1

Abstract

This study was undertaken with a view to examining the link between audit revenue and public
expenditure in public accounting in the Nigeria fourth republic. Exploratory research approach
was adopted for the study. Revenue and expenditure data of Nigeria government was obtained
from the Central Bank of Nigeria statistical Bulletin. From the findings, it is obvious that while
revenue audit helps in streamlining public expenditure in Nigeria through various reforms, it
appears there is no accountability in the Nigeria public accounting system. On the basis of this,
the study recommended amongst others that there should be restructuring of audit and
accounting system in Nigeria public sector.
1. Introduction
Public sector can be described as entities or organizations that implement public policy through
the provision of services and the redistribution of income and wealth, with both activities
supported mainly by compulsory tax or levies on other sectors. That is, it comprises governments
and all publicly owned, controlled and or publicly funded agencies, enterprises and other entities
of government that deliver public programs, goods, or services (Owolabi, Evans and Samuel,
2013). It has been established that, public sector constitutes the largest sector of the economy of
all nations and employs the largest force. Furthermore, public sector controls the greatest part of
the financial resources of the nation.
Public sector accounting is a system or process which gathers, records, classifies and summarizes
as reports the financial events existing in the public or government sector as financial statements
and interprets as required by accountability and financial transparency to provides information to
information users associated to public institutions. It is interested in the receipts, custody and
disbursement and rendering of stewardship of public funds entrusted (Owolabi et al, 2013).
The nature of government accounting has the purpose of determining how much money was
received and its sources, how much was spent and for what purposes and the financial
obligations accrued. Profit is not the main focus. Unlike the private sector which has profit as
the prime focus and determine the profit of the business over a given period. Hence, many
factors influence government accounting such as the role of government in the different fields
like the armed forces, health and education and the policies set by government to achieve its
aspirations and goals. Thus, government accounting is interested in information gathering that
will enable her to prepare Receipts and Payments accounts (Omolehinwa and Naiyeju, 2012)
Sound public sector accounting rests on an articulate framework which has been defined to
reflect best practices in the world. To this end, a conceptual framework for public sector
accounting is structured to reflect objectives and scope, recognition and measurement criteria,
definition and qualitative characteristics of financial information shown in financial and
accounting reports of public sector accounting entities (Izedonmi and Ibadin, 2013).
The institutional framework comprises the legal, institutional and the professional standards that
regulate the public sector accounting. The International Public Sector Accounting Standards
(IPSASs) which is issued by the International Federation of Accountants International Public
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Sector Accounting Standard Board (IPSASB) is probably the major standard for public sector
accounting. The International Standards of Supreme Audit Institutions (ISSAIs) is another
institutional framework. These bodies are responsible for the overseeing the management of
public sector accounting to reflect transparency and accountability within the wider context of
good public governance (Izedonmi and Ibadin, 2013).
One of the fundamental aspects of public sector financial management in
Nigeria is the issue of audit of government financial reports. Audit is the process
carried out by suitably qualified Auditors during which the accounting records and the
financial statements of enterprises are subjected to examination by the independent
Auditors with the main purpose of expressing an opinion in accordance with the terms
of appointment. The high level of corruption in the public sector of Nigeria is basically as a
result of the failure of auditing (Omodero and Okafor, 2016).

Audit involves performing procedures to obtain evidence about amounts and disclosures in the
financial statements so as to evaluate the appropriateness of accounting estimates made by
management (Imegi and Oladutire, 2018)). Also, Masood and Afzal (2016) see audit as an
independent inspection of an entity where the auditor delivers unbiased results about the
appropriation of funds by underlying organization. The first and foremost goal of auditing is to
bring transparency and accountability as well as prudent financial management in private or
public sector, that also audit serves as a tool for making private and public entities responsible
and accountable for their duties ( Edheku,Obembe and Jacob, 2022).
Public sector audit according to Edheku, Obembe and Jacob (2022) is the process of
recording, analyzing, classifying, summarizing, and communicating and interpreting financial
information about the government in aggregate and in detail, which reflects all transactions
involving receipt, transfer and disposition of government property and funds.
In any situation where money is used as a means of exchange, this calls for the recording of the
facts and figures underlying the financial transactions at least for ease of reference. Public
sectors are mainly established to provide services to the general public; these services cannot be
efficiently and effectively provided without public sector audit (El-Maude & Salihu, 2016). In
Nigeria today, ineffectiveness of auditing policies had continue to hamper the drive for better
performance and financial management across public sector of the country (Aduwo, 2019).
Public expenditure is the spending made by the government of a country on the collective needs
and wants of her citizenries such as spending on; the provision of infrastructures, pension
provision among others. However, of recent, there has been rapid increase in public
expenditure in West African countries, particularly in Nigeria due to the fact that the functions of
the various levels of government have equally increased both intensively and extensively
(Ogah, n.d). In modern times the application of public expenditure by the government as a
variable tool for development is a clear manifestation of its overriding importance.
The control of public expenditure is important to an individual in particular and the public
generally as these controls contributes to the attainment of the objectives of the public
expenditure. It is also necessary to control the expenditure of public funds to ensure that
members of the public will benefit from such expenditure by ensuring that funds are applied
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directly to those projects they are meant for. It is necessary because, it involves determining the
best approach and techniques in achieving the effects of expenditure control on the effective
management of
public sector in Nigeria. A good accounting system will be very helpful in achieving all the
yearnings stated above and serve as a watchdog or effective check and balance to ensure
public expenditure is controlled.
In the Nigeria fourth republic, a lot of reforms have been made to ensure accountability and
transparency in the operation of government businesses. Among the reforms are; due process,
introduction of IPSAS, prosecution of corrupt public officials among others. Despite these reform
measures, it has been established that, Nigeria public sector is far from being corrupt. It is
therefore imperative that proper auditing both financial or revenue and performance audit be
carried out to ensure that there is transparency and accountability in the management of
government resources.

