LONG ESSAY COMPLETE

UNIVERSITY OF GHANA
AUDIT REPORTS: A MERE COMPLIANCE TO LEGISLATIONS OR A TRUE
AND FAIR VIEW OF FINANCIAL STATEMENTS. THE CASE OF SELECTED
PUBLIC INSTITUTIONS IN GHANA.
BY
SACKYI DICKSON KOFI
OWUSU DONKOR GIDEON
ANTWI OSEI-ASENSO
A LONG ESSAY SUBMITTED TO THE DEPARTMENT OF ACCOUNTING,
UNIVERSITY OF GHANA BUSINESS SCHOOL, LEGON IN PARTIAL
FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF A BACHELOR
OF SCIENCE DEGREE IN BUSINESS ADMINISTRATION (ACCOUNTING
OPTION)
MAY 2013

i
DECLARATION
We hereby declare that this work is the result of our own original research and to the best of
our knowledge, no part of it has been presented for another Bachelor’s Degree in this
university or elsewhere.
However, works by other authors which served as sources of information, have been dully
acknowledged by references to the authors thereafter.
SACKYI DICKSON KOFI (10309792) ………………………. …..……………...
Student Signature Date
OWUSU DONKOR GIDEON (10304426) ………………………. …..……………...
ANTWI OSEI-ASENSO (10315397) ………………………. …..…………...

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CERTIFICATION
This is to certify that this long essay is conducted under my supervision according to the rules
and regulations of the University of Ghana Business School, Legon.
Mr. Edward Nartey ………………………… ...………………..
(Supervisor) Signature Date

iii
DEDICATION
This study is dedicated as follows:
Sackyi Dickson Kofi – To my one and only Nephew, HilkiahAdjeiMensahBoamah.
OwusuDonkor Gideon – To my family especially my Mum, Mrs. Esther OwusuDonkor
AntwiOsei-Asenso - To my family especially my Dad, Mr. OseiAsibeyAntwi.

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ACKNOWLEDGEMENTS
The completion of this study gives us joy and affection. It has really tasked us mentally,
physically and financially and tested our mettle as students. We hope it will be of great help
to all who may use the valuable information in it later.
To start with, we thank the Almighty God for his abundance grace and mercies for granting
us good health without which this study cannot be done.
We are deeply grateful to our supervisor Mr. Edward Nartey whose patience, guidance,
suggestions and encouragement has brought this work to fruition despite his heavy schedules.
We are equally grateful to the officials of the Intercity STC, the state institution we used as a
case study. We are also indebted to Mr. Kennedy Segbenya and Mr. Rev. Ghunney of the
Ghana Audit Service and all the staff at both IMANI Ghana and the Institute for Democratic
Governance (IDEG).
Our final indebtedness goes to everyone, who in diverse ways made this study possible. May
God whose help and blessing has brought us this far bless them.

v
ABSTRACT
Audit Reports remain a key source of third party assurance to parties engaged in agency
relationship. This is where a principal engages the services of hired agent to manage
resources on his behalf. Inherent in these relationships are risks that develop into agency
costs if not managed properly.
The main aim of this research among other things is to examine the audit report as a
reflective and evidential indicator of the true and fair view of financial statements of business
or a mere compliance to legislation in Ghana regarding the performance of public
institution.The research primarily focused on the public sector with Intercity STC being the
Public Institution used as a case study. Also, the views and perceptions of other stakeholders
are summarized by a way of engaging Civil Society Organizations (CSOs) which exist to
articulate and serve the very interest of the public in general.
The research first and foremost established the central problem it seeks to address and related
objectives and research questions. The relevant literature was reviewed to gather previous
information on the subject matter as well as identify research Gaps suitable to provide a
fitting place for the research in the body of knowledge already established.
The research methodology came up with the grand approach on which the conduct of
theresearchwas based. It covered the questionnaires issued; the interview conducted and spelt
out the methods of data analysis and interpretation to set the tone for a meaningful discussion
on the subject matter. In chapter four and five of the research, the puts the findings in
perspective and discusses the key finding of the research. Our findings underscores the
institutional importance and relevance of the concepts of “True and Fair view”and Audit
compliance with compliance been the main approach unless there is a need for a substantive
audit. Finally, arecap of the study was done with recommendations drawn from the study as
well as directions for future research.

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TABLE OF CONTENTS
Title Page
Declaration i
Certification ii
Dedication iii
Acknowledgements iv
Abstract v
Table of Content vi
List of Tables x
List of Figures xii
List of Acronyms xiii
CHAPTER ONE………………………………………………………………………....1
INTRODUCTION………………………………………………………………………1
1.1 Background to the Study……………………………………………………………...1
1.2 Problem Statement…………………………………………………………………….3
1.3 Research Objectives…………………………………………………………………...4
1.4 Research Questions……………………………………………………………………4
1.5 Significance of the Study……………………………………………………………..5
1.6 Research Methodology………………………………………………………………..5
1.7 Conceptual Framework………………………………………………………………..6
1.8 Literature Review……………………………………………………………………..7
1.7 Scope and Limitation of Study……………………………………………………….8

vii
1.8 Chapter Disposition……………………………………………………………………9
CHAPTER TWO..............................................................................................................10
LITERATURE REVIEW……………………………………………………………....10
2.0 Introduction…………………………………………………………………………...10
2.1 Meaning of Auditing within the Context of the Public Sector………………………..11
2.2 Government Activities and the need for Auditing in the Public Sector……………....12
2.3The Objective of Auditing in the Public Sector………………………………………15
2.4 Types of Audit within Public Sector………………………………………………….17
2.4.1 Financial Statement (Regularity) Audit…………………………………………….18
2.4.2 Internal Control Audit……………………………………………………………...18
2.4.2.1 Budgetary Control in the Public Sector, the role of Internal Audit……………....19
2.4.3 Performance Audit………………………………………………………………….19
2.4.4 Compliance Audit…………………………………………………………………..20
2.4.5Audit Reports............................................................................................................22
2.5 Regulatory Framework……………………………………………………………….23
2.6 The Auditor General (A-G)…………………………………………………………..25
2.7 Meaning of ‘True and Fair’ View…………………………………………………....26
2.7.1 How to arrive at ‘True and Fair’ View……………………………………………..27
2.8 Public Sector Auditing in Ghana……………………………………………………..29
2.9 Public Interest in State Auditing……………………………………………………..31

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CHAPTER THREE…………………………………………………………………….32
METHODOLOGY……………………………………………………………………...32
3.1 Introduction…………………………………………………………………………..32
3.2Research Design……………………………………………………………………...32
3.3 Target Population………………………………………………………………….....34
3.4 Sample Size…………………………………………………………………………..34
3.5 Sampling Technique………………………………………………………………….35
3.6 Data Collection………………………………………………………………………36
3.6.1 Data Collection Instrument………………………………………………………..36
3.6.2 Data Collection Procedure………………………………………………………....37
3.7 Data Reliability and Validity.......................................................................................37
3.7.1 DataReliability…………………………………………………………………….37
3.7.2Data Validity……………………………………………………………………....38
3.8 Pretesting the Questionnaire………………………………………………………....39
3.9 Data Organisation and Analysis……………………………………………………..39
CHAPTER FOUR………………………………………………………………….....40
DATA ANALYSIS AND DISCUSSION…………………………………………….40
4.1 Introduction…………………………………………………………………………40
4.2Methods of Data Analysis and Presentation………………………………………..40
4.3 Interpretation of Findings…………………………………………………………..41
4.3.1-6Demographic Relationship and Study Variables……………………………....41

