THE ROLE OF AUDITING IN ENHANCEMENT OF ACCOUNTABILITY IN PUBLIC SECTOR: A STUDY OF THE MINISTRY OF FINANCE, EBONYI STATE

CHAPTER ONE INTRODUCTION 1.1 Background to the Study Across the globe, public sector organizations are mandated to manage public resources transparently, equitably, and efficiently. The public sector encompasses all government-controlled entities that provide goods and services to citizens, ranging from administrative ministries to public utilities. The demand for accountability in the public sector has grown, especially as public expectations increase due to democratization and fiscal pressures (Agbo & Owolabi, 2021). Governments in both developed and developing nations are under increasing scrutiny to uphold integrity, control corruption, and ensure fiscal prudence. This demand has underscored the importance of auditing as a mechanism for promoting transparency and enhancing accountability in public administration. According to Maseko and Manyani (2021), the public sector refers to the segment of the economy composed of institutions that are owned and operated by the government and provide services not driven by profit motives but by public interest. In Nigeria, the structure of the public sector is shaped by its federal system of governance, where powers and responsibilities are shared among the three tiers of government. Ministries such as the Ministry of Finance serve as crucial economic and administrative entities, managing public revenue, budgeting, and expenditure at the state and federal levels. Odunayo and Onyekachi (2023) opined public sector as the institutional framework through which the state delivers services and implements policies that affect citizens' welfare and national development. In the Nigerian context, the public sector includes ministries, departments, and agencies (MDAs) at federal, state, and local levels, many of which are responsible for resource allocation, policy formulation, and execution hence requiring accountability. Accountability in the public sector refers to the obligation of public officials, institutions, and agencies to be answerable for their actions, decisions, and stewardship of public resources. It entails a framework where government actors are held responsible not only for how they manage finances but also for how effectively they deliver services and fulfill policy mandates. According to Ezenwoke and Adetona (2021), accountability is “a multidimensional governance principle that ensures that public officials justify their decisions and are subject to sanction or reward based on performance and legality.” This concept is rooted in the democratic ideal that public resources belong to the people and should be managed transparently and judiciously. Similarly, Onuorah and Appah (2023) define accountability as “the systematic process of evaluating, reporting, and correcting deviations in the operations of public entities to maintain integrity and public trust.” In this regard, accountability mechanisms include financial audits, performance evaluations, reporting systems, and public participation platforms. In practice, however, accountability in Nigeria’s public sector is often undermined by opaque administrative procedures, inadequate enforcement of audit recommendations, political interference, and weak institutional capacities (Nwankwo & Omeje, 2022). Strengthening accountability is thus critical for achieving good governance, and auditing remains one of the core instruments through which accountability can be institutionalized, particularly within sensitive sectors like finance ministries where fiscal decisions affect the broader economic and social landscape. As outlined by Akinyemi and Omodero (2022), the Nigerian public sector operates in a challenging environment marked by corruption, lack of transparency, weak institutional oversight, and limited citizen engagement. These systemic weaknesses necessitate strong internal controls, of which auditing is a vital tool for oversight and performance evaluation. Auditing serves as a systematic examination and evaluation of financial records and operational procedures within an organization. According to Adegbite et al. (2020), auditing in the public sector entails an independent review of government operations, finances, and programs to ensure that public resources are used efficiently, effectively, and legally. Additionally, Ayoola and Edeh (2023) describe auditing as a proactive mechanism that strengthens accountability frameworks by detecting irregularities, ensuring compliance, and informing policy decisions. In this regard, the audit process is not just a financial ritual but a governance tool that enhances public trust and institutional integrity. The tenets of auditing in the public sector include independence, objectivity, transparency, and professional competence. These principles guide the auditor's conduct and ensure the credibility of audit outcomes. International frameworks such as the International Standards of Supreme Audit Institutions (ISSAIs) emphasize the auditor's role in promoting good governance, accountability, and performance measurement (INTOSAI, 2021). Against this backdrop, this study focuses on how auditing functions contribute to accountability within the Ministry of Finance in Ebonyi State. This study, therefore, interrogates the effectiveness of auditing in promoting accountability, addressing financial mismanagement, and enhancing public sector governance in this context. 1.2 Statement of the Problem Despite constitutional and statutory provisions for auditing in Nigeria, In recent times, public sector institutions continue to grapple with issues of financial impropriety, embezzlement, and unaccounted expenditures. Observations by Uzochukwu and Ajayi (2021) indicate that while audit reports are generated annually, they are rarely acted upon, leading to a culture of impunity in public financial management. The Ministry of Finance, Ebonyi State, is not exempt from these systemic weaknesses. The Office of the Auditor General and state audit departments are responsible for ensuring that financial reports of public institutions comply with statutory provisions and reflect fair and accurate records. This ministry is pivotal in managing fiscal affairs, including revenue generation, public expenditure, and financial planning. Reports from civil society groups and the State House of Assembly reveal recurrent issues of budget padding, unretired