Despite the existence of the devolved funds, internal inefficiencies in their management have made them not to achieve the desired results. For instance, poverty levels have increased from 56% in 2002 to 60% in 2008, public service delivery has failed, inequalities in resource distribution prevails and funds meant for community use have been looted by corrupt civil servants and politicians. Of specific importance is the CDF that was meant to control imbalances in regional development and combat poverty at the grassroots. At its inception in 2003, the fund was allocated 2.5% of the government’s ordinary revenue, which was later increased to 7.5% in 2010. Therefore the study was aimed at finding out factors affecting effectiveness of auditing procedures on CDF projects. Specifically it investigated the effects of the legal framework, auditor‟s specific professional skills, record management and auditor‟s independence on effectiveness of public procurement audits. A descriptive research design was employed. The target population was 80 respondents while a sample size of 40 were selected using a stratified random sampling to ensure representativeness. Both quantitative and qualitative methods of data analysis were used to get a conclusion of the findings of the subject matter.
1.1 BACKGROUND TO THE STUDY
Public Procurement has become an increasingly important factor in economic and business circles globally. This is evidenced by the growing interest of donors, governments, civil society, professional organizations, the private sector and the general public. After decades of messy Public Procurement systems, a majority of developing countries, Nigeria being no exception, are now reforming the legal, organizational and institutional frameworks for public procurement. Through public procurement, 12 to 20% of developing countries‟ GDP is spent annually (and as much as 70% of GDP in post conflict countries such as Uganda and Sierra-Leone). Even marginal improvements in procurement systems, therefore can yield enormous benefits (Basheka, 2010).
Procurement refers to the acquisition of goods, services and works by a procuring entity using public funds. Public bodies have always been big purchasers, dealing with huge budgets. Public procurement represents 18.42% of the world GDP. In developing countries, public procurement is increasingly recognized as essential in service delivery (Basheka, 2010). It accounts for a high proportion of total expenditure. For example, public procurement accounts for 60% in Nigeria, 58% in Angola, 40% in Malawi and 70% of Uganda‟s public spending. This is very high when compared with a global average of 12-20 % (Froystad, 2010).
Due to the colossal amount of money involved in government procurement and the fact that such money comes from the public, there is need for accountability and transparency. Consequently, various countries both in developed and least developed countries (LDCs) have instituted procurement reforms involving laws and regulations.
The complexities of public procurement performance require more than just a mere policy framework in every nation. There is need to have direct interventions that would undo the complexities that bedevil the efforts of the government and international organization for supporting the public procurement performance initiatives. In this era of quickly changing corporate environment, purchasing managers are encouraged to be proactive. Purchasing managers need to develop a more proactive strategic approach and encouraged a proactive approach to purchasing planning (Shuetze, 1994).
Government procurement is one of the four economic activities of government (Thai, 2001). The others are: redistributing income through taxation and spending, provision of public goods and services, and lastly providing the legal framework for economic activities to flourish. Ordinarily, government procurement includes “buying, purchasing, renting, leasing or otherwise acquiring any supplies, services or construction;” and “all functions that pertain to the obtaining of any supply, service or construction, including description of requirements, selection, and solicitation of sources, preparation and award of contract and all phases of contract administration. Although, government procurement is still young as an academic discipline, recent nature of public procurement suggests that public procurement practice has undergone major changes particularly in the area of legal reforms.
An appropriate regulatory system is required to enhance transparency and non-discriminatory tendencies in order to achieve value for money. The law establishes the procurement methods to be applied, advertising rules and time limits, the content of tender documents and technical specifications, tender evaluation and award criteria, procedures for submission, receipt and opening of tenders, and the complaints system structure and sequence (PPOA, 2007). Ongoya (2005) points out that regulations lay
the foundation for separation of powers between institutions managing public procurement and those checking on compliance. According to Manasseh (2007), auditors examine procurement transactions and documents, pursuant to the appointment terms and in compliance with relevant statutory requirements. Availability of sound legal framework offers boundaries and benchmarks against which audit is conducted objectively.
In an effort to achieve decentralization of resources in Nigeria, several devolved funds have been operationalized. The funds include; Roads Maintenance Levy Fund (RMLF) and the District Bursary Fund started in 1993, Local Authority Transfer Fund (LATF) launched in 1999, Constituency Development Fund (CDF), Secondary Education Bursary Fund (SEBF) and Free Primary Education Fund (FPEF) established in 2003 and the Rural Electrification Levy Fund (RELF) that was operationalized in 2007 (CCG, 2007). All these funds form an important avenue for the transfer of resources from the central government to the communities.