While Performance audit examines whether programs implemented have achieved their goals
economically, efficiently and effectively and addresses matters that extend beyond the traditional
concerns of financial auditing by examining whether the agencies have ̳done the right thing‘, followed
procedures and used minimum costs, financial or revenue audit on the other hand, is concerned with
the examination of the financial statements prepared by public sector agencies. It is designed to provide
independent and objective opinions whether the financial information prepared by management has
been relevant, and accurate, fairly presented and also to assure that money has been spent
appropriately. As part of the process, the auditor may examine the transactions in relation to
expenditures, receipts, and also the accounts of whether they are compliant with accounting standards,
statutory provisions, and other regulations (Olaoye and Adedeji, 2019).

It can be said that from the foregoing, the essence of auditing government expenses is to ensure that
the limited resources of government are used prudently to satisfy the needs of the generality of the
populace. Furthermore, revenue audit act as control measure to ascertain what is, hat ought to be and
what will be. In view of the importance of auditing as a control apparatus in the management of
organization resources, it is important to examine the link between it and public expenditure in the light
of public sector accounting reforms in the Nigeria fourth republic. The focus of this study is directed at
this.

Statement of the problem

The basis of public sector accounting is to ensure that public resources are effectively managed for the
good of all. This informs why there are various amendment as to its operation. Furthermore,
government expend resources available to it in providing basic needs of the people in the area of health,
security, education and provision of infrastructure. While this provision is important, it is also essential
that proper control be maintained to ensure that the resources are not misused. The use of revenue
audit is important to ascertain how much was available and how much had actually been spent. In the
light of this, there is need to examine how the relationship between revenue audit and public
expenditure ensure accountability and transparency in the operation of government accounting.
Furthermore, it is important to examine how the link between revenue and expenditure audit enhances
financial reporting credibility in the public sector in the Nigeria fourth republic. This study tends to
address this.
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Objectives of the study

The objectives of this study are;

i. To examine the link between revenue and expenditure audit in line with public accounting
practice in the Nigeria fourth republic.
ii. To examine how the link between revenue audit and public expenditure enhances public
financial reporting credibility.

Research Questions

i. What is the link between revenue and public expenditure audit in public accounting practice
in the Nigeria fourth republic?
ii. How does the link between revenue and public expenditure audit enhances public financial
reporting credibility in the Nigeria fourth republic?

Significance of the Study

Government like individuals is constrained by limited resources in executing its public programmes. As
such, prudence is required by every stakeholder in ensuring that the limited resources are efficiently
used. On the basis of this, the managers of government resources are expected to adopt standard
guidelines required of them in the receipts and disbursement of government funds. The legislators who
are custodian of public account committee will be expected to protect the public interest by raising
query on any frivolous transactions. The link between audit revenue and public expenditure had not
been properly addressed at least to the extent to which the author knows. This study is intended to fill
that gap and at the same time provides a resource material for future reference.

Scope and limitation of the study

The study centres on revenue audit and public expenditure with respect to public sector accounting in
the Nigeria fourth republic. It is specifically on the link between audit revenue and public expenditure
and how the link between the two enhances public sector financial reporting credibility in the Nigerian
fourth republic. However, the inability of the researcher to obtain revenue audit and public expenditure
audit report within the time frame of the study greatly limited the coverage of the study.

Organization of the study

The study is organized into four sections. Following the introduction is the review of related literature in
section two. Section three is the methodology while section four is the discussion of findings, conclusion
and recommendations.

Operational definition of terms

Revenue audit: A revenue audit is the examination of the financial statements prepared by public sector
agencies and designed to provide independent and objective opinions whether the financial information
prepared by management has been relevant, and accurate, fairly presented and also to assure that
money has been spent appropriately
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Public expenditure: Public expenditure is the spending made by the government of a country on the
collective needs and wants of her citizenries such as spending on; the provision of infrastructures,
security and general welfare of the masses among others.

