ABSTRACT

This study focused on the operation and the evaluation of the effectiveness of the Health Maintenance organization. The aim of the study was to investigate if the Health Maintenance organizations who are the administrator of the scheme are running the scheme well in Nigeria. Further to investigate if access to medical care is cheaper with health insurance when compared to retainership. In order to achieve this, healthcare international as a health maintenance organization was studies. Literatures on health insurance were reviewed, questionnaires wee distributed to Healthcare international staff, hospital on the scheme, and enrolled population in the public and private organizations. The data collected were analyzed using percentage method The analysed data reveals that access to medical care is cheaper with health insurance but the health insurance scheme is yet to be properly operated in Nigeria as  there has not been enough awareness and understanding of how the scheme is operated. In conclusion it was recommended that Federal Government through the Nation Health  Insurance Commission and the health maintenance organization should create a mass awareness about health insurance and put in place measures on how is should be properly  operated in Nigeria.

 CHAPTER ONE

1.1INTRODUCTION

Internal Auditing is an independent appraisal activity established within an organization as a service to it. It is a control which functions by examining and evaluating the adequacy and effectiveness of other controls.

It can also be defined as a control established within an organization, originally concerned with the financial records, investigative techniques developed by the control is now applied to the analysis of the effectiveness of all parts of an entity’s operation and management.

In any organization, the management usually sets out the plans including control procedures while the internal auditors supervise monitors and reviews as well as ensures compliance with such plans and control procedures.

However, large organizations are faced with various problems of co-ordination, control, public and employee relationship and general management. The development and maintenance of internal control system which is under the watchful eyes of internal audit staff is therefore of great important in this regard.

Internal control system can be defined as “a whole system of controls, financial and otherwise established by the management in order to carry on the business of the enterprise in an orderly and efficient manner, ensures adherence to management policies, safeguard completeness and accuracy of the record.

An internal Auditor must be free to review the whole internal control system of an organization. However, there is a sharp distinction between internal and external auditing.

The Auditing Practice Committee (APC) defined External Auditor’s duty as “Independent examination of and expression of opinion on the financial statement of an enterprise by an appointed auditor in the pursuance of that appointment and in compliance with any relevant statutory obligation. While an Internal Auditor’s duty is to prevent and detect errors and frauds by the management, the detection of frauds is only indicated in the case of external Auditors.

For an effective internal auditing program, the internal auditor must be independent; the independent of internal auditing department is to be responsible to an officer of sufficient rank in the organization to ensure a broad scope of activities and adequate consideration of an effective action on the findings and recommendations made by him. He should not develop and install procedures and prepare records which he would not be expected to review and appraise.

1.2STATEMENT OF PROBLEMS / PROBLEM ANALYSIS

Over the years, doubts have been expressed over the effectiveness of internal audit, in the Armed Forces. Some of the factors responsible for internal audit ineffectiveness could be;

1.                 Does the ineffectiveness of internal audit result from shortage of professionally qualified personnel?

2.                 Is the head of internal audit department independent? Is he responsible to the assistant director or to the commander?

3.                 Does the account department prepare books on time so that the internal audit staff can carry out post-payment auditing?

4.                 Does the management give prompt attention to the audit queries issued by the internal audit department?

1.3OBJECTIVE OF THE STUDY

In this research work, efforts are made to find the root causes of the multi-various problems being encountered by the internal audit department in the Armed Forces.

Intellectual universal remedy shall be offered to, as the ineffectiveness of internal audit in the Armed Forces.

The central purpose of this research work lies on the fact that an Internal Auditor is concerned with measuring and evaluating the continuous effectiveness of the internal control system. Therefore, if the internal audit department is reluctant, this may mean that;

a.                 The policies, plans and procedures set down by the management may not be complied with by the organization’s staff

b.                 The information required by the management to make decision may be incomplete and unreliable.

Recommendations shall be made as to the way by which internal auditing can be effective so that it can make a proper review of the operations, procedures and records of Nigeria Air Force’s Pay and Accounting Group.

1.4SIGNIFICANT OF THE STUDY

As this research work is being carried out about the gap in human knowledge as regards the Nigeria Armed Force accounting department and effectiveness of their internal control system.

At the end of this study, procedures will be provided to follow and executed properly in order to make an end to misappropriation, mismanagement of funds and as well fill in the gap in human knowledge as it will also boost the morals of the forces personnel

1.5SCOPE AND LIMITATION OF THE STUD

This research work shall be limited to the Nigeria Air Force, Pay and Accounting Group alone which has been chosen as a case study.

