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This article deals with the challenge of internal audit function in Nigeria public sector. Internal audit is a process generally adopted towards ensuring and safeguarding of resources and promoting of operational efficiency in organization. An audit is an independent examination of the financial statements of an organization with a view to forming an opinion as to the truth and fairness of the statements. Before i proceed let me explain brief overview about this topic:
It is generally agreed that finance is the main say of any economy, be it public or private sector. it is equally true that no meaningful development could be achieved without finance and proper management, as a result of this, many organisations establishes difference systems of control or ensure smooth running of their business of which internal auditing is an integral part.
Basically, internal auditing ensures that all activities of the organization are carried out by employees according to laid down procedures. The objective of this article has been to evaluate the internal control system in the Nigerian public sectors, to ascertain the non - implementation of routine audit report and the lack of proper segregation and assignment of duties. in recent times, a combination of forces has led to a quiet revolution in the profession. Government moving towards democracy must demonstrate accountability in the use of public money and efficiency in the delivery of service. In many cases internal control system are weak, staffs are poorly paid making them unmotivated, coupled with non - implementation of routine audit report by appropriate authorities.

The issue of auditing becomes important principally as a result of the separation of ownership from management whether in public or private sector. in the private sector, the separation is between the shareholders on one hand and the Board/Management on the other hand. Shareholders own the resources and the Board/Management utilizes these resources to achieve some agreed predetermined objectives. Whereas, in the public sector it is the separation between the electorates (citizens) of the nation and those elected into various offices either as president, governor or chairman of local government. The arrangement however introduces and emphasizes the issue of agency position of either the board/management or the executive arm of government. Since every agency requires stewardship, management is obliged to periodically give report on how resources entrusted to them have been utilized.


What is Auditing?
Auditing is an independent examination of, and the expression of an opinion on the financial statements of an enterprise by an appointed auditor, in accordance with his terms of engagement and the observance of statutory regulations and professional requirements.
Auditing as a utilitarian discipline emanated as a response to offer credibility to the stewardship and accountability functions of financial accounting and in consequence, financial reporting. It is a systematic investigation and appraisal of transactions procedures, operations and result in financial statements. The auditor should be approved and must have personal and operational independence in order to perform his duty effectively.


Audit are categories into four(4) stages:

Private
Statutory
Management
Internal Audit

even though all the types of audit focus on regulations, which lead to control of expenditure or revenue. internal auditing as “an independent appraisal function within an organisation for the review of system of control and the quality of performance as a service to the organisation.

Internal audit as part of the internal control system put in place by management of an Organization to ensure adherence to stipulated. work procedure and as aid to management for smooth administration, control cost minimization; ensure capacity utilization and maximum benefit derivation.

Objective of Auditing
Internal auditing (IA) serves as an important link in the business and financial reporting processes of corporations and not-for-profit providers. Internal auditors play a key role in monitoring a company’s risk profile and identifying areas to improve risk management. The aim of internal auditing is to improve organizational efficiency and effectiveness through constructive criticism.


Audit findings and recommendations would not serve much purpose unless management is committed to implement them. Adams (1994) used agency theory to explain that it is in the interest of management to maintain a strong internal audit department. Implementation of audit recommendations is highly relevant to audit effectiveness (Van Gansberghe, 2005) and the management of an organization is viewed as the customer receiving internal audit services. As a result, management's commitment to use audit recommendations and its support in strengthening internal audit is vital to audit effectiveness (Sawyer, 1995). Organizational setting refers to the organizational profile, internal organization and budgetary status of the internal audit office; and also the organizational policies and procedures that guide operation of auditors. It provides the context in which internal audit operates. Thus, organizational setting can exert influence on the level of effectiveness that internal audit could achieve.


Management Control in Public Sector
In the eye of Woolf (1986) the public sector is primarily composed of non-profit making organizations. Management control in its broadest context is the means by which an organization carries out its objectives effectively and efficiently. Public sector management can be generally distinguished as having hierarchical structures composed of responsibility centers, units, sections, departments and divisions. Central government department, if changes are made for certain services they are usually nominal and have a little impact on the level of services offered. Autonomous bodies are subjected to high degree of Central government control. Local government authorities receive by far the largest proportion of their funds through the rate support grant or allocation. They can equally raise revenue locally, primarily by levying rates; the extent of their power is strictly monitored by central government. Therefore, the management and control of the public purse is the heart of government administration. The internal audit reports directly to the chief executive, the financial regulations, however, enjoins the chief executive of each ministry to ensure that the accounting and finance functions and internal audit functions are placed under the direct control of suitable competent accountants..


Internal Audit Quality
Internal audit quality, which is demonstrated by the office's capability to provide useful audit findings and recommendations, is one of the most prominent factors on which audit effectiveness is anchored. The performance standards of the IIA (1999) require the auditor to plan and perform the work such that he or she would be able to arrive at useful audit findings and forward recommendations for improvement. The office's ability to properly plan, perform and communicate the results of audits is a proxy for audit quality. Therefore, audit quality is arguably a function of extensive staff expertise; reasonableness of the scope of service; and effective planning, execution and communication of internal audits.



Top Management Support
The management literature offers ample evidence for the key role of top management support in the success of almost all programs and processes within an organization. Fernandez & Rainey (2006) argued, based on a literature review that top management support and commitment to change play a crucial role in organizational renewal, as senior managers can mobilize the critical mass needed to follow through on efforts launched by one or two visionary thinkers. A number of empirical studies have found top management support for quality to be a key factor in its improvement.