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4.4 Audit Report and Associated Perceptions………………………………………....50
4.5 Audit Compliance and ‘True and Fair View’……………………………………...52
4.6 Public Sector Accountability and Audit Reports………………………………….59
4.7 Post Audit Report: The role of the Public Accounts Committee (PAC)…………..64
4.8 Summary....................................................................................................................70
CHAPTER FIVE……………………………………………………………………..71
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS.............................71
5.1 Introduction………………………………………………………………………..71
5.2 Summary…………………………………………………………………………...71
5.2.1 Objectives of Study……………………………………………………………...71
5.2.2 Restatement of Research Questions……………………………………………...71
5.2.3 Research Methodology…………………………………………………………..72
5.3 Key Findings …………………………………………………………....................72
5.4 Conclusions………………………………………………………………………...79
5.5 Recommendations………………………………………………………………….81
5.5.2 The Stakeholders of the Public Institutions……………………………………...81
5.5.1 The Public Accounts Committee (PAC) of Parliament………………………….81
5.6Research Gap and Direction for Future Research…………..……………………...82
References……………………………………………………………………………...83
APPENDICES

x
LIST OF TABLES
Table Page
Table 1- Sex Distribution- Civil Society Organizations (IMANI & IDEG)………………...42
Table 2- Age Distribution- Intercity STC……………………………………………………43
Table 3- Age Distribution- Civil Society Organizations (IMANI & IDEG)………………...44
Table 4- Educational Qualification- Intercity STC…………………………………………..45
Table 5- Educational Qualification- Civil Society Organizations (IMANI & IDEG)……….46
Table 6- Departmental Distribution- Intercity STC………………………………………….47
Table 7- Departmental Distribution- Civil Society Organizations (IMANI & IDEG)……....48
Table 8- Years of Experience………………………………………………………………...50
Table 9- Ever seen an Audit Report…………………………………………………………50
Table 10- Importance of Audit Report………………………………………………………51
Table 11- Essence of Audit Report………………………………………………………….52
Table 12- Whether or not ‘True and Fair View’ supersedes compliance to legislation……..53
Table 13- Audit Compliance to Legislations – Civil Society Organizations (IMANI)……..54
Table 14- Audit Compliance to Legislations – Civil Society Organizations (IDEG)………55
Table 15- ‘True and Fair View’ (IMANI)…………………………………………………..58
Table 16-‘True and Fair View’ (IDEG)……………………………………………………..59
Table 17- Public Sector Accountability and Audit Report………………………………….60
Table 18- Audit Report, Fraud and Mismanagement……………………………………….60
Table 19- Audit Report and Forecast……………………………………………………….61
Table 20- State Auditor (Ghana Audit Service) and Effective Audit……………………...62
Table 21-Audit Reports and Remedial Actions of Management…………………………...63

xi
Table 22-Auditing in the Public Sector and meeting its purpose…………………………..63
Table 23- Responsibility of Public Accounts Committee (PAC)…………………………..64
Table 24- Follow Ups Made by Public Accounts Committee (PAC)……………………....65
Table 25- Remedial Actions Taken………………..……………………………………….66
Table 26- Advice Against Fundamental Risks………………………………………...…...67
Table 27-Post Audit Outcome (IMANI)…………………………………………………...68
Table 28- Post Audit Outcome (IDEG)………………………………………………….....69

xii
LIST OF FIGURES
Figure Page
Figure 1: The three party relationship………………………………………………………..15
Figure 2: Oversight Process:A model for Supreme Audit Institutions on Compliance Audit.22
Figure 3: Schematic Representation on the Research Design Employed……………………34

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LIST OF ACRONYMS
AICPA- American Institute of Certified Public Accountants
CEPA- Center for Policy Analysis
GAS- Ghana Audit Service
ICA- Institute of Chartered Accountants (Ghana)
ICAEW- Institute of Chartered Accountants of England and Wales
IFRS- International Financial Reporting Standards
IIA- Institute of internal Auditors
INTOSAI- The international organization of supreme audit institutions
ISA- International Standards on Accounting
MDAs - Ministries, Departments and Agencies
PAC- Public Accounts Committee
PSA- Public Sector Auditing
SAI- Supreme Audit Institutions
SAS- Statements on Auditing Standards

1
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Audit reports have become one of the essential documents in financial statement reporting
among businesses in Ghana and the world at large. In present day business, audit reports seek
to establish the degree of correspondence between the declarations made with regards to
economic events and the established criteria by objectively obtaining and evaluating evidence
(Arens et al., 2002).
In the industrial revolution, where owners hired the services of managers to run the
operations of companies due to the growth in manufacturing concerns, audit reports were
primarily to detect fraud. However in the latter half of the 20th
century, there was a shift in
the audit report usage to establish whether or not financial statements give a true and fair
picture of operations within institutions, both profit making and nonprofit making
organizations and also for public institutions (Wittington &Pany, 2004). The shift in
emphasis was in response to the growing demands of shareholders, new investors on the
stock exchange, governmental agencies, banks and other interested third parties who might
rely on the financial information to make decisions.
The various public institutions, despite the need for them to ensure societal welfare and not to
maximize and generate profits are held in check due to the auditors’ role in ensuring
transparency in their activities through the issuing of audit reports. This work of the auditor
expands to profit making enterprises and also to public institutions set up by either
government or through acts of parliament.
Public institutions represent the largest provider of services through the various public
corporations established by government and also act as the body which utilizes state funds in

2
carrying out their operations. The demand for auditing and assurance service in the public
sector can be understood through the need for accountability when governments, being the
largest business owner, hire others to manage their business as is typical in modern pubic
corporations and sectors. The choice of the State Transport Corporation (STC) presents an
ideal public corporation described above for our research.
The international organization of supreme audit institutions (INTOSAI) define public sector
audit, as “an examination of operations, activities and systems of a specific entity, to verify
that they are executed or function in conformity with certain objectives, budgets, rules and
requirements” ( Marques, 2002)
As can be noted, there are common aspects in the definition of auditing and public sector
audit but public sector auditing can be said to be still far from what is done in the private
sector. For private enterprises, it is of the greatest importance that financial statements
transmit a true and appropriate image of the financial situation especially that of the financial
statement and also of the cash flow statement. For public enterprises however, what matters
most is that the management of public funds has been adequate and was regulated by criteria
of legality; therefore the traditional branch of public control (compliance).
After independent examination by Auditors, an unqualified audit report seeks to portray that
the auditor’s opinion on a complete set of general purpose financial statements are prepared
in accordance with a financial reporting framework that is designed to achieve fair
presentation and states whether the financial statement ‘‘give a true and fair view'' or ''are
presented fairly, in all material respects,''.
Our exploratory research seeks to reconcile these two stands in an attempt to bridge the
expectation gap between the compliance required by legislation and the “true and fair view”
interested third parties would rely on to make decisions.

3
1.2 PROBLEM STATEMENT
During the industrial revolution, investors with a reasonable assurance regarding the internal
operations of a business entity provided the needed capital to undertake expansion, product
research and improved technology to enhance productivity. This provides value to the
economy as investors align their investment portfolios in the best possible fashion in relation
to the associated risk. (Wallin, 1992)Public institutions are not exempt from the related
expectations of what the management and leadership of the public institutions are to do which
is to work in the best interest of the public and also to be accountable to the public whom
they represent.
Audit reports issued have been questioned in some high profile financial disasters such as
cases involving Enron, and WorldCom which has suggested that the auditors involved have
compromised the “true and fair view” principle despite complying with applicable legal
requirements and giving unqualified opinions regardless of the consequences and cost to
innocent investors. This implies a breach of stakeholders trust in financial statements (Satava,
Caldwell & Richards, 2006).
In relation to public institutions in Ghana, the Auditor General’s reports pertaining to the
performance of the public institutions is not indicative of the true internal operations, the
collapse of these institutions like Ghana Airways and the recent performance unrest in the
State Transport Corporation corroborate this.
Little has been written about the public interest role in the management of public enterprises
in Ghana especially involving the Ghana audit service which is in charge of public sector
auditing in Ghana. This is not surprising, as traditionally, performance auditing systems are
perceived as a mere compliance to legislations and not to reveal a true and fair view of
financial performance (Emmanuel et al., 1997; Drury, 2008; Garrison et al.,2002).

