a. Accountability is an obligation to answer for the execution of one‟s assigned responsibilities. It is the requirement to provide explanation about the stewardship of public money and how this money has been used. Accountability, requires government to carry out all aspects of its financial responsibilities with openness, trust, basic values and ethical standards so that its activities are transparent to the public. Where a government has something to hide, public reporting is more likely to be unreliable and less comprehensive in order to obscure material facts. Included in the four IMF Codes of practices and fiscal transparency is assurances of integrity.

Required:

i. Identify and explain SIX conditions or measures to be put in place to enhance public accountability.        (6 Marks)

ii. From the IMF codes of good practices and fiscal transparency on Assurances of integrity, identify any TWO good practices. (4 Marks)

b. The following initiatives have recently been taken by Ojaja State Polytechnic, a publicly subsidised institution of higher learning which was established by an Act of the State House of Assembly.

First, Ojaja State Polytechnic allowed a property developer to use a portion of the campus to construct a mall that will be available for rent, and it is projected that N10.5 billion will be needed to complete and furnish the building. The developer will be responsible for a portion of the cost, and after ten years of operating the asset, the property will be transferred to Ojaja State Polytechnic. It is also agreed that during the period the developer will operate the mall, a percentage of earnings will be distributed to employees of the polytechnic. A former Rector of Ojaja State Polytechnic currently serves as the Chairman of the Board and Chief Executive Officer of the real estate development firm. The administration at Ojaja State Polytechnic reportedly chose him without advertising the post because they believe he is a well-known person of integrity. This Build, Operate and Transfer arrangement will no doubt boost the internally generated revenue of the polytechnic.

Secondly, exceptional students from low-income backgrounds can apply for one of ten available scholarships at Ojaja State Polytechnic. The scholarship scheme includes a matrix for evaluating and ranking applicants considering the two main factors of brilliance and low-income level background. Officers from the Ministry of Social and Humanitarian Affairs routinely investigate the list of awardees to confirm compliance with the requirements of the scheme. Evidence show that one of the supervisors working on the external audit of Ojaja State Polytechnic approached the Rector of Ojaja State Polytechnic for two spots in respect of students with very low income level background and the Rector granted him, his request.

Thirdly, prior to joining the Office of the Auditor – General as a Senior Auditor, Mr. Koko had a position in the accounting department of Ojaja State Polytechnic. At different times, he was in charge of internal auditing and preparation of financial report at the polytechnic. As a staff of the office of the Audior-General, Mr. Koko led the latest audit of the polytechnic after two years of leaving the polytechnic. Subsequent to the audit, allegation on mismanagement of finances surfaced in the media titled “Former accounting department worker sues Ojaja State Polytechnic for unfair termination after being accused of theft” during the year. This led to negative public perception of the Polytechnic and Mr. Koko was contacted by management with the request to testify in court.

During that period, a government-funded initiative to educate chartered accountants on the International Public Sector Accounting Standards (IPSAS) and International Standards on Auditing (ISA) for public auditors got under way. The functioning of the International Organisation for Supreme Audit Institutions (INTOSAI) will be discussed as part of the training workshop. In addition, at the end of the session, attendees are expected to be able to prepare both targeted and broad financial reports and apply a conceptual framework for public sector financial statements.

Required:

i. Describe THREE ethical concerns (one from each of the initiatives) that you will identify as an experienced public sector auditor and provide appropriate audit responses. (6 Marks)

ii. Explain FOUR criteria for adopting external confirmations as part of substantive procedures as an auditor. (2 Marks)

iii. Explain FOUR conditions under which an entity can carry out a direct procurement. (2 Marks)