imprests, and procurement fraud (Oluwatosin & Eze, 2022). This raises concerns about the functionality and effectiveness of internal and external audits within the ministry. Also, the lack of responsiveness to audit findings undermines the core purpose of the audit process, which is to enhance accountability and improve service delivery. Auditing becomes a mere formality rather than a strategic management tool. According to Nwachukwu et al. (2023), a major gap lies in the implementation of audit recommendations and the absence of punitive measures for financial misconduct. This dysfunctionality results in recurring financial irregularities, weakened public trust, and poor resource utilization in the ministry. Although, previous studies have explored the effect of auditing on accountability in sectors such as local government administration (Oluwafemi & Usman, 2021), parastatals (Egbunike & Chukwujama, 2022), and educational institutions (Anyanwu & Oguonu, 2020). However, there is limited empirical focus on state ministries, particularly those overseeing fiscal governance such as the Ministry of Finance. In the context of Ebonyi State, which faces economic constraints and underdevelopment challenges, robust auditing is crucial for maximizing the impact of limited public resources. The lack of scholarly attention to this geographical and institutional context creates a critical research gap that this study seeks to fill. 1.3 Objectives of the Study The aim of this study is to assess the role of auditing in enhancing accountability in the public sector, using the Ministry of Finance, Ebonyi State, as a case study. i. To determine the extent to which auditing influences financial accountability in the Ministry of Finance, Ebonyi State. ii. To examine the effect of internal auditing on transparency in public financial operations. iii. To assess how external auditing contributes to compliance with public financial regulations. iv. To evaluate the overall impact of auditing mechanisms on public officials’ answerability and responsibility in financial matters. 1.4 Research Questions i. To what extent does auditing influence financial accountability in the Ministry of Finance, Ebonyi State? ii. How does internal auditing affect transparency in the management of public financial resources? iii. How does external auditing contribute to compliance with financial regulations in the public sector? iv. What is the impact of auditing mechanisms on the answerability of public officials in financial operations? 1.5 Research Hypotheses H₀₁: Auditing has no significant effect on accountability in the Ministry of Finance, Ebonyi State. H₁₁: Auditing has a significant effect on accountability in the Ministry of Finance, Ebonyi State. H₀₂: Internal and external auditing do not significantly influence compliance and transparency in the Ministry of Finance. H₁₂: Internal and external auditing significantly influence compliance and transparency in the Ministry of Finance. 1.6 Significance of the Study This study is of significant value to public policy and administrative reforms in Nigeria. As accountability remains a cornerstone of effective governance, the study provides empirical evidence on how auditing can enhance financial discipline, reduce corruption, and promote fiscal transparency. Policy-makers at both the state and federal levels can adopt its findings to reform audit laws, strengthen oversight institutions, and develop frameworks for implementing audit recommendations across government ministries. For public officials and financial managers, especially within the Ministry of Finance, Ebonyi State, the study highlights practical gaps in auditing processes and proposes strategies for effective internal control systems. By evaluating how different forms of auditing (internal and external) influence financial accountability, the findings offer actionable insights for improving compliance, minimizing irregularities, and enhancing public trust in financial reporting. Academically, this study contributes to the growing literature on public sector accountability in sub-Saharan Africa, particularly in under-studied contexts like Ebonyi State. It will serve as a reference for future research, especially in public financial management, governance, and auditing disciplines. Students, scholars, and institutions engaged in public sector research can draw upon the methodology and findings to explore broader comparative or longitudinal studies on accountability mechanisms in Nigeria. 1.7 Scope of the Study This study is geographically delimited to Ebonyi State, focusing specifically on the Ministry of Finance located in Abakaliki. The choice of location is strategic due to the ministry's pivotal role in fiscal management, budget preparation, disbursement of funds, and financial reporting. By narrowing the investigation to one critical government institution, the study ensures a thorough, context-specific analysis of how auditing affects accountability mechanisms within a real operational environment. Thematically, the study examines the relationship between auditing (independent variable) and accountability (dependent variable), focusing on sub-variables such as financial accountability, transparency, compliance, and answerability. The population consists of public finance officials, internal auditors, external auditors, and administrative personnel within the Ministry of Finance. The study does not extend to other ministries or states, nor does it cover private sector financial auditing. 1.8 Operational Definition of Terms Auditing: This refers to the independent and systematic examination of financial records and internal controls in the Ministry of Finance, with the aim of verifying compliance with policies and detecting mismanagement. Accountability: The obligation of public officials to justify their financial decisions and actions, and to accept responsibility for the use of public resources in line with institutional standards and public expectations. Internal Auditing: A continuous, organizationally-embedded auditing process conducted by officials within the Ministry of Finance to assess risk management, control processes, and governance practices. Financial Transparency: The openness and clarity in the reporting of financial operations and budget implementation, ensuring that stakeholders—including citizens and oversight agencies—can access, understand, and evaluate government spending.