4
1.3 RESEARCH OBJECTIVES
The overall objective of this study is to examine the audit report as a reflective and evidential
indicator of the true and fair view of financial statements of business or a mere compliance to
legislation in Ghana regarding the performance of public institution.
Specifically, this study is
 To understand what it meant by true and fair view of audit reports and how the
conduct of audit strategy can lead to true and fair view in the public sector.
 To examine whether the mere compliance of audit reports to legislations, standards
and statutes are prioritized over the “true and fair view” principle of the financial
statements
 To identify the influence of audit reports issued on the public over the performance of
the various public institutions
1.4 RESEARCH QUESTIONS
This research is guided and shaped by the following questions:
 Do the audit reports reflect the true and fair view of financial statements in Ghana?
 Does the compliance to legislations override the true and fair view principle of
financial statements reporting?
 To what extent are stakeholder’s (citizens) perceptions affected by the audit reports on
the various public institutions?

5
1.5 SIGNIFICANCE OF THE STUDY
Findings and Recommendations from this study would perhaps help citizens, the principal
stakeholders of the public institutions, in understanding the importance and the impact of
audit reports issued on the financial statements which are supposed to reflect the true and fair
view of the performance of the public institutions and not just a mere compliance to
legislations. The recommendations would go a long way to improve the public sector auditing
trail in Ghana where the various stakeholders and public institutions like the Public Accounts
Committee (PAC) of parliament are expected to act on the audit reports from the State
Auditor- Ghana Audit Service (GAS).
1.6 RESEARCH METHODOLOGY
This explains the data required how they were gathered and methods of analysis employed to
achieve the objectives of the study.
The study employs both primary and secondary data to examine and determine the current
use and relevance of audit reports among stakeholders of public institutions in Ghana. Also,
existing information made up of publications such as books, journals, articles, internet
sources and many other already established facts were used. Secondary data by way of audit
reports, financial statements, and other performance reports were investigated to assess the
impact of audit reports on the decisions of stakeholders.
As a precursor to the other quantitative methods like charts and graphs employed in this
research, observations, interviews, and questionnaires werealso employed to analyze our data.
Quantitatively, the research seeks to elicit information by the use of surveys conducted for
the intended users of audit reports and to assess the impact of this report on their decisions.

6
The research covered identifiable stakeholders of the public institutions with case studies
focused on two (2) institutions. The samples of our research were representative of the
various stakeholders of the public institutions in Ghana whose perceptions the audit reports
would have impacted on.
Data obtained from respondents were analyzed using excel spreadsheet application. The
result would be presented using statistical tools such as tables and charts. Descriptive
statistics was used to analyze the data. Details of the methodology are contained in the
Chapter Three to this work.
1.7 CONCEPTUAL FRAMEWORK:
For our research, the underlying concepts are applicable:
True and fair view:‘True and fair view’ is used by auditors to convince the user group or the
stakeholders that the financial statements are free from error and are factual.
Pollitt and Summa describe‘true and fair’ as one of the most common expressions used in the
financial industry today. It is used to describe the required standard of financial reporting but
equally to justify decisions, which require a certain amount of arbitrary judgement making. It
is the principle that is used in guidelines ranging from auditing and financial standards to the
company law acts.
Audit Compliance: For private enterprises, it is of the greatest importance that financial
statements transmit a true and appropriate image of the financial situation especially that of
the financial statement and also of the cash flow statement. For public enterprises however,
what matters most is that the management of public funds has been adequate and was

7
regulated by criteria of legality; therefore the traditional branch of public control (audit
compliance).
The new Public Management: In recent times, new ways of management are being adopted
– New Public Management (NPM) where relevance and information transparency as well as
control are equally crucial and important to the public who are the main stakeholders of the
public institutions. (Baker, C. Richard; Owsen, Dwight M. [2002])
These concepts provide a solid basis for our research topic and would help in understanding,
explaining and drawing conclusions that would benefit stakeholders of Public institutions.
1.8 LITERATURE REVIEW
The American Accounting Association, Committee On Basic Auditing Concepts(1973),
defines the term auditing refers to the systematic process of objectively obtaining and
evaluating evidence regarding assertions about economic actions and events to ascertain the
degree of correspondence between those assertions and established criteria and
communicating the results to interested users. The International Organization of Supreme
Audit Institutions (INTOSAI) defined auditing in terms of public sector audit as “an
examination of operations, activities and systems of a specific entity, to verify that they are
executed or function in conformity with certain objectives, budgets, rules and requirements”
The Wilson Committee posited that need for financial accountability has existed ever since it
became necessary for one individual to entrust the care of his possessions or business to
another” (Wilson Committee, 1980).
Adeyemi (2011), asserts that external auditor reports add credibility to the financial reporting
by ensuring that accounting statements follow the generally accepted guidelines and are

8
accurate, but when the state auditor’ performance is below public expectations then his
signature together with his brief opinion will no longer be useful to the citizens who are the
main stakeholders of these public institutions.
Apart from the usual financial statement (regularity) audit performed by State auditors,
Messier et.al (2008) identified three other types of audit. This includes:
 Internal Control Audit
 Compliance Audit
 Performance/Operational Audit
A true and fair view is one of the bedrock principles of preparing financial statements. This
can be linked back to the four basic concepts on presenting this information: going concern,
accruals (matching), consistency, and prudence as stated in Financial Accounting (Arnold,
et.al,1994, p56)
The literature on the public interest role of accounting and Auditing has focused mainly on
corporate ﬁnancial reporting, auditing, social environmental reporting and the accountancy
profession (Briloff, 1986; Canning and O’Dwyer, 2001; English, 2003). Details of the
literature review are contained in the Chapter Two of this work.
1.9 SCOPE AND LIMITATIONS OF THE STUDY
The study would be limited to Management and Staff of the public institution of choice -
STC,specifically the internal audit unit and the finance departmentof this institution. Only
two Civil Society Organizations (CSOs) being IMANI Ghana and the Institute of Democratic
Governance (IDEG) were sampled for the research. Our interview is limited to the State
Auditor, the Ghana Audit Service (GAS)

9
Also, the study would be solely carried out in Accra and hence the findings may not hold for
other regions outside and beyond Accra.
Again, data provided by respondents may be skewed to reflect their individual biases and to
curb this, there will be more sampling of opinions concerning a particular topic so that one
person’s opinion does not become binding.
1.10 CHAPTER DISPOSITION
This study is divided into five chapters as follows:
Chapter One deals with the introduction to the study.
In Chapter Two, relevant literatures are reviewed to present the theoretical conceptual
framework that relates to the study.
Chapter Three focuses on how the whole research was carried out while Chapter Four
isdevoted to the analysis and discussion of data.
In Chapter Five, the summary of the main findings, conclusions are provided.

