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In public sector accounting, Resources Accounting (RA) is the application of accruals accounting for reporting on the expenditure of government and a framework for analyzing expenditure by departmental aim and objectives, relating these to outputs where possible.   

The public sector is more and more affected by significant reforms in the public accounting system in the international context. The aim of the public sector reforms is to overcome bureaucratic obstacles so that managers can use their limited resources more efficiently (Pina, V. and Torres, L., 2009).

Public sector audit has experienced considerable expansion throughout the world. The reason for this is closely related to changes in the structure of government and concern for more accountable and transparent governance, which has resulted in a large increase in the number of accounts and sophistication of financial reporting. The expansion has brought with it an added demand for accountability (Dowdall, 2010). Public sector accounting is quite distinct from commercial accounting in terms of objectives, sources of revenue and bases of recording accounts, responsibility and accountability among others.

It is useful however, to distinguish between audit and other forms of regulation and inspection. Public audit applies to almost every public sector body and is relatively wide-ranging, from certifying the accounts to examinations of economy, efficiency and effectiveness. The audit function and the form in which audit results are reported tend to reinforce the traditional line of public sector accountability to elected representatives rather than establish new forms of accountability.

There is general awareness all over the world for the need to pay greater attention to the improvement of public sector management. The reason is obvious, government constitutes the largest single business entity and her pattern of expenditure through its various parastatals, agencies and commissions stimulate lot of economic activities. As a result of these Government huge involvements in economic activities, initiatives are being taken all over the world towards improvement of the standards of accounting and auditing departments in government (Angus and Mohammed, 2011).

Audit is one of a number of internal assurance and business review activities that should operate in a coordinated and complementary manner to the benefit of the organization. These other activities include management monitoring, evaluations, quality assurance and control self-assessment arrangements that are all designed to provide confidence and assurance to Chief Executives and/or Boards that management is meeting its responsibilities and the entity is achieving its objectives, Anao (2012).

The use of the cash or accrual basis of budgeting and accounting was seen as a great divide between the public and private sector with the public sector practicing cash accounting and budgeting, and the private sector using accrual methods. The better the financial information, the increase in the cost transparency and the valuation of public sector assets (Graham A., 2010).

Public sector accounting has recently been improved. Currently, there are requirements to disclose stock information in addition to the flow of information presented in budget statements or accounts statements. Public sectors have prepared and disclosed their financial statements (including balance sheets and income statements) based on business accounting approaches.

R. A. Adams (2004) in his book "Public Sector Accounting and Finance Made Simple" noted that public sector accounting is "a process of recording, communicating, summarizing, analyzing and interpreting government financial statement and statistics in aggregate and details; it is concerned with the receipts, custody and disbursement and rendering of stewardship on public funds entrusted".

The simplest definition of 'Public Sector' is "all organizations which are not privately owned and operated, but which are established, run and financed by Government on behalf of the public." This definition conveys the idea that the public sector consists of organizations where control lies in the hand of the public, as opposed to private owners, and whose objectives involve the provision of services, where profit making is not a primary objective.

Auditing is the independent examination and investigation of the evidence from which a financial statement has been prepared with a view of enabling the independent examiner to report on whether his own opinion according to the information and explanation obtained by him, the statement is properly drawn up and give a true and fair view of that which is supposed to show and if not to report in what respect he is not satisfied. Robertson, (2006).

The evolution of auditing can be traced back to ancient time when landowner allowed tenant to work on their land while the land owners relied upon an overseer who listen to accounts of stewardship given by the tenants. In the view of this, audit is meant to attest to whether the information given shows a true and fair view of the situation on ground. The act of exercising the audit function is referred to as auditing.

In the early civilization, the method of recording accounts were so crude and the numbers of transaction to be recorded were small and as such every individual was able to put down all his transaction. As man became more civilized, system of checks were applied to their public account thus increasing the need for some system of checks upon persons, whose business was to record the receipt of disbursement of money on behalf of others.

The ancient records of auditing are continued principally to public account; there is clear indication that from an early date, it was customary for an audit of the account of minors and estimates to be performed. The person whose duty it was to make such as examination of accounts became known as on auditor, the word derived from the Latin words “AUDIRE” which means to “HEAR” Pixley, (1989).


The Nigerian public sector is filled with stories of wrong practices such as stories of ghost workers on the pay roll of Ministries, Extra-ministerial Departments and Parastatals, frauds, embezzlements, mismanagement and corruption are found in the public sector in the country (Okwoli, 2004). According to Bello (2001), huge amount of Naira is lost through one financial malpractice or the other in public sector, which to say the least, drains the nation’s meager resources through fraudulent means with far-reaching and attendant consequences on the development or even socio-economic or political programmes of the nation. Billions of Naira is lost in the public sector every year through fraudulent means.