Public accounting: this also known as government accounting. This is a form of accounting that is
more concerned with information gathering that will enable government to prepare Receipts and
Payments accounts as it is the case with Clubs and Societies rather than the profit and loss
account of a private sector business.

II. Literature review

Audit
One of the fundamental aspects of public sector financial management in Nigeria is the issue of audit of
government financial reports. Audit is the process carried out by suitably qualified Auditors during which
the accounting records and the financial statements of enterprises are subjected to examination by the
independent Auditors with the main purpose of expressing an opinion in accordance with the terms of
appointment. Auditing is seen to play an intermediary function in between management and the
resources of the organization. It is also fundamental to any business either the public or private
sector.
A financial audit is concerned with the examination of the financial statements prepared by public sector
agencies. It is designed to provide independent and objective opinions whether the financial information
prepared by management has been relevant, and accurate, fairly presented and also to assure that money
has been spent appropriately. As part of the process, the auditor may examine the transactions in relation
to expenditures, receipts, and also the accounts of whether they are compliant with accounting standards,
statutory provisions, and other regulations (Olaoye and Adedeji, 2019).

Performing an audit requires that there must be economy efficiency and program audits.
Economy and efficiency audits determine whether the entity is following sound procurement
practice; acquiring appropriate types of resources; properly protecting and maintaining resources;
avoiding duplication of effort by employees; avoiding idleness and overstaffing; using efficient
operating procedures; using optimum amounts of resources; complying with requirements of
laws and regulations that could affect acquisition, protection, and use of resources; has an
adequate management control system. Program audit, on the other hand, may assess whether the
objectives of a program is achieving its goals; identify factors inhibiting satisfactory
performance; identify ways of making programs work better; and determine whether
management has reported measures of program effectiveness that are valid and reliable (Olaoye
and Adedeji, 2019)
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Public sector audit is refers to the process of recording, analyzing, classifying, summarizing, and
communicating and interpreting financial information about the government in aggregate and in
detail, which reflects all transactions involving receipt, transfer and disposition of government
property and funds. Accounting is often said to be the language of business”. It is used in the
business world to describe and report the transactions entered into by all kinds of government
parastatals. In any situation where money is used as a means of exchange, this calls for the
recording of the facts and figures underlying the financial transactions at least for ease of
reference (Edheku et al, 2022).

Nigerian public sector audit is strategic in the development of the Nation through the public
sector apparatus on one hand, it drives the business operations of the private sector to a large
extent on the other hand (Olusegun, 2019). The public sector audit financial system in Nigeria
is managed by the Ministry of Finance and the budget office at the Federal level, while each of
the thirty-six States of the Federation run their financial affairs through their individual
Ministries of Finance and budget offices as each State is autonomous with separate budgets
backed up by an appropriation law (Olusegun, 2019). Also, each of the seven hundred and
seventy-four Local councils of the nation run their affairs separately. The three tiers maintain
individual budgets that are guided by separate appropriation laws from preparation, approval,
implementation of the government budgets (Olusegun, 2019). They are individually governed
with separate functionaries. They also maintain the development of the public sector financial
reports for audit and publication individually.

Revenue and Expenditure in Nigeria

The government of Nigeria has different sources of raising revenue for carrying out the various
state functions. The sources of revenue can be classified into twelve (12) namely: customs and
exercise, licenses and internal revenue, direct taxes, fees, mining royalties, earnings and sales,
armed forces revenue, interest and repayment (general), interest and repayment (state),
reimbursements; rent on government property; statutory and non-statutory financial transfers
and miscellaneous revenue (Onuorah and Appah, 2012). However, Section
149 of the 1999 Constitution as amended provides that all revenues collected by the
Government of the Federation shall be paid into the Federation Account except for the
proceeds of personal income taxes of the Armed forces of the federation, the Nigerian Police
Force, External Affairs personnel and residents of the Federal Capital Territory.
Expenditure in Nigeria involves all the expenses which the public sector incurs for its
maintenance, for the benefit of the economy, external bodies and for the country. Public
expenditure in Nigeria is usually categorized into recurrent and capital expenditure. According
to Onuorah and Appah (2012), a recurrent expenditure is made frequently or regularly. In the
context of
government financial management, recurrent expenditure has an economic life span of less
than one year. A capital expenditure has a life span of more than one year for the purpose of
acquiring or improving on a fixed asset
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Government accounting and financial reporting

Government accounting and financial reporting is a very important component of the public
sector Financial management process in Nigeria. As Burton, (2011) noted that government
accounting entails the recording, communicating, summarizing, analysing and interpreting
financial statement in aggregate and in details. In the same vein, Chambers, (2006) argues that
government accounts have the dual purpose of meeting internal management requirements
while providing the public with a window on government operations. Government financial
reports
should be prepared with the objective in mind of providing full disclosure on a timely basis of all
material facts relating to government financial position and operations(Ezejelue, (2012).
Financial reports on their own do not mean accountability but they are an indispensable part of
accountability.