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CHAPTER TWO
LITERATURE REVIEW
2.0 INTRODUCTION
Government auditing is a necessary tool in good public governance and as such, it is crucial
to maintain an appropriate configuration with a broad mandate to achieve the organization’s
governance objectives. The government audit activity’s mandate should be as broad as
possible to enable it to respond to the full scope of the government’s or governmental unit’s
activities.
Although auditors may be able to add value to any segment of the organization for which
they can provide independent, objective assurance, at a minimum, every government requires
some form of independent audit activity that has authority to evaluate the full range of the
government’s activities.
Ultimately, government auditing strengthens public governance by providing for
accountability and protecting the core values of government thus ensuring managers and
officials conduct the public’s business transparently, fairly, and honestly, and with equity
and probity. Elected and appointed officials at all levels of government should support
effective audit activities by establishing independent audit functions that meet all of the key
elements.
This chapter presents the literature on the auditing in the public sector, highlighting the scope
in terms of performance and compliance and its role in ensuring effective and sound public
financial management. It also discusses the various stakeholders in the public institutions
with their increasing roles in public accountability, corporate governance and risk

11
management within the legal framework of Ghana which centralizes around the Auditor
Generals Department.
2.1 MEANING OF AUDITING WITHIN THE CONTEXT OF THE PUBLIC SECTOR
The word ‘audit’ is derived from the Latin word meaning ‘to hear’. It is about upholding the
integrity of financial reporting and business conduct and is about seeking truth (Percy, 1997).
The American Accounting Association, Committee On Basic Auditing Concepts(1973),
defines the term auditing the systematic process of objectively obtaining and evaluating
evidence regarding assertions about economic actions and events to ascertain the degree of
correspondence between those assertions and established criteria and communicating the
results to interested users.
The International Federation of Accountants ( IFAC) defined auditing as “a verification or
examination of the documents of accountability executed by an auditor with the objective of
providing him the ability to express an opinion of those documents in such a way as to
provide them with greater credibility”
The definition by International Organization of Supreme Audit Institutions (INTOSAI) tends
towards public finances and defined public sector audit, as “an examination of operations,
activities and systems of a specific entity, to verify that they are executed or function in
conformity with certain objectives, budgets, rules and requirements”
A vital element for a strong public sector is the community (citizenry) and business
confidence in government. Audit is one tool that can reinforce confidence in government, or
where necessary communicate authoritatively that, confidence is misplaced. In other words,

12
audit can be a tool for public sector reform, alongside the other mechanisms for reforming the
market and making it more efficient.
The credibility of the audit within the context of the public sector activity strengthens public
governance by providing for accountability and protecting the core values of government,
which it does by assessing whether managers and officials conduct the public’s business
transparently, fairly, honestly, and in accordance with laws and regulations (Waring, 2012).
2.2 GOVERNMENT ACTIVITIES AND THE NEED FOR AUDITING IN THE
PUBLIC SECTOR
The Center for Policy Analysis (CEPA) identified that the primary role of government is to
provide the legal framework within which all economic transactions occur. It is common to
divide the activities of government into three broad categories:
(a) the production of goods and services and the regulation of private producers;
(b) the direct purchase of goods and services from firms and households such as the
employment of civil servants to the services of street cleaners; and
(c) the redistribution of income.
To undertake its numerous activities CEPA recognizes that the government organizes itself
into Ministries, Departments and Agencies who undertake these functions on behalf of the
executive for the benefit of the public at large. Performing these activities require the flow of
financial resources, mobilizing or spending public resources. Good economic governance
entails, among other things, having in place the appropriate laws, rules and regulations to
govern the management of public financial resources. Government therefore has a special

13
responsibility to provide assurances to the public a clear picture of where public finances
come from, how they are utilized and accounted for in an open and credible framework
(CEPA, 2005).
The demand for auditing and assurance service in the public sector can be understood through
the need for accountability when governments, being the largest business owner, hire others
to manage their business as is typical in modern pubic corporations and sectors.
Chatfield (1974) asserted that until late 18th
and early 19th
centuries, most organizations (both
public and private) were relatively small and were owned and operated as sole
proprietorships or partnerships. Because businesses were centrally run by governments, there
was little accountability to outside parties. The birth of modern public accounting and
auditing occurred during the industrial revolution, when government (public) companies
became larger and needed the services of hired managers (Samson 2005). The coming
together of the two entities being government as the investor (principal) and managers as
agents to facilitate business brings about the agency relationship and its associated costs.
Gerrit and Mohammad (2007) see the agency theory as a useful economic theory of
accountability that helps to explain the development of the audit. Agency theory posits that
agents have more information than principals and the information asymmetry adversely
affects the principals’ ability to monitor whether or not their interests are being properly
served by the agents.
As noted by the in Institute of Chartered Accountants of England & Wales (ICAEW), audit
provides an independent check on the work of agents and of the information provided by an
agent who helps to maintain confidence and trust, (ICAEW, 2005). The simplest agency
model assumes that no agents are trustworthy and if an agent can make himself better off at

14
the expense of a principal then he will. Auditing in this regard serves as monitoring tool
which will lead to an overall reduction of agency costs
However, the institute of internal auditors sees the public sector to represent a principal-
agent relationship: The officials acting as the principal’s agent must periodically account to
the principal for their use and stewardship of resources and the extent to which the public’s
objectives have been accomplished.
Canadian Comprehensive Audit Foundation, 1991 understands that an effective audit activity
reduces the risks inherent in a principal-agent relationship. The principal relies upon the
auditor to provide an independent, objective evaluation of the accuracy of the agent’s
accounting and to report on whether the agent uses the resources in accordance with the
principal’s wishes. The need for a third party to attest to the believability (credibility) of the
financial reporting, performance results, compliance, and other measures arises from several
factors inherent in the relationship between the principal and its agent:
1. Moral hazards — conflicts of interest: Agents may use their resources and authority to
benefit their own interests, rather than the principal’s interests.
2. Remoteness: Operations may be physically removed from the principal’s direct oversight.
3. Complexity: The principal may not possess the technical expertise needed to oversee the
activity.
4. Consequence of error: Errors may be costly when agents are stewards of large amounts of
resources and are responsible for programs affecting citizens’ lives and health.

15
Figure 1: A three (3) Party Relationship (Adapted from: The Institute of Internal Auditors -
www.theiia.org)
2.3 THE OBJECTIVE OF AUDITING IN THE PUBLIC SECTOR
“The need for financial accountability has existed ever since it became necessary for one
individual to entrust the care of his possessions or business to another” (Wilson Committee,
1980).
The UN Guidelines for effective Financial Management (2000, p. 48) observed that public
sector auditing identifies and highlights instances where laws and regulations of public
financial management have not been complied with, where financial systems need
strengthening, and possibly, where value for money has not been achieved. In particular,
internal audit provides the first line of defense against misuse or mismanagement of public
funds whiles external auditing by the office of the Auditor-General provides broader
oversight functions over public sector accountability.