Running any business requires immense responsibility. In a company, managers need to know the logistics of every department, from the cost of a box of paper clips to the biggest deal made, in order to run it successfully. Managers who aren’t very involved with their company’s finances don’t usually do well. The ultimate goal is to make a profit by eliminating unnecessary costs. In order to make an analysis of this, cost accounting comes into play.

Cost accounting is one of the different types of ‘accounting’ systems that fall under management accounting. It is a system that has been developed to provide managers with a structure to examine the day-to-day finances of the company, while not having tax factors to worry about. From the information gathered, managers can make decisions on where to cut costs to improve the company’s profitability.

Before proceeding, let take a look about the word Cost Accounting.

Cost Accounting is a process of collecting, recording, classifying, analyzing, summarizing, allocating and evaluating various alternative courses of action & control of costs. Its goal is to advise the management on the most appropriate course of action based on the cost efficiency and capability. Cost accounting provides the detailed cost information that management needs to control current operations and plan for the future

Since managers are making decisions only for their own organization, there is no need for the information to be comparable to similar information from other organizations. Instead, information must be relevant for a particular environment. Cost accounting information is commonly used in Financial accounting information, but its primary function is for use by managers to facilitate making decisions.

Origin of Cost accounting
All types of businesses, whether service, manufacturing or trading, require cost accounting to track their activities. Cost accounting has long been used to help managers understand the cost of running a business. Modern cost accounting originated during the industrial revolution, when the complexities of running a large scale business led to the development of systems for recording and tracking costs to help business owners and managers make decisions.

In the early industrial age, most of the costs incurred by a business were what modern accountants call "Variable cost" because they varied directly with the amount of production. Money was spent on labor, raw materials, power to run a factory, etc. in direct proportion to production. Managers could simply total the variable costs for a product and use this as a rough guide for decision-making processes.

Some costs tend to remain the same even during busy periods, unlike variable costs, which rise and fall with volume of work. Over time, these "Fixed cost" have become more important to managers. Examples of fixed costs include the depreciation of plant and equipment, and the cost of departments such as maintenance, tooling, production control, purchasing, quality control, storage and handling, plant supervision and engineering. In the early nineteenth century, these costs were of little importance to most businesses. However, with the growth of railroads, steel and large scale manufacturing, by the late nineteenth century these costs were often more important than the variable cost of a product, and allocating them to a broad range of products led to bad decision making. Managers must understand fixed costs in order to make decisions about products and pricing.

Why Is Cost Accounting So Important?

There is more to accounting than accounting. Cost accounting is something a lot of business owners rarely think about.I believe that if more companies had better cost accounting we wouldn't have the issues we have in the downturn in the economy today. Businesses that understand cost accounting do well in these economic times and are more profitable than their competitors. Too often companies don't realize they have a problem until it is too late to do something about it

Cost accounting is a specialized branch of accounting, which involves classifications, accumulation, assignment and control of costs.The use of cost accounting concepts and practices is required for a company to be successful. Cost accounting helps managers make better decisions by providing key information for planning and controlling. Cost accounting assists with measuring performance, determining costs & prices for goods or services, reducing costs, managing costs, and analyzing the benefits of an activity or process. Companies need to measure their costs and then understand the behaviour of those costs over varying conditions such as changes in the volume of goods or services produced. once this has been done, the costs can be assigned to the items produced or services provided and the profitability of each can be determined.

Ensure your company survives, and thrives, now by improving your understanding of your costs. "If you can measure it, you can improve it."

Management of business concerns expects from Cost Accounting a detailed cost information in respect of its operations to equip their executives with relevant information required for planning, scheduling, controlling and decision making. To be more specific, management expects from cost accounting - information and reports to help them in the discharge of the following functions:

(a) Control of material cost
Cost of material usually constitute a substantial portion of the total cost of a product. Therefore, it is necessary to control it as far as possible. Such a control may be exercised by (i) Ensuring un-interrupted supply of material and spares for production. (ii) By avoiding excessive locking up of funds/capital in stocks of materials and stores. (iii) Also by the use of techniques like value analysis, standardization etc. to control material cost.

(b) Control of labour cost
It can be controlled if workers complete their work within the standard time limit. Reduction of labour turnover and idle time too help us, to control labour cost.

(c) Control of overheads
Overheads consists of indirect expenses which are incurred in the factory, office and sales department ; they are part of production and sales cost. Such expenses may be controlled by keeping a strict check over them.

(d) Measuring efficiency
For measuring efficiency, Cost Accounting department should provide information about standards and actual performance of the concerned activity.

(e) Budgeting
Now-a-days detailed estimates in terms of quantities and amounts At* drawn up before the start of each activity. This is done to ensured that a practicable course of action can be chalked out and the actual performance corresponds with the estimated or budgeted performance. The preparation of the budget is the function of Costing Department.

(f) Price determination
Cost accounts should provide information, which enables the management to fix remunerative selling prices for various items of products and services in different circumstances.

(g) Curtailment of loss during the off-season
Cost Accounting can also provide information, which may enable reduction of overhead, by utilizing idle capacity during the off-season or by lengthening the season.

(h) Expansion:
Cost Accounts may provide estimates of production of various levels on the basis of which the management may be able to formulate its approach to expansion.

(i) Arriving at decisions
Most of the decisions in a business undertaking involve correct statements of the likely effect on profits. Cost Accounts are of vital help in this respect. In fact, without proper cost accounting, decision would be like taking a jump in the dark, such as when production of a product is stopped.