Edheku et al (2022) Effective public financial management promotes a system of accounting

that shows the effective utilization of the financial resources of the country; provides a window to
the public to ascertain the financial status of the government; and serves as a major instrument
in the
formulation and implementation of government policies. Public financial management includes
cash management, which aims at achieving an efficient provision of the cash resources of a
government while avoiding the immobilization of resources and minimizing the costs of
borrowing; aid and debt management, which aims at strengthening the management of the
acquisition, servicing and retirement of public debt as well as avoiding increasing debt stock;
revenue management which ensures the promotion of a system of administration geared
towards achieving greater tax payer compliance and convenience, and to increase the efficiency
of revenue collection, reporting and forecasting, and audit and procurement (Hutchinson &
Zain, 2009)
Public financial management should reduce government expenditure by ensuring that the
services needed by the citizens especially the poor are actually delivered, maintained and
worked on properly. It ensures accountability to citizens for the use of public resources. Public
financial management is an attempt made by government to ensure that consistently the budget
is either a balanced or a surplus budget (Scutaru, 2009). The key objectives of financial
management are to create wealth for the government, generate cash and provide an adequate
return on investment. These objectives are the basic elements of the process of public financial
management (Sohand & Martinov-Bennie, 2011 and Aikins, 2011). It is for public entities to
manage assets for the interests of the government and her citizens not for leaders' interests and
it requires internal control systems which are effective and the application of the law of
stewardship of public resources (Boone, & Kurtz, 2013; Feng, Li & McVay, 2009 and Block
& Geoffrey, 2008).

Public Sector Reforms

Weaknesses in budget implementation and monitoring have always resulted in low quality of
government expenditures and many incomplete projects in Nigeria. The federal government of
Nigeria under former president Olusegun Obasanjo embarked on far- reaching economic reforms
designed to deliver sustainable economic growth, wealth creation and improve the quality of life
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of the Nigerian citizen. Various Nigerian governments had in the past, initiated economic
policies and reforms that were supposed to address the economic problems confronting Nigeria;
but most, if not all, failed. In a bid to find solution to the poor economic management situation
and other developmental challenges, the Obasanjo administration embarked on economic
reforms.
In pursuit of this, a number of sectoral reforms were package for implementation, the office of
the honourable minister, economic matters (2000) records the following as some of the
objectives of the various economic reforms, especially those of the Obasanjo regime:
i) Curtailing excessive and extra-budgetary spending by government;
ii) Adopting measures to achieve fiscal prudence, transparency, minimal deficits, and
efficient resources use; iii) Establishing prudence and stability in macroeconomic management
(Okolie, 2022).
Following an extensive review of public procurement system, the government introduced a value
for money audit, or due process mechanism in public contracts, the due process mechanism has
promoted an open tenders process with competitive bidding for government contracts. Any
projects exceeding N50 million also require approval (i.e a due process certification). To ensure
competitive costing of contracts, a database of international prices was developed (from bonafide
internet sources) to serve as a guide during the bidding process. The government also publishes a
public tender’s journal periodically as a means of reducing patronage in the award of contracts;
finally, certification of completed government projects is also required before final payments are
made (Okonjo-Iweala & Osafo Kwaako, 2007).
Public expenditure management: poor public expenditure management in Nigeria greatly
hampered the quality of government capital projects, resulting in poor service delivery to
citizens. The Nigeria’s PEM system under Obasanjo’s administration was founded on the same
philosophy and principles that guided that of his predecessors. Procedurally, the process of
information/data gathering, decision-making and its nature remain the same both during the
military and
civilian regimes, only that thing were treated with military dispatch under the military .
The Nigeria’s PEM system evolved and operated on principles that disregarded the main
objectives of public financial management. These include allocations based on the principles of
needs, equity stability and national interest. On the contrary, the entire PEM system that Nigeria
has practiced, are generally guided by revenue derivation principle. The Obasanjo’ “Due process
PEM” has been guided by and has continued to battle with the crises of fiscal federalism
structure by the derivation principle. The entire PEM equally lack in built adjustment process.
Oversight of public expenditures was further made difficult due to fiscal decentralization in
Nigeria, which allocated about half of total government revenues to states and local
governments, with the remainder being allocated to the federal government. While increased
resource allocation to states and local governments may potentially encourage more direct
interventions in pro-poor programmes, capacity constraints and the lack of transparency at the
sub-national level posed serious challenges. To improve transparency at all levels of government,
but particularly the sub- national level, a monthly publication of federal, state, and local
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government shares of revenue from the country’s federation account was introduced in January
2004. The publication provides details of revenue allocations to all 36 state governments and the
federal capital territory (FCT), as well as 774 local governments. The publication has increased
transparency, particularly of sub-national finances, and opened up dialogue on public revenues
and expenditures at all tiers of government
It should be admitted that the essence of all these reforms was to ensure efficient resource
management of public resources. The extent to which reforms had gone in ensuring efficient
revenue audit in line with public expenditure still remain unresolved issue in public accounting
management.
Theoretical framework

The analysis of the nexus between government revenue and government expenditure has featured
prominently in both theoretical and empirical literature. The theoretical literature contains many
hypotheses that have been proposed to describe the inter-temporal/causal relationship between
public revenue and public expenditure. These hypotheses can be grouped into four namely: tax-
and- spend or revenue-spend hypothesis; spend-and-tax or spend-revenue hypothesis; fiscal
synchronization hypothesis; and fiscal independence or institutional separation hypothesis
(Chang, 2009).