16
The principal objective of an audit of financial statements is to enable the auditor to express
an opinion whether the financial statements are prepared, in all material respects, in
accordance with an applicable financial reporting framework (Millichamp& Taylor, 2008).
The primary responsibility of an auditor is to verify whether the financial statements exhibit a
true and fair view of the state of affairs of an institution or business and their secondary
responsibility is the prevention and detection of errors and frauds.
Adeyemi (2011), asserts that external auditor reports add credibility to the financial reporting
by ensuring that accounting statements follow the generally accepted guidelines and are
accurate, but when the state auditor’ performance is below public expectations then his
signature together with his brief opinion will no longer be useful to the citizens who are the
main stakeholders of these public institutions. For instance, if the public auditing profession’s
governing body issues a standard that says that auditors should observe the client company’s
stock-taking procedures but the auditor fails to do so then his performance would be said to
be deficient because he has not behaved in a manner consistent with professional auditing
standards.
According to Knox (1994) the detection of frauds in the public sector is in the interest of the
user of financial information and the auditor concerned, because on the one hand it is seen as
a job well done and on the other hand it is a sign for the auditor of the risk that the client
shows.
Epstein and Geiger (1994) conducted a survey of public stakeholders that revealed a startling
evidence of the expectation gap between the assurances state auditors provided on the
financial statements compiled by management and the expectations of public and other users
of financial statements. Over 70 per cent of the 246 citizens surveyed believed that public
sector auditors should be held responsible for detecting material misstatements due to fraud,

17
and some 47 percent expect auditors to provide absolute assurance that the financial
statements of state institutions and corporations contain no material misstatement due to
errors. Epstein and Hill (1995) concluded that:
1. public sector stakeholders expected greater amount of assurance concerning the frauds and
errors than the state auditors could provide in relation to the management of state funds.
2. there seemed to be a general lack of understanding concerning the differences in the
auditors’ ability to detect a misstatement due to the frauds and errors in the management of
public institutions.
3. stakeholders/citizens did not grasp the difficulty of detecting material misstatements due to
the frauds or the cost of doing so in public institutions.
2.4 TYPES OF AUDIT WITHIN THE PUBLIC SECTOR FRAMEWORK
Government auditors conduct audits with different types of objectives. Financial reporting
requirements and performance indicators for government functions vary between
jurisdictions and types of activity (e.g., public health, law enforcement, national security, and
environmental protection) and results may take years to materialize. Consequently, the means
to assess government financial regularity and performance vary widely. Accordingly,
individual government auditors demonstrate different types of skills, competencies, and
specializations.
Apart from the usual financial statement (regularity) audit performed by State auditors,
Messier et.al (2008) identified three other types of audit. This includes:
 Internal Control Audit

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 Compliance Audit
 Performance/Operational Audit
The selection of the type of audit or service to be performed is based upon the audit activity’s
authority and purpose, as well as the needs and issues to be addressed. The audit activity’s
scope of work depends on the authority granted to it by its enabling legislation and the needs
or risks the organization faces.
2.4.1 FINANCIAL STATEMENT (REGULARITY) AUDIT:
In a financial (or regularity) audit, the auditor expresses an opinion whether the financial
statements are prepared, in all material respects, in accordance with the applicable financial
reporting framework (regularity). This is often performed by external auditors — either
commercial auditors or auditors from another branch of government. This type of audit
within the public sector focuses on properly accounting for assets and expenditures as
reported by the government. In addition to the financial statement opinion, financial audits
can also examine the reliability of specific financial information, compliance with relevant
procedures and rules, or the safeguarding of assets
2.4.2 INTERNAL CONTROL AUDIT
“Internal auditing is an independent, objective assurance and consulting activity designed to
add value and improve an organization’s operations. It helps an organization accomplish its
objectives by bringing a systematic, disciplined approach to evaluate and improve the
effectiveness of risk management, control, and governance processes.” (The Institute of
Internal Auditors, 1999)

19
Waring (2002) identified that Auditing has evolved as systems, transactions, and operations
have become more complex. In its earliest origins (evidence points to audits conducted in
Babylonia and Mesopotamia as early as 3,000 B.C.), auditing verified the existence of assets.
According to Waring, over time, auditing shifted from a detailed focus on confirming or
validating individual transactions to evaluating the effectiveness of the systems that control
transactions. In the 20th century, public sector auditors also moved well beyond evaluating
economic and financial transactions and conditions. Since the introduction of social
programs, some government auditors have been called upon to validate the effectiveness of
the government services themselves or, they may be required to determine whether the
organization has established mechanisms to measure and report on its effectiveness.
Waring concluded that the credibility of the audit activity strengthens public governance by
providing for accountability and protecting the core values of government, which it does by
assessing whether managers and officials conduct the public’s business transparently, fairly,
honestly, and in accordance with laws and regulations.
2.4.2.1 Budgetary Control in the Public Sector, the Role of Internal Audit
An internal audit function is an essential part of any public expenditure management system
and should ensure that public spending is within budgetary provisions; disbursements comply
with specified procedures, provides for the timely reconciliation of accounts and effective
systems for managing and accounting for physical and financial assets (Commonwealth
Secretariat, 2005).

20
2.4.3 PERFORMANCE AUDIT
Determine whether an authority is achieving objectives & operating economically, efficiently
and effectively in compliance with all relevant Acts. The International Organization of
Supreme Audit Institutions (INTOSAI) sees the adoption of performance auditing in the
public sector as one of the most significant new additions to the traditional auditing role
(financial audit). In a performance audit, the auditor expresses an opinion whether, in all
material respects, the administration of a particular program or entity has been carried out
economically and/or efficiently and/or effectively.
This new type of audit in the view of INTOSAI has evolved to meet the need for greater
information by the taxpayer’s representative, Parliament, mainly regarding the efficiency and
economy in the use of resource by the public managers acting on behalf of the executive. A
significant part of audits have two audit objectives, either expressing opinion on financial
statements and on compliance with the regulations, or expressing opinion on compliance with
the regulations and on the performance of operations. Opinions expressed within performance
audits were descriptive and consisted of assessments of economy, efficiency and
effectiveness of operations.
2.4.4 COMPLIANCE AUDIT
Governments frequently establish governmental audit requirements for entities to undergo an
audit of their compliance with applicable compliance requirements.
Geffken, Carl, (2004, October) identified three (3) levels of compliance:
• External (legislative)

21
• External (policies and frameworks)
• Internal (control frameworks)
As part of selected performance and probity audits, the Auditor-General may audit
compliance with relevant legislation and external/internal policies, review the effectiveness
of some external/internal compliance frameworks
The questions remains whether Good compliance = good management = good performance
and why do some agencies experience compliance as restricting their performance?
The role of the Auditor-General in public sector compliance includes:
• To monitor and report on compliance
• To review effectiveness of compliance frameworks (www.audit.vic.gov.au)
There are varying types of audits that may be used in contract compliance testing. They
include: financial audits, social responsibility audits, those that focus on internal controls and
procedures, and audits defined by the Sarbanes Oxley legislation, which encompasses a
myriad of fiduciary concerns. Supplier performance evaluations are another tool where a
procurement official can review the suppliers’ performance in terms of meeting the
requirements of the contract.
With the intent to avert fraud and collusion, and to maintain the public trust, a well-designed
audit will address all of the critical steps needed for contract compliance by evaluating the
entire procurement process, providing the needed oversight throughout the operations of
supreme audit institutions. The flow chart below shows how the oversight process that relates
to compliance audit in a supreme audit institution which is called the Ghana Audit Service
(GAS) within the Ghanaian context.

22
Figure 2: Oversight process: a model for Supreme Audit Institutions on compliance audit.
(internationalbudget.org)
2.4.5 AUDIT REPORTS
The basic outcome of every audit process seeks to provide an opinion that:
(1) The audit was performed in conformity with generally accepted auditing standards and
(2) Expressing an opinion that the client’s ﬁnancial statements are presented fairly and in
conformity with generally accepted accounting principles.

23
Depending on the circumstances surrounding the audit process, the auditor may issue either
of the two main types of reports:
1. Standard Unqualified ( “clean”) Audit Report
2. Qualified / Modified report
For the purposes of this study, the Standard Unqualified Audit Report would be adopted and
examined in detail. For the auditor to issue a Standard Unqualified Audit Report, Gray and
Manson (2005) identified that the following conditions most be satisfied:
• All financial statements are included.
• The general and applicable standards have been followed in all respects on the
engagement.
• Sufficient evidence has been accumulated to conclude that the underlying records are
free from material error.
• The financial statements are presented in accordance with generally accepted
accounting principles.
• There are no circumstances requiring the addition of an explanatory paragraph or
modification of the wording of the report.
2.5 THE REGULATORY FRAMEWORK
The audit profession globally is heavily regulated by legislations, codes, standards, statutes
and principles. This harmonizes the work of auditors irrespective of the geographical or
territorial boundaries. However, modifications are incorporated to meet the varying needs of
certain jurisdictional laws.