However, it will be practically impossible to reach all the three arms of the Armed Forces in Nigeria in view of this, effort shall be concentrated on Headquarters Pay and Accounting Group.

1.6STATEMENT OF HYPOTHESIS & RESEARCH QUESTIONS.

In order to make this research, project a result oriented-one, the following hypothesis are developed

HYPOTHESIS I

H0:              Poor staffing is not responsible for the ineffectiveness of the internal audit department in the Armed Forces.

H1:              Poor staffing is responsible for the ineffectiveness of internal audit department in the Armed Forces.

HYPOTHESIS II

H0:              Poor accounting system and non-compliance to the accounting concept and convention is not a barrier to effective Internal Audit in the Armed Forces.

H1:              Poor accounting system and non-compliance to the accounting concept and convention is a barrier to effective Internal Audit in the Armed Forces.

HYPOTHESIS III

H0:              Ignorance of Internal auditors’ service and duties of prevention and detection of fraud is not a barrier to the success and effectiveness of internal audit department in the Armed.

H1:              Ignorance of Internal auditors’ service and duties of prevention and detection of fraud is a barrier to the success and effectiveness of internal audit department in the Armed.

HYPOTHESIS IV

H0:              Engagement of average skilled personnel instead of more professional personnel in the Internal Audit Department do not amount to poor performance of the Internal Audit Department of the Armed Force.

H1:              Engagement of average skilled personnel instead of more professional personnel in the Internal Audit Department amounts to poor performance of the Internal Audit Department of the Armed Force.

HYPOTHESIS V

H0:              Non-Independent (dependency) of the Head of Internal Audit Department is not responsible to poor performance of the department.

H1:              Non-Independent (dependency) of the Head of Internal Audit Department is responsible to poor performance of the department.

HYPOTHESIS VI

H0:              Irregular/infrequent auditing is not responsible for ineffectiveness of Internal Auditing in the Armed Forces.

H1:              Irregular/infrequent auditing is responsible for ineffectiveness of Internal Auditing in the Armed Forces.

HYPOTHESIS VII

H0:              The system of government practiced in Nigeria is not a limiting factor to effectiveness of the audit department of the Armed Forces.

H1:              The system of government practiced in Nigeria is a limiting factor to effectiveness of the audit department of the Armed Forces.

1.7DEFINITION OF TERMS

Definition of terms relevant to this research study is given below:

COMPLIANCE TEST

These are test designed to ensure that the internal controls on which the auditor wish to rely on are working properly in practice. An internal auditor should carry out compliance test on which he wishes to rely on, are functioning effectively throughout the period.

If compliance test disclose no exceptions, the auditor may reasonably place reliance on the effective functioning of the internal control test.

SUBSTANTIVE TEST

These are test which seek direct evidence of the correct treatment of a transaction, a balance, an asset, a liability on any item in the books or the accounts. In other words, they are tests of transactions and balances and other procedures such as analytical review, which seek to provide audit evidence as to the completeness, accuracy and validity of the information contained in the accounting records or in the financial statements. For example, to test a balance in a deposit account, direct confirmation must be obtained from the bank.

INVESTIGATION

This is when audit staff are not asked to report on special situation to managements. The basis and scope of investigation can be incorrect with a proposed purchase of a business, suspected fraud or of a back advancing credit or in a number of other situations.

AUDIT PROGRAMME

This is the over all plan or work which an internal auditor intends to follow in his attempt to gather sufficient evidence to permit him to offer an informal opinion. It is both the summary of all that must be done before he will be satisfied that all aspects of the financial data have been investigated and also a list of detailed instructions to his assistance.

Audit program provides a guide in arranging and distributing the work and a check against the possibility of omissions. It facilitates controls and review by managers and supervisions and provide a record of works done.

PRE-AUDIT

This is referred to as, pre-payment audit. It is the examination of transactions before payment. It may include an examination of contracts prior to arrival, scrutinizing of all vouchers before payment and review of all cheques before payment.

Pre-audit provides that;

1.                 Expenditures are not upon their face unreasonable or extravagant.

2.                 Sufficient frauds are available for enablement of the voucher.

3.                 There has been compliance with budgetary, civil service, legislative and legal requirements.

PORT AUDIT

This is sometimes referred as post payment audit, it represents an after the fact examination. Hitherto, post audit was concerned primarily with control of cash and the verification of revenues. Today, its general scope involves the review and appraisal of overall performance measured against established goals.

1.8HISTORICAL BACKGROUND

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