The tax-and-spend hypothesis, put forward by Friedman (1978), states that changes in
government revenue bring about changes in government expenditure. It is characterized by
unidirectional causality running from government revenue to government expenditure.
According to Friedman, increases in tax or revenue will lead to increases in public expenditure,
and this may result in the inability to reduce budget deficits (Chang, 2009).

The spend-and-tax hypothesis, advanced by Peacock and Wiseman (1961, 1979), states that
changes in public expenditure bring about changes in public revenue. It is characterized by
unidirectional causality running from public expenditure to government revenue. As argued by
Peacock and Wiseman (1961, 1979), a severe crisis that initially makes government expenditure
more than tax or public revenue has the potential to change public attitudes concerning the
proper size of government. The upshot is that some of the tax increases, originally justified by
the crisis situation, will eventually become permanent tax policies. Put differently, Peacock and
Wiseman (1961, 1979) argued that temporary increases in government expenditures due to
economic and political crises can lead to permanent increases in government revenues from
taxation; this is often called the “displacement effect” (Bhatia, 2003; Chang, 2009).

The fiscal synchronization hypothesis, associated with Musgrave (1966) and Meltzer and
Richard (1981), is based on the belief that public revenue and public expenditure decisions are
jointly determined. It is, therefore, characterized by contemporaneous feedback or bidirectional
causality between government revenue and government expenditure (Chang, 2009). It is opined
that voters compare the marginal costs and marginal benefits of government services when
making a decision in terms of the appropriate levels of government expenditure and government
revenue.

The fiscal independence or institutional separation hypothesis, advocated by Baghestani and

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McNown (1994), has to do with the institutional separation of the tax and expenditure decisions
of government. It is characterized by non-causality between government expenditure and
government revenue (Chang, 2009). This situation implies that government expenditure and
government revenue are independent of each other.

From the foregoing, three major reasons why the nature of the relationship between government
revenue and government expenditure is very important can be deduced. First, if the revenue-
spend hypothesis holds (that is, if government revenue causes government expenditure) then
budget deficits can be eliminated or avoided by implementing policies that stimulate or increase
government revenue. Second, if the spend-revenue hypothesis holds (that is, if government
expenditure causes government revenue), it suggests that government’s behavior is such that it
spends first and raises taxes later in order to pay for the spending. This situation can bring about
capital outflow as a result of the fear of consumers paying higher taxes in the future (Narayan
and Narayan, 2006; Eita and Mbazima, 2008). Third, if the fiscal synchronization hypothesis
does not hold (that is, if there is no bidirectional causality between government revenue and
government expenditure), it implies that government expenditure decisions are made without
reference to government revenue decisions and vice versa. This situation can bring about high
budget deficits if government expenditure increases faster than government revenue.

Empirical review
Dinah (n.d), examined the effect of value for money audit on fraud prevention in the Nigeria
public sector. The specific objectives were to ascertain whether government auditing achieves
the purposes for which programs are authorizes and funds released economically and efficiently
in accordance with applicable law an regulations and to find out whether in the process if value
for money audit have any effect on fraud prevention in the Nigeria public sector. With the survey
carried out, it was found that value for money audit play a vital role in promoting the
effectiveness and efficiency of activities in the public sector, therefore helps in fraud prevention.
The study recommended that value for money audit should be mandatory requirement under
statutes in all public sector organisations because of its effect in fraud prevention. It also
recommended that government should support the implementation of policies formulated to
enhance value for money audit in the public sector.

