FRAUD PREVENTION AND CONTROL IN NIGERIAN PUBLIC SERVICE: THE NEED FOR A DIMENSIONAL APPROACH
Need help with a related project topic or New topic? Send Us Your Topic
DOWNLOAD THE COMPLETE PROJECT MATERIAL
FRAUD PREVENTION AND CONTROL IN NIGERIAN PUBLIC SERVICE: THE NEED FOR A DIMENSIONAL APPROACH
ABSTRACT
This article examines several fundamental concerns related to fraud prevention and control, as well as its consequences for Nigeria’s socioeconomic development through the use of public sector machinery.
The study employs the chi-square technique to test the dependence of the types of fraud and the areas covered on the public sector organisation in which they are committed, using records compiled from an earlier study covering 637 reported fraud cases in Nigeria committed between 1970 and 1990 in respect of three-tiers of government selected from ten (10) states.
The study establishes the dependence and argues for a comprehensive examination of audit approaches, among others, with a focus on fraud features and regions, drawing heavily on behavioural, equitable, sociological, and ethical principles.
1.1 Introduction.
Public demands and expectations at the grassroots for the provision of important social and basic services utilising government resources have remained astronomically high, as evidenced by increasing strain on the resources available to meet them.
This argument is easy to understand if we accept the simple reality that the strength of any government is determined by the performance of its development programmes, which are heavily reliant on the effective implementation of its policies by its bureaucrats and technocrats.
It is apparent that social, political, and economic progress are dependent on the effectiveness and efficiency of the bureaucracy, as well as the integrity of the bureaucrats. Government exists to serve the interests of its citizens. There must be a method to keep the former accountable to the latter.
A large sum of money is lost through fraud or due to internal control deficiencies and other criminal temptations, which, to say the least, drains the nation’s meagre resources through fraudulent means, with far-reaching and attendant consequences on the nation’s development or even socioeconomic or political programmes.
As Kamaluddeen (1991:1) comments, “billions of Naira is lost in the public sector every year through fraudulent means”. This, he claims, represents merely the quantity that is discovered and made public. Indeed, far larger sums are lost in undetected frauds or those that are kept quiet for other reasons.
Fraud cases in the public sector are so prevalent that it appears that everyone in every segment of the public service is implicated in some way.
This argument is not difficult to understand if we accept and adopt the simple definition of fraud as any purposeful fraudulent conduct intended to deceive or harm any party, individual, or corporate body in any way.
Haladu (1991:6) states emphatically that:
Since the oil boom years, when the preceding observation became relevant, the bane of Nigerian financial administration has been the existence of structurally weak control mechanisms, which create a variety of loopholes that have tended to facilitate and sustain corrupt practices.
This is, of course, compounded by the reality that the concept and ethics of accountability are almost nonexistent in the country’s public administration.
“The Guardian” published a story on Wednesday, August 14th, 1996, titled “Public Service Staff Audit Report Ready”. The article referred to the report of the Task Force on Staff Audit in the Federal Public Service, which was established in March 1996 to investigate the presence of ghost workers in 29 Federal Ministries and around 500 Federal Parastatals.
Indeed, the Task Force was formed as a result of the widespread identification of ghost personnel in the nominal rolls of most government extra-ministerial departments, ministries, and parastatal agencies. Many academic and political observers are unsure what this Task Force produced and how effective it was as a preventive measure!
Presenting the 1989 budget, Babangida (1989) laments: “This administration has always recognised the importance of fiscal discipline and the necessity to bring planned expenditure and projected revenue into fair alignment.
Our performance in this area in 1988 was far from satisfactory.” According to Zayyad (1990:4), an estimated $8 billion was lost in abandoned projects between 1970 and 1990, and this does not include what was lost in the last decade through abandoned projects and other unscrupulous techniques.
This is not to mention the billions of dollars recovered from some public officials who served under the Abacha administration, or the allegations that even the recovered funds were not adequately accounted for, let alone punished wrongdoers. Buhari worries that:
The last time the Federal Government’s yearly financial account was compiled and filed for audit purposes, I believe, was in 1980. And no one was surprised to learn at the 1984 session of the Federation’s Auditors-General and State Directors of Audit that eleven States had last submitted their annual accounts for audit in 1967.
During our government’s tenure from 1984 to 1985, we implemented a programme to update and publish audited accounts, but this was quickly abandoned.
All of this points to a management or operational issue in the Nigerian public sector in terms of financial or accounting controls. [Watoseninyi, 1995: 2].
