qualified staff.  Auditing requires more resources and is labour 

intensive at a tremendous rate and so, the Government will need a large number of qualified audit staffs that are 

capable of carrying out audit duties. 

The quality of audit work done depends on the quality of audit staff and that organization. 

 

 



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2. Ineffective and Inadequate Internal Control System 

To assess the efficiency of an accounting system, the auditor must make a detailed study of the methods by 

which the accounting date are originated and their flow through the system, including the internal control that are 

incorporated into the procedures.  He now issue a report but before he can do so he must satisfy himself that the 

system of record-keeping maintained by an organization is adequate to ensure that all transactions are correctly 

recorded, allocated and summarized and that accounting statements prepared from the records are in agreement with 

such records and correct in principle. 

Internal control system is the whole of controls, financial and otherwise established by the management in order 

to carry on the acidities of the organization in an orderly manner, safeguard its assets and secure as far as possible the 

accuracy and reliability of its records and that it includes internal check and internal audit. 

In Government, there is inadequate plan of the organization which should signify a forum for establishing 

distinct lines of responsibilities for the staff so as to ensure coordination of efforts. 

For the auditor to be able to assess the effectiveness and adequacy of internal control system, there should be an 

efficient managerial supervision and review of the organizations financial operations and position at regular and 

frequent intervals by means of interim accounts and reports but this is lacking in the Public Sectors thus indicating a 

deficiency in the internal control system.  Also, a good system of internal control should promote operational 

efficiency this has not been the case with the Public Sector. 

 

3. Financial Difficulties 

For concrete achievement of any organization, financial resources are fundamental.  Inadequate funding may lead 

to a break down or cause a temporary disaster of organizational activities.  Annually, it has been discovered, that the 

State Audit Department(s) complains of meager finance for the day to day operations up till this millennium the 

request for favorable funding have not been met.  The problem funding has affected the effectiveness of the audit 

practice. 

 

4. Training Incentive 

Training can be regarded as the reaching and practice given to an individual in order to bring a desired standard 

of behaviors, (Performance).  Training is used to develop and improve both the mental and physical skills of 

employees to increase their knowledge. 

Despite the fact that people are the most valuable resources of an audit institution and well trained employees and 

key ingredients to an efficient and effective audit department, very few numbers of officers are sent on courses 

(Heidenheimer et al., 1993). Even when they go on courses on their own they are never encouraged many of them 

will not be permitted to go.  This is another contributing factor to the ineffectiveness of auditing practice in the Public 

Sector. 

 

5. Operational Vehicles, Materials and Equipments 

At present in most departments, there are no enough vehicles for the auditors who are on out-door work 

especially when there is need for inspection to the entire unit. 

There are no adequate adding machines, in some cases the available ones have to be shared between officers and 

this will be causing delay in work and prompt report. 

There is lack of working tools and equipment to carry out the audit work.  The auditors going out to agencies and 

units to carry out Audit may not be given or fully equipped with their working tools and materials e.g working papers. 

 

 

 



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6. Accommodation/Working Environment 

Lack of enough accommodation is another problem facing Public Sector Audit.  Due to this problem many of the 

officers are not given good office accommodations.   

Even the available office rooms are not partitioned, well equipped and without carpets, Vans, cabinets and other 

things to make the working conditions attractive. 

 

7. Independence of Auditor 

The auditor is not an ordinary employee of the organization because he is expected not to have any connection 

whether financially or otherwise with the organization.  But this is not always the case.  How independent is the work 

of somebody on the payroll of the Government. 

 

6. CONCLUSION 

In summary, the significance and need for audit in Government Department cannot be overlooked.The practice 

of Auditing have not been adequately achieved due to the problems mentioned earlier, however, if the suggestions for 

improvements in this paper are implemented the merits of audit practice will be enjoyed. 

Public sector auditing allows for guided and effective savings and application of resources for greater benefit of 

mankind. It‟s not only discovered that effective use and application of best auditing techniques can afford the society 

the required steawdership and accountability of  persons entrusted with public resources, but part of a modern 

management methodology to help the societies accomplish the desired progress and development in the scheme of 

things. 

 

7. RECOMMENDATION 

It has been discovered in this article that many problems are confronting Public Sector audit and there is need for 

improvement. 

As a matter of necessity and urgency there should be more recruitment of qualified and experience accountants to 

the Government Audit Department.  The working condition should also be attractive.   

There should be procurement of more motor vehicles, adding machines, and availability of working 

materials/tools such as audit working paper, audit guideline etc.  If these are made available to the auditors this will 

improve their performance. All these may not be possible without improvement in the funding of the Auditor General 

Offices.  The Government Executives should therefore support them financially and otherwise to enhance smooth 

operation of the audit practice. 

There should be a provision for training facilities.  If proper training is given to the staff it will enhance their 

efficiency and productivity.  It is important to point out that well trained staffs are the key ingredients to an efficient 

and effective audit system in an organization. Auditing staff can be trained going on short courses or full time studies.  

Regarding the problem of internal control system, there are no absolute standards of internal control but in this 

case, the plan of organization should be defined and procedures involved should be in writing.  Each member of staff 

should be clearly made aware of the scope and the limitations of their responsibilities.  Particular attention should be 

paid to cash transactions as it is the most readily convertible of assets and thus prone to misappropriation.  Direct 

observations should be enforced where necessary, for instance, at the time of stock-taking or payment of wages in 

other to observe the operation of the prescribed procedures.  

 

Funding: This study received no specific financial support. 
Competing Interests: The authors declare that they have no competing interests. 

Contributors/Acknowledgement: All authors contributed equally to the conception and design of the study. 

 

 



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Banfield, E., 1961. The moral basis of backward society. Chicago: Free Press  

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