Reichborns (2013) examined political accountability and performance audit. The review noted
that
performance audit contributes to political accountability. The study used a questionnaire to
examine the influence of performance audit by analyzing data from a survey of 353 civil servants
who have experienced one or more performance audits. Based on the assessments in the reports,
the audited civil servants were expected to make changes and improve. The study found out that
a performance audit is a tool designed to hold ministries and the government administration
accountable for government spending and for results.
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Odia (2014) examined Performance Auditing and Public Sector Accountability in Nigeria: The
Roles of Supreme Audit Institutions (SAIs). The study survey employed a research method. The
study found out that the strengthening of the legislature oversight and institutional capacity
building of SAIs-independence, internal governance, work quality and more emphasis on
performance auditor value for money audit by the SAIs would promote foster public
accountability in Nigeria.
Reichborn-Kjennerud (2015) examined Resistance to Control Norwegian Ministries and
Agencies
Reactions to Performance Audit. Based on survey data from 353 civil servants in Norway the
study analyses the ministries and agencies responses to the SAIs control. The analysis shows that
civil servants in the ministries tend to be less positive to performance audit when compared to
civil servants in the agencies. Top executives, irrespective of administrative level, were more
negative than middle managers and other public employees. In addition, civil servants more
exposed to performance audit were, in general, more negative towards it.
Amara (2015) examined Performance Auditing Practice in the Libyan Public Sector. The
qualitative research method was used in this study, whereas 16 semi-structured interviews were
conducted with performance auditors and public sector managers (eight with each group). The
results reveal that the PA system in Libya can be improved through the adoption of certain
procedures, of which the most important are improving performance auditors‘ skills and
attention being paid to PA by the legislative and administrative officials at higher levels in Libya .

Loke et al. (2016) examined the perception of public sector auditors on performance audit in
Malaysia: an exploratory study. The study employed a postal questionnaire method to seek the
perception of the auditors. The questionnaire was distributed to the population of public sector
auditors in the National Audit Department in Malaysia and a total of 503 respondents. The
response was analyzed using descriptive statistical analysis including mean score and mean score
ranking. The Findings revealed that auditors were of the opinion that effectiveness element
should be one of the performance audit elements and that public sector auditors should be given
the opportunity to influence policy decisions. In addition, the results show that the public auditor
is not the only profession that can carry out performance audit but can team up with other
professions. The performance audit was claimed to be able to enhance public accountability, as
well as to enable more economical, efficient and effective utilizing of public resources.
Oladele and Olaoye (2016), carried out a dynamic analysis of financial control and government
budget performance in southwest Nigeria. The study specifically analyzed the causal
relationship
between expenditure budgeted-actual variance, revenue budgeted-actual variance ad
government budget performance. Employed in the study were secondary data sourced from the
annual budget of southwestern state for period covering year 2000 to 2014. The study made
use of granger causality dynamic analysis. The result of the analysis conducted revealed that
there is no significant dynamic relationship between finance control and government budget
performance in southwestern Nigeria. Thus the study recommended that government at state
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level should device budget implementation models that will foster dynamic interaction between
budget realization/implementation and budget performance.

Balli (2016) examined the Role of Performance Audit on Performance Improvement and
Accountability in the Audited Public Sectors of Oromia National Regional State. The study
employed a descriptive research method. The data collected was analyzed using Microsoft Excel
which is appropriate for this descriptive statistics. For statistical interpretation, mean and
standard deviation were used. The study found out that majority of the selected audited public
sectors have positive or good perceptions of performance audit. The findings also show that
activities performed by the legislature from viewpoint of the audited public sectors were small or
slight and the media participation in performance audit report from viewpoint of the selected
audited public sectors were average or moderate.
Omedoero and Okafor (2016), examined the efficiency and accountability of public sector
revenue and expenditure in Nigeria (1970-2014). Data on total federal government revenue
and expenditure, state governments’ revenue and expenditure were collected from Statistical
bulletin from the Central Bank of Nigeria from 1970-2014. The results were analysed using
relevant statistical tools. The findings reveals that the level of accountability is very poor in
Nigeria because the attributes of accessibility, comprehensiveness, relevance, quality,
reliability and timely disclosure of financial information, social and political information
about government activities are completely non available or partially available for the
citizens to assess the performance of public officers mostly the political office holders.
Conclusively and evidently the study revealed that there is significant relationship
between efficiency of public sector expenditure, recurrent expenditure and capital
expenditure in Nigeria from 1970-2014. On the basis of these, the paper recommended among
others that for accountability to be successful in the management of public funds in Nigeria
there must be a reduction in the level of corruption, improving public sector accounting and
auditing standards, legislators as champions of accountability and restructure the public
accounts committees and the value of money must be applied in the conduct of government
business.

Dijana and Adis (2017) examined performance audit of the public sector with reference to
measuring efficiency in the educational system. The study employed a Survey research method,
the study found out that Performance audit contributes to the strengthening of the legality, trust,
and efficiency of institutions in the public sector and the main objective of performance audit is
to provide a better quality public service through better spending of public money and a higher
level of public accountability.

