Abstract
The research centered on External audit as a tool for improving public corporations and
parastatals, the Nigerian Communication Commission as a case study. The main objective that
guided this study was to check if there are financial irregularities in the company and whether
the internal audit department is discharging its responsibilities effectively. In realizing its
objective, the study has employed a case study design which has provided the opportunity to
such techniques as questionnaires and observations in the data collection process. The target
population of this study targeted some NCC employees who formed 43 respondents. The data
obtained in this research provided descriptive statistics and narrations. The study also used a
Single Factor Analysis of Variance (ANOVA) to determine the relationship between the
independent variables and the dependent variable. The study found that management support
had the greatest effect to the external audit operation as an instrumen
INTRODUCTION
1.1 Background to the study
There is general awareness all over the world for the need to pay greater attention to the
improvement of public corporation and parastatals. 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 the
governments’ involvements in economic activities, initiatives are being taken all over the world
towards improving the standards of accounting and auditing departments in its institutions.
The public sector accountant has the responsibility of developing systematic arrangements to
assist management in the performance of the services of the institution while the External auditor
has among other duties, the complementary role to examine whether management actually
performs that efficiently. The External auditor has to satisfy himself that the accounts presented
have been prepared according to statutory and regulatory requirements considering that all
proper accounting practices have been observed throughout the compilation process.
It is a fact that public Corporations have a significant role in improving the wellbeing of the
communities in any nation. In Nigeria, The Nigerian Communication Commission (NCC) falls in
the category of public corporation. These corporation are the ones whose management has a
direct impact on people’s lives in their respective localities (Chacha, M.A,). In this way,
improving the manner in which these local institutions are managed is likely to be significance
not only on the way they deliver goods and services to the population but also provide a good
image of the public sector institutions within and outside Nigeria. Given this importance of
public corporation, in the current moment the government in Nigeria has put much attention on
developing and strengthening the audit department/function in the telecommunication sector. The
logic behind this initiative is that in so doing there is a likelihood of improving the management
of these institutions and hence being able to serve better the people in this era of decentralization.
Therefore this research is set to look at the current development in the management of the public
corporation, especially the initiative to strengthen the external audit function in the public
corporation. In so doing the research aims at assessing the effectiveness of using external audit as
a tool for improving public corporation management in the telecommunication sector.1.2 Statement of the problem
Corporate fraud, bribes and illegal political contributions constitutes a threat to public confidence
in government parastatals. People have argued that internal audit in companies which
government control or in which they hold majority shares is very weak and inadequate and thus
responsible for the occurrence of corporate irregularities and poor performance.
A weak system of internal control cannot provide sufficient accounting information to safeguard
their assets and ensure effective efficient operations. In this study, the researcher will investigate
the potential effectiveness of external auditors in government parastatals in preventing corporate
irregularities and safeguarding assets.
It is upon this background that this study is conducted with the Nigerian Communication
Corporation as a case study.1.3 Objective of the study
This research is set to fulfill the following main research objective: To assess the effectiveness of
external audit as a tool for improving public corporations. In order for the study to be able to
fulfill the intention of its main research objective the Nigerian Communication Commission,
Ikoyi, Lagos was selected for that matter. Other specific objectives are:
i. To assess public corporations external audit effectiveness and efficiency in the prevention
of corporate irregularities.
ii. To point out if there is deficiency in the internal control system of public corporations as
well as its implication for top-decision maker.
iii. To check if public parastatals neglect modern techniques of keeping financial records
iv. To make useful recommendation in areas of lapses in their external audit activities.1.4 Research Question
There are many questions that need to be asked as regards this study. These are likely questions:
i. Is external audit effective enough to prevent corporate irregularities in public
corporations?
ii. Is there deficiency in the internal control system of public corporations?
iii. Do government parastatals neglect modern techniques of keeping financial
records?1.5 Research Hypothesis
This research tends to achieve it aims by considering the following hypothesis:
i. Ho: External audit is not effective enough to prevent corporate irregularities in
public corporations
H1: External audit is effective enough to prevent corporate irregularities in public
corporations.