Thus, one need not wonder too much to see how devastatingly frauds have compromised the administrative competence, performance capacity, and general credibility of the public sector – initial estimates of major projects become little fractions of the ultimate costs paid, original cash projections produce less than half of the benefits expected
and projects that seemed technically feasible and economically viable turn out to be “white elephants,” if not abandoned, with serious implications. [Bello; 2001:2].
The work is thus organised into seven primary sections: introduction, purpose of study, hypothesis, theoretical background, methodology, data analysis, conclusion, and recommendations.
1.2 The purpose of the study
The report tries to combat the growing trend of fraud in Nigerian public sector organisations. Financial laws and regulations continue to be enacted on a daily basis, and courts and tribunals continue to administer punishment to fraudsters, all in an effort to prevent and control fraud, but to no avail.
Some researchers suggested that the explanations for this dismal trend lie in the quality of the accounting system, accountants, and auditors, while others held that it is a function of leadership and society as whole.
The purpose of this article is to examine the dimensions of fraud in the Nigerian public sector and determine whether the forms of fraud perpetrated differ from one public sector organisation to another.
It will also determine whether the primary sectors covered or implicated in fraud in public sector organisations are distinct or similar. The primary goal is to assess fraud prevention and control in light of the nature of these public sector organisations, so that an adequate framework for restoring sanity and financial discipline may be proposed.
1.3 Hypothesis.
The study aims to test the following hypothesis.
1. HO: The sort of fraud perpetrated is not determined by the type of public sector organisation in which it is committed.
H1: The type of fraud committed is determined by the public sector organisation in which it is committed.
2. HO: The principal area of fraud is not determined by the type of public sector organisation in which it is committed.
H1: The principal area of fraud is determined by the type of public sector organisation in which it is committed.
1.4 Theoretical Background.
In every organisational system where resource management is separated from ownership, some method of making the former accountable to the latter is required to lend credibility, responsibility, and confidence to activities. [Kamaluddeen; 1995:2].
Writers agree that this is the core principle of auditing in both the public sector and most privately owned businesses. Ahmed (1977:13), for example, defines the goal as serving to limit the despotic abuse of power by those to whom it is assigned.
Ola (1979:3) further observes that the demand for public financial accountability has prompted all sovereign states to regard auditing as a critical component of a political, conscious, aware, free, or civilised society.
Despite the apparent unity over the intellectual foundation of public sector auditing, scholars disagree on its scope. Gutman (1981:25) defines public sector audit as an examination of the financial activities and submissions of government ministries.
According to Ola (op. cit), government audits can be regarded from three perspectives: accounting, appropriation, and administrative substance.
Accountancy audits verify the application of sound accounting principles and discover frauds; appropriation audits ensure regularity; and administrative audits ensure the authority and legality of expenditure in all areas within the government’s competence.
[Kamaluddeen, ibid]. Under our definition, the public sector includes all government-established organisations such as federal ministries, parastatals, state governments, and local governments.
The concept of fraud is inherently disordered. Scholars’ attitudes about fraud, however, differ significantly. Cause and effect are sometimes confused. Defining fraud is therefore as difficult as identifying it. [Bello; 2001].
According to Kamaluddeen (1995:2), who quotes Russell (1978:108), the term fraud is broad and applied in a variety of ways. Courts must rely on a few general criteria to detect and defeat fraud, which can take several forms.
It is preferable not to define the phrase lest men devise ways to perpetrate fraud that would elude such definitions. However, fraud is often defined as “anything intended to deceive.”
Apaa (1993:2) defines fraud as “all offences against ethical practices.” It involves embezzlement, theft, or attempted theft, as well as acts of unlawfully gaining, missing, or destroying assets or lowering bank liabilities.” Mani (1993:1) agrees with this viewpoint, but adds that a single definition may be inadequate.
Thus, he defines fraud as “the use of deception to obtain an unjust or illegal financial advantage; intentional misstatement in, or omissions of amounts or disclosure from an entity’s accounting records or financial statements; or theft whether or not accompanied by misstatements in accounting records or financial statements” .
An apt summary of these definitions within the context of our discussions tends to suggest that fraud is an act of obtaining financial value by trick or deceit through contract inflation, kickbacks, paying or collecting money for non-existing commodities, usually from the State corpus, cash misappropriation, account manipulation to disclose false position, wage frauds, ghost workers, incorrect deduction, etc.
Need help with a related project topic or New topic? Send Us Your Topic