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THE ROLE OF INTERNAL AUDITING IN PROMOTING EFFECTIVE FINANCIAL ACCOUNTABILITY IN THE CAMEROONIAN PUBLIC SECTOR

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THE ROLE OF INTERNAL AUDITING IN PROMOTING EFFECTIVE FINANCIAL ACCOUNTABILITY IN THE CAMEROONIAN PUBLIC SECTOR

CHAPTER ONE

INTRODUCTION

Background of the Study

According to the Institute of Internal Auditors (2018), internal auditing is a practice that is independent, analytical, and consultative in nature. Its purpose is to increase the worth and improve the functioning of an organisation. Internal audit has now become a fundamental aspect of corporate governance. Recently, there has been a growing focus on the efficient management and accountability of financial resources, particularly in the public sector. This emphasis has been prompted by the rise in fraud and high inflation rates, which devalue untracked or unaccounted cash. It is especially important to address these issues as they undermine the goals of establishing such enterprises and extra-ministerial departments. Many government institutions are enhancing their internal control systems to enable effective strategic management planning and transparency in departmental matters. 

This responsibility is necessary since government institutions are on the verge of collapsing due to the misappropriation of funds and the presence of corrupt officials who are actively working to defraud and enrich themselves at the expense of the organisation. To safeguard its financial resources from theft, an organisation must have a comprehensive understanding of its income and expenditure verification system, accounting system, authorisation method, and cash control system. This knowledge should specifically pertain to cash inflows and outflows. This elucidates the exponential increase in the misappropriation of public monies by authorised and governmental technocrats who are entrusted with the responsibility of safeguarding such cash. 

It is important to remember that cash and other easily convertible resources, whether tangible or financial, are the most valuable current assets for the efficient operation of her machinery. Input is necessary to sustain the firm on an ongoing basis. These resources are required for paying workers, fulfilling contractual obligations, and investing in infrastructure development to provide a high level of life. 

A crucial aspect of managing physical and financial assets involves the efficient allocation of corporate funds. The planning and control of such activity is facilitated by rigorous internal auditing, which incorporates severe internal controls, adherence to accounting rules and principles, and thorough verification and authorisation procedures (Herath, & Albarqi, 2019). This is essential due to the cyclical nature of business, when government revenue decreases and there is a significant time gap between receiving an order, purchasing supplies, paying wages, shipping the goods, and finally receiving payment. Investing in cash and tangible assets is necessary to address immediate operational needs. The irregular flow of funds leads to seasonal variations. Additionally, having a robust cash management and control system is crucial for daily and monthly use of funds. These systems acknowledge the inherent uncertainty in predicting both cash inflows and outflows. 

An efficient system for managing and tracking cash is crucial for the overall functioning of an organisation. It is astonishing to observe the absence of proper legal cash control and asset management systems in numerous public sector organisations in Cameroon, particularly those owned by the government and state. While certain organisations create a cash budget at the start of their fiscal year without any subsequent authorisation and control process, others simply exercise cash control on a monthly basis through bank reconciliation statements, which are manipulated to clean up their messy financial situation. 

Unfortunately, it is only when cash issues arise that management begins to search for the immediate and underlying causes, as well as potential solutions, even though they themselves are the root of the problem. Stever (2019) asserts that auditing, whether internal or external, serves as a distinct platform and tool for ensuring accountability. Managers are motivated to deliver accurate accounts of entrusted funds to avoid being found negligent. Therefore, it serves as a deterrent to managers of public funds from committing fraud. Internal auditing is an independent assessment of an organization's activities, specifically focussing on accounting, financial, and other operations. Its purpose is to provide management with protective and constructive services by measuring and evaluating the effectiveness of other control mechanisms. Therefore, a survey will be conducted in order to assess the role of internal auditing in promoting effective financial accountability in the Cameroonian public sector.

