ANALYSIS OF AUDIT PROCEDURES IN CAMEROON'S PUBLIC SECTOR

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

The administration and oversight of public sector funds has been a persistent worry for the general public.  Recently, there has been a significant expansion in both the quantity and financial worth of public sector activities (Alastair, 2008). As a result of this rise, there is a heightened need for the accounting officials to be held accountable.   Public officials and workers responsible for managing resources and activities should provide comprehensive reports on their performance to the public (Khan, 2006).  The public will be provided with reports of accountability in order to evaluate the performance of authorities who are responsible for managing public resources.

Accountability is a fundamental principle in the governance of any country, and it applies to public investments as well (Alastair, 2008).  Increased public accountability has led to a greater demand for further information regarding programs, projects, and services in the public sector (Khan, 2006).  Cameroon's legislation mandates that public officials and individuals responsible for public resources must generate accountability reports.  The citizens, as well as the parliamentarians, have the right to know whether government resources are being managed in accordance with established laws and regulations (Sen, 2019). In addition, it is imperative for the public to be informed about the economic, efficient, and successful implementation of public expenditures, projects, programs, and services in order to achieve the intended objectives.  Internal audit has a substantial and crucial role in overseeing the financial control of the State and its investments (Dike, 2002). Auditing is a constituent component of accountability.  The policies and procedures will significantly ensure accountability.  Audit procedures are essential in the Public Sector to ensure efficiency, accuracy, and integrity (Dye and Rick, 1998). 

The public sector audit environment refers to the context in which governments and other entities are accountable for managing and utilising national wealth, natural resources, tax revenues, and other sources of funding to provide services to citizens and other beneficiaries. These entities are responsible for managing, performing, and using resources. They are accountable to both the providers of resources and the individuals, especially citizens, who rely on the services provided utilising those resources. Public sector auditing is to provide favourable circumstances and strengthen the anticipation that public sector organisations and employees will carry out their duties with effectiveness, efficiency, ethical behaviour, and compliance with relevant laws and regulations. Public sector auditing is a methodical procedure that involves impartially gathering and assessing data to determine if information or actual situations meet established standards. Public sector auditing is crucial as it offers legislation and oversight bodies, governance authorities, and the general public with impartial and objective evaluations regarding the management and effectiveness of public sector policies, programs, or operations.

Internal auditing plays a vital role in the public sector's governance by ensuring accountability, transparency, and the effective utilisation of resources. In Cameroon, similar to numerous developing nations, the public sector has distinctive obstacles when it comes to executing efficient audit procedures. The audit procedures implemented in the public sector of Cameroon are specifically designed to guarantee the proper utilisation of public funds and to ensure that institutions adhere to legal and regulatory obligations. The KPMG Africa Fraud Barometer study of 2022 revealed that Cameroon was among the top five African countries responsible for the majority of fraud cases, totalling US$2 billion in the first half of 2021. Nigeria, Kenya, Zimbabwe, and South Africa collectively accounted for 74% of all fraud cases in Africa. In 2018, there were numerous high-profile fraud cases in Cameroon that received extensive coverage in both state media and local newspapers. Senior management engaged in occupational scams, resulting in the diversion of millions of United States dollars from government agencies. A recent study by Hamilton and Gabriel (2019) contends that fraud is the primary adversary of the corporate realm. No company or nation is exempt from fraud, as it is present in all human pursuits. Nwankwo, 2019. This study aims to analyse the audit procedure in the Public Sector, its function, and propose enhancements.

1.2 Statement of the problem

Internal audit methods in Cameroon's public sector are essential for guaranteeing accountability, transparency, and effective administration of public resources. Notwithstanding several reforms and endeavours to modernise auditing techniques, some difficulties continue that compromise the efficacy of these procedures.

A lack of staff is a significant issue that the audit department in the Public Sector in Cameroon is currently facing (David, 2019).  Several state and government entities suffer from understaffing, resulting in a shortage of highly qualified personnel.  Auditing necessitates significant resources and is very labour-intensive, so the Government will require a substantial number of competent audit personnel capable of fulfilling audit responsibilities. The effectiveness of audit work is contingent upon the calibre of the audit personnel and the organisation itself (Etokhana, 2021).

One further constraint of Cameroon's public sector audit is the inefficiency and insufficiency of its internal control system (Joshua, 2022). In order to evaluate the effectiveness of an accounting system, the auditor needs to conduct a thorough examination of the processes through which the accounting data is generated and how it moves through the system. This includes analysing the internal controls that are integrated into the procedures.  Prior to issuing a report, he must ensure that the organization's record-keeping system is sufficient to accurately record, allocate, and summarise all transactions. Additionally, he must verify that the accounting statements derived from these records are consistent with the records themselves and accurate in principle. An internal control system refers to the comprehensive set of financial and non-financial controls established by management to ensure the smooth operation of an organisation, protect its assets, and maximise the accuracy and reliability of its records. This system encompasses internal checks and internal audits (Joshua, 2022: Mendi, 2019). In the realm of governance, there is a lack of a comprehensive organisational plan that should serve as a platform for clearly defining the roles and duties of the personnel, thereby ensuring effective coordination of their activities. In order for the auditor to evaluate the efficiency and sufficiency of the internal control system, there needs to be consistent and regular managerial oversight and examination of the financial operations and position of the organisation through interim accounts and reports. However, this is lacking in the Cameroon Public Sectors, indicating a deficiency in the internal control system.   Furthermore, it is essential for an effective internal control system to enhance operational efficiency. Unfortunately, this has not been observed in the Cameroonian Public Sector according to Joshua (2022).