24
The auditing environment at the international level has the international Standards on
Auditing (ISA) and Statements on Auditing Standards (SAS) issued by the International
Auditing and Assurance Standards Board (IAASB) of the International Federation of
Accountants. In the US, Generally Accepted Auditing Standards (GAAS) was issued by the
American Institute of Chattered Public Accountants (AICPA).
In Ghana, the legal framework that governs the work of the Auditor-General and the auditing
of public accounts in general are:
a) The financial provisions of Article 187 of the 1992 Constitution of the 4th
Republic.
b) Audit Service Act, 2000 (Act 584).
c) The Financial Administration Act, 2003 (Act 564) and prior to that the Financial
Administration Decree (1979) and the Financial Administration Regulations (1979).
d) Internal Audit Agency Act, 2003 (Act 658).
The profession is also regulated by the chartered accountant act 1963, Act 170 which spells
out the basic qualifications of an auditor both for public and private entities inter alia:
To qualify for appointment as an auditor of a private or public company, a person must be a
member of ICA and not disqualified by any Legislative Instrument (The Chartered
Accountant’s Act, 1963 (Act 170). These standards and jurisdictional laws regulate the
practice of auditing in different parts of the globe with an audit report as an end product of
the audit process.

25
2.6 THE AUDITOR-GENERAL
Article 187(2) of the 1992 Constitution enjoins the Auditor-General to audit and report on all
the public accounts of Ghana and of all public offices, including the courts, the central and
local government administration, the Universities and public institutions of like nature, any
public corporation or other body or organization established by an Act of Parliament. Article
187(5) of the same constitution sets the time frame of 6 months after the end of the
immediately preceding financial year within which each of the auditing responsibilities
defined above should be completed and submitted to Parliament.
Sections 40 and 41 of the Financial Administration Act (FAA), 2003, clearly define the
responsibilities of the heads of department and the Controller & Accountant-General in the
preparation of monthly and annual statements of public accounts and the time limits by
which these accounts are to be transmitted to the Auditor-General. The most fundamental,
sections 40(1) and 41(1) stipulate what should be included in the public accounts by way of
reporting.
Section 13 of the Audit Service Act, 2000 (Act 584) spells out the manner and the specific
expectations of auditing to be carried out by the Auditor-General on the public accounts
referred to in Article 187(2) of the 1992 Constitution. To paraphrase, the Auditor-General is
expected to ascertain whether in his opinion:
a. The accounts have been properly kept.
b. All public monies have been fully accounted for, and rules and procedures have been
followed to ensure effective check on all aspects of revenue assessment, collection and proper
allocation.
c. Monies have been expended for purposes approved in the appropriations bill (budget).

26
d. Essential records are maintained and the rules and procedures applied; and
e. Programmes and activities have been undertaken with due regard to economy, efficiency
and effectiveness.
2.7 THE MEANING OF ‘TRUE AND FAIR’ VIEW
‘True and fair view’ is used by auditors to convince the user group or the stakeholders that
the financial statements are free from error and are factual. Researchers have explored and
tried to identify the function of ‘true and fair view’ in auditing. While it is known from
various legal regulations and accounting standards, that ‘true and fair view’ is a concept used
to give an opinion on the financial statements, many still find it a very confusing and vague
term (Cowan, 1965; Walton 1993; Elliot and Elliot, 1997; Hulle, 1993; Gill, 1983). ‘True and
fair’ view as is being applied currently by the external auditors lacks clarification and is not
likely to be clarified in the future (Higson, 1991; Porter 1992; Rutherford, 1985).
Pollitt and Summa describe ‘true and fair’ as one of the most common expressions used in the
financial industry today. It is used to describe the required standard of financial reporting but
equally to justify decisions, which require a certain amount of arbitrary judgement making. It
is the principle that is used in guidelines ranging from auditing and financial standards to the
company law acts.
A true and fair view is one of the bedrock principles of preparing financial statements. This
can be linked back to the four basic concepts on presenting this information: going concern,
accruals (matching), consistency, and prudence as stated in Financial Accounting (Arnold,
Hope, Southworth and Kirkham; 1994, p56)

27
Traditionally the "true and fair view" in Great Britain has implied a connection between the
internal accounting and the external accounting (Cunningham, 2003).
In US, they see the concept to imply that accounting should be informative and that it should
disclose real transactions. But in many other countries where they have tried to follow the
"true and fair view" they have used much time in trying to interpret this concept, without
being successful (Cunningham, 2003).
True and fair view in general can be explained to reflect the verifiability and reasonability of
financial statements prepared and how it discloses all the relevant and material items captured
in the public institutions.
2.7.1 HOW TO ARRIVE AT A TRUE AND FAIR VERDICT
True and fair view is linked to materiality in SAS 220 (page 2) and describes that, a matter is
material if its omission would reasonably influence the decisions of an addressee of the
auditors report. Likewise a misstatement is material if it would have a similar influence
(SAS220: Materiality and the Audit, 1995). This (SAS220) is the auditors’ code; those who
are responsible for assessing the statements in light of the ‘true and fair’ doctrine. Elsewhere
in this standard it is stated:
‘auditors plan and perform the audit to be able to provide reasonable assurance that the
financial statements are free from material misstatement and give a true and fair view’. (SAS
220, 1995, p2)
Contrary to this Lewis &Pendrill (2000, p191) suggest, ‘if the accountant digs deep enough,
the reality of the transaction will emerge’.
However, examining every transaction is not practical and in a large company the scope is

28
immense whiles in a small company the resources are not there. If marginal cost is greater
than marginal benefit, chances are that it’s not worth checking,
A true and fair view is not a guarantee, but an opinion, as SAS 300 (1995, p13), paragraph 50
states:
‘Audit evidence is generally persuasive rather than conclusive; some detection risk is usually
present even if they [auditors] examine all evidence available of an account balance or an
entire class of transactions’.
The essence of the concept "true and fair view" differs in different countries. Hence, its
contribution to the consistency in the financial disclosure is far from self-evident. The
flexibility in accounting is undermining the comparability of accounting (Dunk, Kilgore,
2000).
Dunk and Kilgore (2000) mean that the concept "true and fair view" still is unclear, even if
the many authors in the literature have attempted many times to define it. They mean that the
"true and fair view" is nothing but a generally accepted accounting practice, which in turn
gives a pragmatic solution on valuation problems in accounting. The large importance that
"true and fair view" has got in accounting internationally; imply that the more mechanical use
of accounting rules is given up. The concept "true and fair view" is seen as rather vague,
ambiguous and misdirected. A "true and fair view" is then not even incompatible with
creative accounting and income equalization. Moreover, different groups have different
interests in accounting statements. The executives in the companies want to view that the
company runs well, the employed want better salaries, and government want more taxs
whiles shareholders want more dividends. Therefore, these groups can have different views
on what the "true and fair view" is. The concept "true and fair view" can be applied relatively
subjective, and can then be adapted to different situations (Gearing, 1995)

29
2.8 PUBLIC SECTOR AUDITING IN GHANA
As noted in the preceding discussion, the auditing profession and Auditor General’s
Department are among the ensemble of institutions, technologies and tactics that are core to
governance processes (Power, 1994; Dean, 2003). This is also applicable in the Ghanaian
context where the auditor general audits all the government accounts.
Financial audits are an instrumental aspect of the accountability relationship between the
governors and the governed, a process that enhances the reason for the state.
Globally, over the last decade, the audit profession has experienced an expanded
responsibility for fraud detection and deterrence requiring increased professional skepticism
(AICPA Statement on Auditing Standards No. 99, 2002). Consistent with the growing global
expectations of the profession, the Auditor General’s Department in Ghana has, over the
years, directed considerable amount of energy and resources towards the detection and
fighting of public sector fraud.
The upsurge in fraud investigations by the Auditor General’s Department has become
necessary, in part, because of the general weakness of the institutional structures for public
ﬁnancial administration (Braughtigam and Knack, 2004).
Akotia (2000, p. 6) observes more generally: A major defect in ﬁnancial administration arises
from failure to integrate accounting and registry systems, with the result that essential
information is lost or becomes subject to inaccuracies. Ideally, registry systems and account
records systems should be used where each is most appropriate. For many tasks, both are
required and there needs to be adequate cross-reference between the two. However, too often
users do not receive the support they require to make maximum use of these systems.

