1.1       Background of the Study

The increasing incidence of fraud and misappropriation of funds and property by Accounting officers and chief executive in the public sector of the Nigeria economy pose pertinent question as to whether auditing plays any significant role towards ensuring proper accountability and judicious use of fund set aside for various purposes and corporate objectives. Some programmers and activities organized by these individuals are assumed to be done on behalf of  the people therefore deserted to be assured the resources which they put at the disposal of these accounting officers are efficiently, effectively and economically managed, since it is known, that not all of us are judicious in the in the management of our private affairs and much less, the public affairs entrusted to us. A case in point is about distressed banks like continental marchant bank and Nigeria marchant bank. Poor management was the problem with these banks, if these banks hard carried out proper audit and made use of the recommendation, the directors would have reduced proper accounts of their deeds. Accountability has clearly manifested itself as a principle to be pursued if the status quo is not to be perpetrated. Several past leader have pledged to introduce a more responsible system of government with accountability but their subsequent conduct or governance have show that they have little or no understanding of the definition and application of accountability, hence the question of what then is accountability arises. Accountability as it is contained in long man dictionary of contemporary English is the condition or quality of being able (that is having) to give an explanation for one’s actions. Accountability is also defined as the management of funds and other assets of which individuals or institutions had been custodians. Auditing is regarded as one of the more recently established professions born out of the complexity of modern business world. It became relevant so as to discourage men from erring and to expose those who erred when they give account of how they managed the funds and property entrusted to them. This account or report is usually done by means of financial statement in order to verify the true and fairness of this report, an independent person- an auditor will audits the account. An audit is an investigation by an auditor into the evidence form which the final revenue accounts and balance sheet or other statements of an organization have been prepared in order to ascertain that they present true and fair view of the summarized transactions for the organization at the end date, so enabling the auditor to report thereon. There are more involved definitions such as; that issued by the consultancy council of accountancy of accountancy bodies (CCAB), which defined an audit as the independent examination of and expression of opinion. On the financial statements of an enterprise by an appointed author in pursuance of that appointment and incompliance with any relevant statutory obligations. The law also makes provisions for the establishment of audit department as seen from the above definition, SEC 357 of companies and allied matters act auditors that will audit the financial statement of the company at the annual general meeting. The government, on behalf of the general populace manages public sector resources (Shim & Seigal, 1995). According to Funnell and Cooper (1998), the government in the Westminster system is accountable to the public for managing and consuming the public resources. Thompson (1996) claimed that public sector accountability is established through various over-seeing bodies; the Audit Office is one such body in a Westminster system (Funnell & Cooper, 1998). The traditional function of these oversight bodies is to conduct ‘financial attest’ and ‘compliance to budgetary appropriation’ audits of government expenditure and revenues, and this has extended to include performance auditing in most jurisdictions (Funnell & Cooper, 1998; Parker, 1990; Thompson, 1996). Performance auditing has been described as an independent evaluation of the economy and efficiency of auditee operations, and the effectiveness of programs in the public sector (English, 1990; Guthrie & Parker, 1999; Leeuw, 1996; McRoberts & Hudson, 1985; O’Leary, 1996; Parker 1990; Thompson, 1996). Therefore, the belief is that the performance auditor will be able to hold the public sector managers accountable by undertaking such audits (English, 1990; Jacobs, 1998; McRoberts & Hudson, 1985). Such audits by the Auditor General (Nigerian Auditor-General) may be presumed to use accounting information to reveal the conduct of the auditees with respect to management of the public sector. As such, that which is made transparent will be only what is required by the accountant. The question now is that in spite of all these provisions and safeguards one still experience the alarming rate of fraud and misappropriation of public funds and property by those entrusted with their safe guards. It is not surprising that great emphasis is being laid on proper auditing as means to enhance accountability in the public sector of the nations. Therefore, the study tends to examine auditing as an aid to accountability on the public sector. A case study of NNPC.