Statement of the Problem

The Cameroonian public sector, similar to many others in Africa, has had difficulties pertaining to fiscal mismanagement, corruption, and a dearth of openness. These problems have frequently eroded public trust in government institutions and impeded socio-economic progress. Establishing and enhancing internal auditing activities within government agencies are considered essential measures to tackle these difficulties and foster efficient financial accountability (Akingunola, Adekunle, & Adedokun, 2021). 

The limited research conducted on relevant subjects worldwide has shown varying results. Bowrey et al. (2018) conducted research on financial accountability in Australia, focussing on a system that considers the state budget, mid-year updates, a financial report for the consolidated fund, and an account of state finance. Rabrenović (2018) examined the utilisation of financial openness as a prerequisite for European Union membership, in addition to assessing the impact of cost-quality, efficiency, and economic performance on the allocation of public resources. Nzewi and Musokeru (2018) investigated the function of supervisory bodies responsible for public service financial accountability. Their study examined the utilisation of legal and institutional frameworks, as well as the processes involved in budget preparation and implementation, accountability and financial reporting, debt and cash flow management, and internal control. Hence, it is in the light of these that the study seeks to assess the role of internal auditing in promoting effective financial accountability in the Cameroonian public sector.

 1.3  Objectives of the Study

The main purpose of this study is to assess the role of internal auditing in promoting effective financial accountability in the Cameroonian public sector. Specifically, the study will;

Determine the effectiveness of internal auditing in detecting and preventing financial misconduct in public organizations.

Determine whether internal auditing contributes to financial accountability and transparency in public institutions.

Investigate the challenges faced by internal auditors in the Cameroonian public sector.

1.4  Research Questions

The following questions have been prepared for the study:

How effective is internal auditing in detecting and preventing financial misconduct in public organizations?

Does internal auditing contribute to financial accountability and transparency in public institutions?

What challenges do internal auditors face in the Cameroonian public sector?

1.5 Research Hypotheses

H0:Internal auditing does not significantly promote effective financial accountability in the Cameroonian public sector.

Ha: Internal auditing significantly promote effective financial accountability in the Cameroonian public sector.

1.6 Significance of the Study

Assessing the effectiveness of internal auditing techniques will allow businesses to identify vulnerabilities and establish more robust audit procedures. As a consequence, there will be more financial transparency, heightened confidence from individuals and stakeholders, and a decrease in financial losses resulting from fraudulent activities and anomalies. 

Moreover, the results will provide a basis for formulating theoretical strategies for financial regulation, highlighting the significance of internal audits as a crucial element of regulatory oversight. This will provide a framework for future research on the correlation between regulation, auditing, and financial accountability. Nevertheless, subsequent researchers will use it as a literature review. This means that other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regard to the role of internal auditing in promoting effective financial accountability in the Cameroonian public sector.

1.7 Scope of the study   

The scope of this study is boarded on the role of internal auditing in promoting effective financial accountability in the Cameroonian public sector. Empirically, the study will determine the effectiveness of internal auditing in detecting and preventing financial misconduct in public organizations, whether internal auditing contributes to financial accountability and transparency in public institutions and investigate the challenges faced by internal auditors in the Cameroonian public sector.

Geographically, the study will be delimited to Douala, Cameroon

1.8 Limitation of the study

In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents. In addition, there was the element of researcher bias. Here, the researcher possessed some biases that may have been reflected in the way the data was collected, the type of people interviewed or sampled, and how the data gathered was interpreted thereafter. The potential for all this to influence the findings and conclusions could not be downplayed. More so, the findings of this study are limited to the sample population in the study area, hence they may not be suitable for use in comparison to other schools, local governments, states, and other countries in the world.

 1.9 Definition of Terms

Auditing:The systematic examination and evaluation of financial records and transactions of an organization to ensure accuracy, reliability, and compliance with established accounting standards and regulations.

Fraud:intentional acts of deception or misrepresentation made to secure an unfair or unlawful financial gain.

Financial Accountability: The obligation of government officials and public sector entities to manage public resources responsibly, report accurately on financial activities, and be answerable for their fiscal actions.


This material content is developed to serve as a GUIDE for students to conduct academic research



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  • Methodology: Yes available


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