This represents only the amount that is ferreted out and made public. Indeed much more substantial or huge sums are lost in undetected frauds or those that are for one reason or the hushed up. Appah and Appiah (2010) argues that cases of fraud is prevalent in the Nigerian public sector that every segment of the public service, could seem to be involved in one way or the other in some of these nasty acts.

In spite of the existence of 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.

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 audit and accounting duties, lack of implementation of routine audit report by appropriate authorities and inadequacy of internal control system leading to improper investigation.

The above reasons greatly constitute issues and challenges of auditing in public sector. This gives the researcher the impetus for undertaking a research on this study with a view to coming up with elucidation of those challenges.


The objective of this research is to outline the specific task to be set out towards achieving the purpose of the research problem.

The research project is expected to achieve the following objectives:

1.     To investigate issues and challenges encounter in auditing public sector accounts.

2.     To examine the role of public sector auditing in controlling frauds, embezzlements, financial malpractice and corruption that is found in the public sector.

3.     To ascertain the lack of proper segregation and proper assignment of duties and shortages of staffs to carry out audit duties in public sector.

4.     To ascertain reasons for improper implementation of routine audit report by appropriate authorities.

5.     To provide solution to the issues and challenges of auditing in public sector


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

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

2.     What are the role of public sector auditing in controlling frauds, embezzlements, financial malpractice and corruption that are found in the public sector.

3.     Are there lack of proper segregation and proper assignment of duties and shortages of staffs to carry out audit duties in public sector?

4.     Are there reasons for improper implementation of routine audit report by appropriate authorities?

5.     What are the solution to the issues and challenges of auditing in public sector?


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

Hypothesis i:

HO: There is no significant relationship between challenges in audit function and the public sector.

HI: There is a significant relationship between challenges in audit function and the public sector

Hypothesis ii:

HO: Public sector auditing has not impacted positively in controlling frauds, embezzlements, financial malpractice and corruption in the public sector.

HI: Public sector auditing has impacted positively in controlling frauds, embezzlements, financial malpractice and corruption in the public sector.

Hypothesis iii:

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

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


The project intended to bring to light the issues and challenges of auditing in 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 auditing 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 auditors as a yardstick to improve organizational performance. It is also necessary for the auditors to understand their loopholes so that necessary adjustments could be made to enhance their efficiency.


The scope of this research work is limited to resource accounting in public sector, that is, critically examine the issues and challenges of auditing in public sector as a whole, with particular focus on some selected ministries in Edo state. This implies that the data to be collected will be restricted to Edo State.


A study of this nature is bound to experience certain problems as such the constraints imposed on the research include:

1.     Lack of adequate information: 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.

2.     Time: A study of this nature needs relatively long time during which information for accurate or at least near accurate inference could be drawn. The period of the study was short, time posed as constraints to the research.

3.     Cost: The research would have extended the survey to other area at the empirical level, but limitation as included cost of transportation to the source of material and the cost of time setting of the already completed work.


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.

AUDITING:  This is the process by which a competent independent person accumulates and evaluates evidence about quantifiable information and established criteria. Cooper V.R.M. (2005)

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

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 is verified independently by or is complementary to the work of one another.

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.


Pina V. and Torres L., 2009. Reshaping Public Sector Accounting: An

International Comparative View, Canadian Journal of Administrative

Sciences, Vol 20, no . 4, pp. 334

Graham A., 2010. Accrual Budgeting and Accounting, Financial Management in

Canada’s Public Sector, pp. 3

R. A. Adams (2004) "Public Sector Accounting and Finance Made Simple".

Robertson, J. C. (2006). Auditing; Union Series in Undergraduate Accounting (8th edition).California: Wesley Publishers.

Okwoli, A. A. (2004). “Towards Probity, Accountability, and Transparency in Revenue

Generation in the Nigerian Public Sector”, Nigerian Journal of Accounting Research, Vol. 1(1): 1-9.

Bello, S. (2001). ‘Fraud Prevention and Control in Nigerian Public Service: The need for a

Dimensional Approach”, Journal of Business Administration, 1(2): 118-133.

Appah, E. and Appiah, K.Z.A. (2010). “Fraud and Development of Sound Financial Institutions in Nigeria”, Nigerian Journal for Development Research, 1(1): 49 – 56.

Dowdall, J., 2010. Audit and accountability in government. Report of a Joint Seminar Organized by Institute of Governance and Economic and Social Research Council of Northern Ireland, pp: 1-2.

Anao (2012) Public Sector Internal Audit Better practice guide retrieved from http//…/…

Pixley, F. W. (1989): ’Auditors: Their Duties and Responsibilities’, 6th Ed., p. 4 . 6.

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