Training can be defined as the process of providing instruction and practice to an individual with the goal of achieving a desirable level of performance in specific behaviours.   Training is utilised to enhance and refine the cognitive and physical abilities of personnel in order to augment their expertise. Although well-trained staff are crucial for the efficiency and effectiveness of an audit institution, only a small number of officers are sent on courses (Heidenheimer et al., 1993). Even when individuals attend courses independently, they are rarely motivated and many of them are not allowed to go.  This is an additional aspect that contributes to the lack of efficacy in auditing practices within the Cameroonian Public Sector.

The internal audit function in Cameroon's public sector is encountering substantial obstacles that hinder its capacity to ensure efficient supervision and responsibility. The obstacles encompass insufficiency of resources, limitations imposed by institutions, and intricate regulatory frameworks. These problems lead to gaps in audit coverage, ineffective risk management, and inadequate follow-up on audit findings, which undermines the overall integrity and efficiency of public sector governance. This paper aims to analyse the audit procedures in the public sector of Cameroon, taking into consideration the current situation.

Objectives of the study

The primary objective of this study is to critically analyze the audit procedures in Cameroons public sector. Specific objectives of this study are to:

To analyze the current audit procedures used in Cameroon's public sector

To identify the challenges affecting the effectiveness of audit procedures in Cameroon's public sector

To evaluate the impact of the challenges on the overall audit process

To propose recommendations for improving audit procedures in Cameroon's public sector.

1.4 Research Questions

The following research questions which are in line with the objectives of this study will be answered in this study:

What are the current audit procedures used in Cameroon's public sector?

What are the challenges affecting the effectiveness of audit procedures in Cameroon's public sector?

What is the impact of the challenges on the overall audit process in Cameroon's public sector?

What are the recommendations for improving audit procedures in Cameroon's public sector?

1.5 Research Hypotheses

To determine the effectiveness of this study, the following research null hypotheses will be formulated to guide the study and it will be tested at 0.05% levels of significance.:

Ho: There are no challenges affecting the effectiveness of audit procedures in Cameroon's public sector.

Ha: There are challenges affecting the effectiveness of audit procedures in Cameroon's public sector.

1.6 Significance of the study

The research on audit procedures in the public sector of Cameroon is of great significance to several stakeholders, such as government institutions, public sector employees, policymakers, and the general public. Gaining comprehension and enhancing audit methods can have extensive consequences for governance, accountability, and resource management.

The study offers insights on enhancing internal audits to increase oversight of public sector operations by analysing current audit procedures and identifying flaws. Enhanced audit procedures enhance the level of openness in financial administration, thereby guaranteeing the proper utilisation of public funds and establishing a transparent system for tracking expenses.

Moreover, the act of recognising inefficiencies and deficiencies in audit procedures can result in a more efficient allocation of resources, hence minimising wastage and enhancing the overall effectiveness of public sector operations. The study's recommendations can enhance internal controls, therefore reducing the risks associated with financial mismanagement and fraud.

Moreover, the report offers significant data and analysis that can guide policy decisions and institutional reforms targeted at enhancing audit processes and regulatory frameworks. The findings from the study can provide guidance for the creation of new rules or the modification of current ones to tackle the highlighted difficulties and improve the efficiency of internal audits.

Moreover, the study emphasises the necessity of focused training and professional development programs by highlighting deficiencies in skills and knowledge among auditors. Enhancing the quality of audit work can be achieved by implementing improved training and capacity building initiatives, which will result in a more competent and effective audit personnel. The study enhances public confidence in government organisations and their financial management methods by addressing audit procedure concerns and implementing stronger monitoring. Improved audit methods result in increased accountability, which subsequently promotes higher public trust in the honesty and efficiency of public sector activities.

In essence, this study contributes to the existing knowledge on internal auditing in developing nations by offering a comprehensive analysis of the unique circumstances in Cameroon. Findings and recommendations are a valuable resource for auditors, scholars, and practitioners, offering valuable insights into the most effective methods and typical difficulties encountered in public sector auditing.

1.7 Scope of the study

Broadly, this study focus is to critically analyze the audit procedures in Cameroons public sector. Specifically, this study seeks to analyze the current audit procedures used in Cameroon's public sector and identify the challenges affecting the effectiveness of audit procedures in Cameroon's public sector. 

Further, this study will focus on evaluating the impact of the challenges on the overall audit process and it also seeks to propose recommendations for improving audit procedures in Cameroon's public sector.

 The study is carried out in Cameroon. 

1.8 Limitations of the study

As with any human endeavour, the researchers experienced many minor constraints during the investigation. The main limitation was the lack of extensive literature on the topic, due to the limited availability of data about the analysis of audit procedures in the public sector of Cameroon. Hence, a significant allocation of time and exertion was necessary to ascertain the appropriate materials, books, or information and amass data. 

Furthermore, this study is constrained by its small sample size and narrow geographical scope, focussing solely on Cameroon. Therefore, the conclusions of this study cannot be extended to other situations, thus requiring further investigation. 

Moreover, the researcher's restrictions were primarily due to financial constraints, as they are a student without any source of income to sustain themselves. The exorbitant transportation charges at the research location posed a significant challenge in covering the expenses for transportation fees.

Furthermore, the researcher faced a time constraint due to the need to do this research while still fulfilling the obligations of attending lectures and participating in other educational activities.

1.9 Definition of terms

Audit: Audit is the examination or inspection of various books of accounts by an auditor followed by physical checking of inventory to make sure that all departments are following documented system of recording transactions. It is done to ascertain the accuracy of financial statements provided by the organization.

Corporate governance: Corporate governance is the structure of rules, practices, and processes used to direct and manage a company. A company's board of directors is the primary force influencing corporate governance.

Accountability: Accountability is the practice of being held to a certain standard of excellence. It is the idea that an individual is responsible for their actions and, if that individual chooses unfavorable actions, they will face consequences.

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