30
While there are petty-fraud cases among low-income earning government employees, there is
the argument that the growing allegations against highly paid senior government officials’,
including fraud charges against the former Auditor General, seems to suggest that some
perpetrators of fraud are simply exploiting the existence of weak control systems in the
government sector.
Consistent with Power’s (2003) view, according to a survey organized, we find that the
control systems in government departments serve a legitimating purpose and do not
necessarily function according to design as noted by a respondent in this respect.
Besides the World Bank, other key international agencies such as United States Agency for
International Development (USAID) and Canadian International Development Agency have
provided assistance aimed at improving governmental financial management to support the
government’s fight against fraud in public bureaucracies. Like the World Bank, such attempts
have also focused on providing funding for capacity building; targeting the three key
institutions involved in the country’s financial governance. For example, in a seminar, the
then US Ambassador to Ghana, Bridgewater (2006, pp. 4-5) remarked:
I applaud the government’s public statements in support of zero tolerance for corruption. It is
good that laws are passed that are designed to reduce corruption such as the public
procurement, financial management and audit laws. [...] Nonetheless, the US and other
companies consistently express concern about the corruption in Ghana’s ports, police and
ministries responsible for licensing new businesses.
The ambassador then went on to state that: USAID Ghana program is preparing to launch an
anti-corruption assistance program. Our Public Affairs Section is hosting an internationally-
known author and lecturer on good governance to conduct a series of workshops throughout
Ghana beginning July 24 (Bridgewater, 2006, p. 8)

31
2.9 PUBLIC INTEREST IN STATE AUDITING
The literature on the public interest role of accounting and Auditing has focused mainly on
corporate ﬁnancial reporting, auditing, social environmental reporting and the accountancy
profession (Briloff, 1986; Canning and O’Dwyer, 2001; English, 2003).
Little has been written about the public interest role of management controls especially for
the public sector auditing. This is not surprising, as traditionally, management accounting
systems are perceived as external decision facilitating tools (Emmanuel et al., 1997; Drury,
2000; Garrison et al., 2002). However, a management control system, such as a budgetary
system, assumes a public interest role once it has been delegated a public accountability role.
The State Enterprises’ Commission (SEC) in Ghana assumed the position of an external
auditor, with the budgetary performance of State Owned Enterprises (SOEs) providing a
basis for carrying out its evaluation and reporting on their control, accountability,
transparency and the efficient use of resources. In this context, SOEs’ budgetary systems
have direct implications for the pursuit of their public interest role. Public sector reforms in
Ghana and in most other Less Developed Countries (LDCs) have been advocated by
transnational bodies such as the World Bank and the IMF based on neo-classical economic
policies (Stiglitz, 2002). To neo-classical variants, public sector reforms will bring about
private management styles, which should lead to better public service.

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CHAPTER THREE
RESEARCH METHODOLOGY
3.1 INTRODUCTION
This chapter focuses on the approach to carry out the research. It provides details of data
analysis which includes the description of the relevant variables and method of data
collection, type, source, and procedure. The study employs both primary and secondary data
to examine and determine the current practices and involvement of the Ghana Audit Service
in public sector auditing in Ghana.
3.2 RESEARCH DESIGN
A qualitative approach was followed. Burns and Grove (1997) define qualitative research as a
formal, objective, and systematic process to describe and test relationships and examine cause
and effect interactions among variables. A survey is one of the basic tools of a qualitative
research.
Survey can be used for descriptive, explanatory and explorative research. Using a descriptive
survey, we try to collect original data for describing a population too large to observe directly
(Mouton, 1996). A survey obtains information from a sample of people by means of self-
report that is, the people respond to a series of questions posed by investigator/researcher
(Pollit and Hungler, 1993).
In this study, the information was collected through self-administered questionnaires
distributed personally to the subjects of the study.
The descriptive survey was selected because it is an accurate portrayal or account of
characteristics for example behaviors, opinions, abilities, beliefs, and knowledge of a

33
particular individual, situation or group. This design was chosen to meet the objectives of the
study namely:
 To understand what it means by true and fair view of audit reports and how the
conduct of audit strategy can lead to true and fair view in the public sector.
 To examine whether the mere compliance of audit reports to legislations, standards
and statutes are prioritized over the “true and fair view” principle of the financial
statements
 To identify the influence of audit reports issued on the public over the performance of
the various public institutions.
In this chapter, the schematic approach begins from the aggregation of data from three key
research areas / respondents namely; the Ghana Audit Service, the State Transport
Corporation and Civil Society Organizations (CSOs), and secondary sources being the
publications, journals, articles, and reports of these institutions.
The data from these sources were represented by way of statistical tools like graphs, tables
and charts. Descriptive tools were employed and inferences drawn from the data collected.
The main findings and results obtained were summarized to set the tone for further analysis and
interpretation. Finally, the data was thoroughly analyzed and discussions concluded to sum
up the research.
The flow is shown in the diagram (Figure 3.1)

34
Figure 3.1: A Schematic Representation of the Research Design Employed
Source: Adapted from Leedy, (1993)
3.3 TARGET POPULATION
The target populations for the study were the Management and Staff of the Ghana Audit
Service, the management of the State Transport Corporation and Civil Society Organizations
(CSOs).
3.4 SAMPLE SIZE
A structured interview was conducted with a team from the Ghana Audit Services. A
convenient sample of 40 respondents was selected from the State Transport Corporation
(STC) and the Civil Society Organizations (CSOs). Mouton (1996) defines a sample as
Capture the data and inspect the
data using descriptive, inferential
statistics and frequency tables
Main findings and summary of the
results obtained
Analyze and discuss results
Administer Questionnaires/
Interview to management and
staff of Ghana Audit Service
Obtain Secondary data
from publish articles,
reports, books, journal,
etc.
Administer Questionnaires/
Interview to public interest groups,
and State Transport Corporation.