Amah and Nwaiwu (2018), examined empirically, the effect of tax audit practice on
down south tax revenue generation in Nigeria. Both primary and secondary source of data was
adopted and the data collected was analysed using linear regression analysis and multiple
regression analysis with the aid of special package for social sciences (SPSS). The empirical
results indicated that the predictor variable of tax audit practice has positive effect on criteria
variable of tax revenue in Nigeria. The study concluded that there exist a significant positive
effect of desk audit on personal income tax. The study recommended that Tax administrators
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should not concentrate only on desk tax audit but also on field tax audit and back tax audit so as
to block all leakages and increase the level of tax payers compliance.
Olaoye and Adedeji (2019), examined performance audit and public sector budgetary efficiency
in southwest Nigeria. Specifically, the study examined the effect of total quality management
(TQM) on budgetary efficiency in Southwest Nigeria, Public service value (PSV) on budgetary
efficiency in Southwest Nigeria and Government accountability system (GAS) on budgetary
efficiency in Southwest Nigeria. Primary method of data collection was employed, through
structured questionnaire and it was sourced from the Ministry of Finance, Ministry Rural
Development, Ministry Health, Ministry Work and Infrastructure in selected Southwest States in
Nigeria, which are, Lagos, Oyo and Ogun. Data were analyzed using both descriptive and
inferential statistics. The study found out that total quality management (TQM), public service
value (PSV) and government accountability system (GAS) indicated positive and significant
effect on budgetary efficiency in southwest Nigeria respectively. The overall regression model of
(Total quality management, Public sector value and Government accountability system in the
selected States) are significant. The study concluded that total quality management, public
service value and government accountability system have significant effects on public sector
budgetary efficiency in Southwest Nigeria, and positively related.
Ozuomba (2019), evaluated empirically, the relationship between performance audit and
accountability of the public sector entities in Nigeria. The population of the study was the Nigeria
public sector. Information for the examination were gathered from the auxiliary wellspring of a
multi-year financing and yield information of the Nigeria control area. The information were
investigated utilizing different relapse with the utilization of E-View bundle. The outcome and
discoveries of the investigation demonstrated that there is a huge connection between
execution review and responsibility of the open segment in Nigeria. Reality remains that the
execution of the open parts in Nigeria has been appraised as terribly low. Based on the result of
the study, we recommend that there should be legal mandate in the public to carry out regular
performance audit of their activities and programs to ensure proper accountability of resources
given to them. There is need to establish proper accountability culture. The absence of
accountability culture and strong government agencies to enforce laws and rules has
significantly influenced poor public sector performance.

Edheku et al (2022), examined the relationship between public sector audit and financial fraud
control in the public sector. The study determined the relationship between public sector audit
and internal control quality, as well as investigate the extent to which public sector audit
influence financial reporting credibility. The researchers administered two hundred (200)
questionnaires to
respondents, out of which one hundred and sixty-two (162) were retrieved and was used for
the analysis. To test the stated hypotheses, the researchers made do with chi-square statistic
tool. At the end of the analysis, it was found that there is a significant relationship between
financial fraud control in the public sector, internal control quality, financial reporting credibility
and
public sector audit. It was therefore recommended that performance of training courses, general
and private, for accountants in order to enhance their perception of financial rules and public
sector audit.
 14

From the review literature, it can be established that control of government resources in respect
to its expenditure can be in the form of revenue audit of performance audit. The essence is
therefore to ensure prudent resource management in government. It is also worth mentioning
that there is a very strong link between government revenue and expenditure. This informs why
most of the reforms in the public sector was to ensure reductions in expenditure of government
perhaps through fraudulent means.

Methodology
The research method adopted here is exploratory system; this is found to be appropriate for the
purpose of establishing the key issues and variables in explaining the degree of comparability
and areas of deviance. The source of data is secondary source that is through historical review of
the accounting system by examining the previous documents, such as legislation, decrees and
professional pronouncements. Archival sources, books and journals are other sources of
information. Also internet sources provided us with additional information. The method of
analysis is explanatory in nature; this is done through adequate exegesis of the gathered
information.

Presentation of Results and Discussion of Findings

Federal Government Revenue and Expenditure (2000-2021)

Year FGREV TFGEX TFGREX TFGCEX

2000 597.3 701.1 461.6 239.5
2001 797.0 1,018.0 579.3 438.7
2002 716.8 1,018.2 696.8 321.4
2003 1,023.2 1,226.0 984.3 241.7
2004 1,331.6 1,504.2 1,110.8 351.3
2005 1,758.3 1,919.7 1,321.3 519.5
2006 1,937.2 2,038.0 1,390.2 552.4
2007 2,333.7 2,450.9 1,589.3 759.3
2008 3,193.4 3,240.8 2,117.4 960.9
2009 2,643.0 3,453.0 2,128.0 1,152.8
2010 3,089.2 4,194.6 3,109.4 883.9
2011 3,553.5 4,712.1 3,314.5 918.5
2012 3,629.6 4,605.3 3,325.2 874.7
2013 4,031.8 5,185.3 3,689.1 1,108.4
2014 3,751.7 4,587.4 3,426.9 783.1
 15

2015 3,431.0 4,988.9 3,831.9 818.4

2016 3,184.7 5,858.6 4,160.1 653.6
2017 2,847.3 6,456.7 4,780.0 1,242.3
2018 4,185.6 7,813.7 5,675.2 1,682.1
2019 4,894.0 9,714.6 6,997.2 2,289.0
2020 3,983.1 10,231.7 8,188.8 1,614.9
2021 5,045.4 12,164.1 9,145.2 2,522.5

Source: Central Bank of Nigeria (CBN) Statistical Bulletin, 2021.

