National Audit Reports; A tool for improving for Governance
Accountability, or the rendering of accounts, has traditionally been concerned with ensuring that government resources are used effectively and efficiently (Odesomi, 1992). In corporate governance, auditing is vital. National audit reports provide a review and evaluation of a country's fiscal performance in every financial year. It guarantees that financial data is presented clearly and accurately, and it promotes transparency and accountability in firms and the wider economy. Through different recorded and documented transactional reviews, national audits and financial statements capture a nation's operating, spending, and financing operations. Audits and financial information provide shareholders, creditors, government agencies, and partners, among others, with useful information that is further used to enhance governance.
National auditing is a relatively broad concept that applies to every public sector agency. It entails the verification of various states' and public-sector entities' accounts. A national audit is critical to protecting public funds, maintaining correct accountability, maintaining suitable norms of conduct in public services, and assisting services in achieving value for money. Because the public sector is funded by taxes, fees, and fines, the public has a reasonable interest in audits of the public sector, as well as the norms and principles utilized by the auditors. Auditing in the public sector has grown significantly over the world. A proper audit plays a key role in establishing accountability and ensuring the optimal use of public funds by objectively gathering and analyzing the underlying evidence to show the credibility of the information reported by or retrieved from the management. It gives individuals and the public the ability to hold the government accountable over what has already been accomplished or what it hopes to achieve. This raises the need for more transparent and accountable governance which positively influences government structures and the sophistication of proper financial reporting. According to the Association of Certified Chartered Accountants (ACCA, 2009), the annual accounts (including the audit report) are only one method in which the authority's management proves to the legislature and electorate that it is properly stewarding public assets.
The Relevance of Audit Quality in National Financial Reporting
Audit quality practices are procedures in place to ensure that financial statements provide members of the organization and the public with relevant and reliable information. Depending on the size, nature of the activity, and legislative requirements, these methods differ from one performance standard to another. Audit quality produces qualitative financial reports which in turn prevent financial crises (Kaklar et al., 2013). The audit quality practices used in financial statement compilation reflect the financial statements' credibility. Palm Rose (1988) viewed audit quality from the perspective of assuring that the financial statements will contain no material misstatements. Similarly, Shockley (1981) documents that perceptions of audit quality are vital as they determine the credibility of audit reports. In addition, audit quality when considered in conjunction with auditor independence; impact the confidence level that users of financial statements have in financial reports (Al Khaddash et al., 2013). A compromised audit quality offers users of financial statements less confidence in the activities of the government of an economy.
The current state of Audits and Reports in Nigeria
National and subnational audits and other public financial accountability measures are not only critical for good governance and development. It also accesses and account for state and local governments' budgetary health and financial behaviors. By minimizing fiscal practices that result in waste, inefficiencies or misuse, and corruption, national audit plays an important role in enhancing the government's expenditure and income capabilities. However, it is critical to understand the impact of sub-national auditing, which aims to strengthen public finance management and accountability mechanisms at the state and local levels even in federal auditing and financial assessments. As shown in a report by the Paradigm Leadership Support Initiative (PLSI), a civic group in Nigeria that promotes accountability, all 36 states of the federation were examined against public finance management practices and accountability procedures. A sub-national Audit Efficacy Index 2020 has revealed that 18 States of the federation operate without Audit Law. They are Adamawa, Kano, Kebbi, Kogi, Plateau, Benue, Kwara, Nasarawa, Sokoto, Taraba, Ogun, Ondo, Osun, Abia, Ebonyi, Imo, Oyo, Bayelsa, and Enugu states. They have the least potent audit mechanisms in the country having scored below 50 percent. Lord (2002), identifies poor internal control measures as the reason for ineffective audits in the public sector.
Stakeholder participation in the audit process, and role of citizens
While citizens are the primary recipients of national audit reports, it is critical that they have a good grasp of the state's auditing process and reports, and what is statutory. Audit reports benefit civil society organizations, the media, and other intermediate stakeholders, as they typically function as links between government departments and citizens. Stakeholders (CSOs, NGOs, Think Thanks, etc.) and Citizens, in addition to being aware of the national audit reports that are made available to the public, have a responsibility to play in determining the effectiveness of these reports through the observation of the accounting methodologies employed in the audit process. Stakeholder and citizen participation in the audit process can result in more efficient reports by using advanced analytics and predictive tools to deliver more value, deeper insight, and foresight where needed.
Conclusion and Recommendation
National audit reports are the main tools needed by the National Assembly to hold those responsible for public expenditure to account. High-quality, timely, and well-disseminated audit reports will lead to better public access to information on the performance of government agencies. Audit transparency will give credence to government financial reports, improve stakeholders' perceptions and confidence in government and MDAs' public financial management, and provide a credible source of evidence for research, analyses, decision-making, advocacy, and demand for better service from government agencies (legislators, CSOs, NGOs, private sector, and citizens). More so, in order to support openness and participation in governance as well as transparency and accountability, audit reports in Nigeria should remain open to the public in order to make financial data available to citizens and ensure that national resources are adequately accounted for, as well as to ensure that relevant policies and regulations are more effective.