The constituencies‟ development fund was created through an Act of parliament in 2003 then subsequent amendments CDF (amendment) Act in 2007 and 2013.The fund was established by the government to devolve resources meant for development through public participation to the constituencies. The CDF board which runs the fund receives at least 2.5% of the government annual budgetary allocation revenue in every financial year which is disbursed to the constituencies for development of public projects. Such amount is enormous to the economy and needs proper financial management to achieve the intended objectives.
Therefore, sound procurement will play a critical role to achieve these objectives. Key operating principle of the legal and regulatory framework is the promotion of value for money practices in public procurement and the maximization of economy, effectiveness, efficiency and compliance with regulations.
The PPDA Act, 1999 stipulates that effective legal framework in itself prevents fraud (GON, 1999). The supplies and management Practitioners Act, 2004 provides for professionalization of procurement practice which facilitates good record keeping. This facilitates timely audit and enhance cost efficiency in auditing. Sound procurement regulations are critical to effectiveness of public procurement audit. Before the PPDA (1999), there were big discrepancies and differences between the procurement practices applied in different public entities (PPOA, 2004). The main laws applied in the conduct of public audits in Nigeria include the Public Audit Act, Public Internal Audit Act, the CDF Act, Public Procurement and Disposal Act (1999). Other laws applicable include CDF Act (effective 2003 and amended in 2007 and 2013), Supplies Management Practitioners Act (effective 2007), Accountants Act (effective 2008) and Public Financial Management Act (effective 2004 and amended in 2012) and ethics and officers Act of 2003.
1.2 PROBLEM STATEMENT
Despite the existence of the devolved funds, internal inefficiencies in their management have made them not to achieve the desired results. For instance, Wanjiru (2008) documents that poverty levels have increased from 56% in 2002 to 60% in 2008, public service delivery has failed, inequalities in resource distribution prevails and funds meant for community use have been looted by corrupt civil servants and politicians. Of specific importance is the CDF that was meant to control imbalances in regional development and combat poverty at the grassroots. At its inception in 2003, the fund was allocated 2.5% of the government’s ordinary revenue, which was later increased to 7.5% in 2010. Seventy five per cent of the fund is allocated equally amongst all 210 constituencies with the remaining 25% being allocated according to the constituency poverty levels (KIPPRA, 2010).
An audit conducted by National Tax Payers Association (NTA) found that in Ibadan Southeast Constituency the report found wastage of the CDF funds, whereby, N 5,950,000 had been wasted due to badly implemented projects and N. 600,000 on abandoned projects. The report, however, did give the reasons that caused bad implementation and abandonment of those projects is through malpractices in procurement system. 44 million spent in Ibadan Southeast Constituency by the CDF committee on various projects could not be established after it failed to avail vouchers, bank statements, invoices and procurement documents. Therefore the study will explore on factors affecting effective procurement auditing CDF projects in Nigeria.
1.3 OBJECTIVES OF THE STUDY
The aim of this study is to assess on factors affecting effective procurement auditing of CDF projects in Nigeria.
1.3.2 Specific Objectives
- To establish if legal framework affect effective procurement auditing of CDF projects in Nigeria.
- To find out how professional skills affect effective procurement auditing of CDF projects in Nigeria.
- To evaluate if poor record management affect effective procurement auditing of CDF projects in Nigeria.
- To determine how auditor‟s independence affects effective procurement auditing of CDF projects in Nigeria.
1.4 RESEARCH QUESTIONS
- Does legal framework affect effective procurement auditing of CDF projects in Nigeria?
- How do professional skills affect effective procurement auditing of CDF projects in Nigeria?
- How does poor record management affect effective procurement of CDF projects in Nigeria?
- Has auditor‟s independence affects affect effective procurement auditing of CDF projects in Nigeria?
1.5 JUSTIFICATION OF THE STUDY
The study will create new knowledge and awareness in the area of procurement management in all industry sectors both in the private and public sectors. The findings will be used by the policy makers as a blue print for the improvement of allocation and participation of managers in CDF. The study will also provide concrete evidence on the effect of procurement audit on procurement performance on CDFs and will be valuable to institutions such as the CDF Board, Public procurement oversight authority (PPOA), the National Treasury, the National Assembly, civil groups, academic institutions and the general public.
1.6 SCOPE OF THE STUDY
This research was carried out in Central Region, Ibadan Metropolis, Ibadan Southeast constituency. Respondents were drawn from Ibadan Southeast Constituency. This because of the researcher‟s observation on the auditing of the CDF projects during my industrial attachment as well as its proximity to the researcher‟s place of work.
1.7 LIMITATIONS OF THE STUDY
Some respondents were not willing to provide sensitive information especially that concerning audit reports released by the auditor general since the operations had been politicized. Other respondents misinterpreted the intensions behind the research and refused to provide accurate information besides assurances of confidentiality for fear of disclosure.
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