The result presented above show that in most of the years, total federal government
expenditure (TFGEX) exceed federal government revenue (FGREV), resulting in fiscal deficit. It
is also notice that total government expenditure consist of recurrent expenditure and capital
expenditure. It is important to mention that in order to reduce debt associated with huge fiscal
deficit, the following measures are suggested;

1. Legislatures should champion the cause of accountability. The legislators in Nigeria and other
developing countries have the constitutional responsibility to ensure that the executive are
accountable to the people for the management of public funds. But the revise is the case in
Nigeria, where the legislators are part and parcel of the collapse of the system. However, for
accountability to be achieved in Nigeria, legislators at all level of government must ensure that
appropriate laws and over-sight functions are properly performed by them.

2. Re-orientation of Value System. One fundamental problem in Nigeria is the failure of the
value system. This failure has resulted to the high level of corruption and lack of accountability
by public officers. The nation’s value system should be strengthened through the reintroduction
of civics and ethics into the curricula of our educational system while a national orientation for
the rebirth of our value system should be urgently initiated.
3. Management accountability framework. Accountability law is only a part of the accountability
process. A proper accountability framework would require that the government should put in
place guidelines for preparing and approving work plan, method of monitoring plans, reporting
performance, accumulation of portfolio of evidence on performance reporting, system of
validation and oversight of performance reports, establishing and resourcing public
accountability institutions, training pubic managers and guidelines for dealing with political
institutions by public managers.

4. Protection of Whistleblowers. One fundamental means of achieving optimum accountability in

Nigeria is the protection of the whistle blowers. An effective framework of accountability requires
that those who blow the whistle should be protected against any reprisal. The government in
Nigeria should establish appropriate laws to protect the whistleblowers.

5. Creating an environment of accountability An effective framework of accountability rests,

besides, formal structures, on a proper environment. It requires such things as existence of a
 16

proper code of conduct, training in ethics, appearance of equal treatment by senior managers
toward all employees, and unforgiving accountability of senior officers. It also means that the
oversight bodies should adopt a reasonable attitude toward public managers.

6. Adoption of International Public Sector Accounting Standards The success of accountability

in the public sector in Nigeria lies on the proper implementation of the International Public
Sector Accounting Standards. Public sector organizations in Nigeria use the cash basis of
accounting. It is very necessary that Ministries, Departments and Agencies should begin to use
the accrual basis of accounting. A complete accrual basis of accounting would make public
managers accountable for recording and safeguarding of public assets, managing public cash
flows, and disclosing and discharging public liabilities.
.
7. Public performance reporting. Public managers are in a business that affects virtually every
aspect of a person’s life. People, therefore, have a right to know, how the public managers are
doing their business. The legislators need to take a lead in this regard and enact necessary
laws making it obligatory for all public entities to report on their performance. Public reporting on
performance of departments or programs should be made mandatory.

8. Determination of the cost of doing government business. One major problem affecting the
growth of public expenditure and corruption in Nigeria is the high cost of doing government
business. A large number of costs in the form of use of existing assets and facilities are not
recorded in the year the assets are used. The government following cash-based accounting
does not have a system of charging depreciation to the government assets and allocating them
to various programs and projects. Thus the true cost of doing government business remains
hidden. A proper accountability framework would require that a detailed cost accounting system
be introduced in government.

9. The establishment of the benchmark of efficiency. A very important problem facing public
sector managers in Nigeria is the clear absence of performance benchmark. Public performance
reporting requires that benchmarks of efficiency be devised for all ministries, departments and
agencies. This should be done in consultation with the MDA’s themselves and should remain
open for periodic review and revisions.
10. Strengthening the Public Accounts Committee. Public accounts committees play a very
significant role in accountability of public officers in Nigeria. Public accounts committees should
be strengthened with a system of familiarizing the members with the audit scope, approach and
methods through workshops and powers to take action if their recommendations are not
implemented
.
11. Change in the structure of Government Accounting and Auditing. Governmental accounting
system in Nigeria is grossly deficient. Financial reports are outdated
and unreliable at all levels of government. Little attention is paid to financial accountability.
There is an urgent need to restructure the public sector accounting system taking into
consideration the frailties and flaws of governmental accounting in Nigeria. It is urgently
 17

necessary that a
comprehensive revision of the entire audit laws of the country be undertaken with a view to
aligning them with current realities and demands of globalization
Conclusion
It is not just enough to have retinue of suggestions towards efficient public financial
management in Nigeria. It is imperative that every stakeholder in the Nigeria state must exhibit
sense of patriotism so as promote moral sense of living with a view to promoting accountability
in the management of public resource.

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