ii. Ho: There is no deficiency in the internal control system of public corporations
H1: There is deficiency in the internal control system of public corporations
iii. Ho: Government parastatals do not neglect modern techniques of keeping
financial records
H1: Government’s parastatals neglect modern technique of keeping financial
records.1.6 Scope of the study
This research study focused on assessing the effectiveness of external audit as a tool for
improving public corporations in Nigeria. In order to realize this focus of the study the Nigerian
Communication Commission (NCC), Ikoyi, Lagos was selected as a case study.1.7 Significance of the study
The findings of this research will provide the insights on how external audit effectiveness can
improve the public corporations and in particular for the Nigerian Communication Commission
(NCC), Ikoyi, Lagos. It is believed that positive improvement in the public corporations is likely
to benefit the citizens of Nigeria. Therefore, this study provides crucial understanding to the
policy makers and other stakeholders in the Nigerian Communication Commission (NCC), Ikoyi,
Lagos on the role and significance of the external auditing.
The results of the study are significant in the way that they are to a large extent relevant for
influencing the management activities in the external audit of the Nigerian Communication
Commission (NCC), Ikoyi, Lagos and to the external auditors.
For other researchers and those who will be interested with the functioning of the external audit
department, the findings and conclusions drawn in this research may act as part of the reference
materials for the purpose of stimulating debates on the effectiveness of external audit in public
corporations.1.8 Definition of operational terms
The researcher finds it worthy to define some important terms in the research work for a better
understanding of their meaning and the context in which they are applied in the work.
External audit is an independent examination of the financial statements prepared by the
organization. It is usually conducted for statutory purposes (because the law requires it).
Public corporation is defined as that part of a country’s economy which is controlled or
supported financially by the government. In Nigeria, the public service is a national institution of
excellence that has an important role in the abolition of poverty and acquiring a sustainable
economic growth
Internal Control System: is the whole system of control, finical or otherwise established by
internal check, internal audit and other forms of control
Agencies: is an organization or bureau that provides some service for another
1.9 Historical Background of the Nigerian Communication Commission (NCC)
The Nigerian Communications Commission is the independent National Regulatory Authority
for the telecommunications industry in Nigeria. The Commission is responsible for creating an
enabling environment for competition among operators in the industry as well as ensuring the
provision of qualitative and efficient telecommunications services throughout the country.
Over the years NCC has earned a reputation as a foremost Telecom regulatory agency in Africa.
The Commission is hoping to catalyze the use of ICT’S for different aspect of national
development. The Commission has initiated several programs such as State Accelerated
Broadband Initiative (SABI) and Wire Nigeria Project (WIN) to help stimulate demand and
accelerate the uptake of ICT tools and services necessary for the enthronement of a knowledge
society in Nigeria.
In order to achieve its mandate, the Commission has put in place the necessary licensing and
regulatory framework for the supply of telecommunications services.
Organizational Structure
The Nigerian Communications Commission’s organisational structure is comprised of twenty
(20) departments, including the four (4) departments under the Human Capital & Infrastructure
Group.
The Executive Vice Chairman (EVC) is the Chief Executive Officer of the Commission and
directly oversees ten (10) departments, including the Human Capital & Infrastructure Group.
The Executive Commisioner – Technical Services (ECTS) directly supervises the departments
charged with the oversight of technical standards, spectrum and engineering issues governing the
Nigerian telecommunications industry.
The Executive Commissioner – Stakeholder Management (ECSM) directly supervises the
departments charged with addressing the needs of telecommunications industry stakeholders
including vendors, service providers and consumers.
The Board of Commissioners, of which the EVC and the two Executive Commisioners are
members, is charged with the governance of the Nigerian Communications Commission and has
oversight functions over all of the Commission’s activities.
Below is the Organisational Structure of NCC:
CHAPTER TWO