35
elements selected with the intentions of finding out something about the population from
which they were taken. A convenient sample consists of subjects included in a study because
they happen to be at the right place at the right time (Pollit and Hungler 1993:172).
A total of 40 questionnaires are issued out to various categories of correspondents who were
willing to participate in the research within a one month frame. 20 questionnaires will be
issued to the staff and management of the State Transport Corporations. Also, 20
questionnaires will be given to two different Civil Society Organizations (CSOs) to ascertain
their views on the audit reports issued on public corporations.
3.5 SAMPLING TECHNIQUE
The subjects selected to be included in each sample should meet specific criteria. The
workers at the Ghana Audit Service and the State Transport Corporation (STC) should meet
the following criteria to be included in a sample:
 Must have worked in the Service for at least a year or more
 Must be mentally sound in order to consent to participation
 Must be willing to participate
 Obtain the consent of senior management before participation if participation is
against working rules
 Be of either sex or any race.
For the Civil Society Organizations (CSOs) the following criteria apply:
 Must be a Ghanaian by birth
 Must be a registered voter
 Must be a registered tax payer

36
 Must be mentally sound in order to consent to participation
 Must be willing to participate
 Be of either sex or any race.
3.6 DATA COLLECTION
3.6.1 Data collection instrument
A questionnaire was chosen alongside a formal interview as data collection mediums. A
questionnaire is a self-printed report form designed to elicit information that can be obtained
through the written responses of the subjects. The information obtained through the
questionnaire is similar to that obtained from the interviews except that the questions tend to
have less depth (Burns and Grove 1993).
Two distinct questionnaires were used to collect the data. One was administered for the
public enterprise in question, State Transport Corporation and the other for the Civil Society
Organizations (CSOs) who stand out as major stakeholders in governance and public
accountability.
The questionnaires consisted mostly of close ended questions and a few open ended questions
providing the researchers with diverse detail. In the open ended questions, the subjects were
required to respond in writing, whereas closed ended questions had options which were
determined by the researcher (Burns and Grove 1993). Open ended questions were included
because they afford the subjects to respond to questions in their own words providing further
insight and perspective.
The questionnaires were only in English since the population sample selected understands
English and can read and write for themselves. Here anonymity was guaranteed based on the

37
fact that the researchers would not be able to link their responses to them at the data analysis
stage. Questionnaire one (Q1) administered to the State Transport Corporation (STC) consists
of four (4) sections; A, B, C and D. The section A is aimed at gaining demographic data like
age, gender, and education. It also looks at the working experience (in years), position in the
Corporation, and specific departments of the respondents. This information could assist the
researcher when interpreting the results to gain insight into whether or not the subjects
perception of the audit report is linked to the department they belong or whether education is
linked to their understanding of the relevance of audit reports in their establishment. The
sections B, C, and D are focused on the subject matter of the research.
Questionnaire two (Q2) for the CSOs is also structured just as the Questionnaire one (Q1).
3.6.2 Data collection procedure
The questionnaires are personally distributed by the researchers to the STC and the CSOs’
employees and management to complete. The questionnaires administered were collected
within weeks after they were completed.
3.7 DATA RELIABILITY AND VALIDITY
3.7.1 Reliability
Polit and Hungler (1993) refer to reliability as the degree of consistency with which an
instrument measures the attribute it is designed to measure. The two questionnaires were
answered by both groups of subjects as well as an interview for the state auditor, The Ghana
Audit Service (GAS), and were structured in a way to ensure consistency. Reliability was

38
also ensured by minimizing sources of measurement error like data bias. The researchers
being the sole administers of the questionnaires providing the privacy, confidentiality and
general comfort attempts to reduce bias.
3.7.2 Validity
The validity of an instrument is the degree to which an instrument measures what it is
intended to measure (Polit and Hungler 1993). Content validity refers to the extent to which
an instrument represents the factors under study. To achieve validity, the questionnaires
included a variety of questions on Audit reports and its importance in the public sector of
Ghana.
Questions were based on the data gathered during the literature review to ensure that they
were representative of what the public stakeholders should know regarding the Audit reports
and its real essence in the public sector of Ghana. Also, content validity was further ensured
by consistency in administering the questionnaires with the questions formulated in simple
language for clarity and ease of understanding. Clear instructions were given to the subjects
to reduce errors and misstatements.
All persons approached to participate in the study completed questionnaires and participated
in the interview. With no person refusing to participate in the study, external validity was
ensured. Burns and Grove (1993:270) refer to external validity as the extent to which study
findings can be generalized beyond the sample used. Using 100% participation, generalizing
the findings to all members of the population is therefore justified. In a research, the number
of people who are approached and refuse to participate in the study should be reported so that

39
threats to external validity can be judged. As the percentage of those who decline to
participate increases, external validity decreases (Burns and Grove, 1993)
3.8 PRETESTING THE QUESTIONNAIRE
Before implementing the study, the researchers had to ensure that the measurement
procedures and the measurement instrument had acceptable levels of reliability and validity.
To pretest a questionnaire refers to a trial administration of an instrument to identify its flaws.
The researchers carried out a pretest on five people who do not form part of the research
sample.
3.9 DATA ORGANIZATION AND DATA ANALYSIS
Data collected from the field was organized using frequency distribution tables. Tables,
charts, graphs, frequencies and percentages were used to demonstrate the response that was
obtained from the respondents. The data was also analyzed by the use of an Excel
Spreadsheet to lend more credibility to the analysis. Qualitative methods of investigations are
also be employed alongside the quantitative methods in the analysis and interpretation of data
for the study.

40
CHAPTER FOUR
DATA ANALYSIS AND RESEARCH FINDINGS
4.1 INTRODUCTION
This chapter describes the analysis of data followed by a discussion of the research findings.
The findings relate to the research questions that guided the study. Data were analyzed to
identify, describe and explore whether or not audit reports reveal a true and fair view or are
only a mere compliance to legislations. This analysis and discussion is done using selected
public stakeholders and institutions that have interests in the audit outcomes of public
institutions. The chapter begins with a description of the demographic characteristics of the
respondents. The total number of respondents was forty. Out of the entire number of
respondents twenty of the respondents were for the selected public institution (intercity STC).
The remaining twenty respondents were for civil society organizations represented by
IMANIGhana and the Institute of Democratic Governance (IDEG). Ten respondents were
selected from IMANI and ten respondents were selected from IDEG to form the total number
of respondents of the civil society organization.
4.2 METHODS OF DATA ANALYSIS AND PRESENTATION OF DATA
Details of the survey instruments were given under chapter 3 and a copy of the questionnaire
is attached as Appendices. For ease of reference, the questionnaires were numbered one (1)
and two (2).
As far as possible, data were tabulated and displayed through tables, with the aim of
identifying and discerning any patterns that provided the best interpretation of the results
of the study.

41
4.3 INTERPRETATIONS OF FINDINGS
4.3.1 Demographic Relationships and Study Variables
Although it was not part of the purpose of the study, this set of data was intended to describe
demographic variables of the sample and to assess for any influence on the research findings.
The demographic data consisted of age, sex, years of experience and adequacy of training and
support. Respondents largely omitted the open- ended question in this section of the
Questionnaire.
4.3.2 Gender differences of the participants in the sample
From Intercity STC, males make up the majority of the respondents. Twelve, which
represents 60% of the respondents, were males whiles eight, which represents 40% were
females.
Table 1:Sex Distribution- Intercity STC
Sex No. Percentage
Male 12 60.0%
Female 8 40.0%
Total 20 100.0%
Source: Field Work, 2013
0
10
20
30
40
50
60
MALE FEMALE
SEX DISTRIBUTION

42
On the other hand, from IMANI majority from the civil society organization of the
respondents were females. Three (30.0%) were males from IMANI. There was another three
(30.0%) of the respondents from IDEG. Seven (70.0%) of the respondents from IMANI were
females and another seven (70.0%) of the respondents were females from IDEG.
Table 1:Sex Distribution- Civil Society Organizations (IMANI & IDEG)
4.3.3 Age ranges of the participants in the sample
From Intercity STC, the age group that has the greatest percentage is 50 years or more. Nine
of the respondents are aged between 50 years or more which has a percentage of 45%. Four
of the respondents are also aged between 20-29 years which has the second highest
percentage of 20%. The age group that comes third is 40-49 years which has 3 members
representing 15%. At the bottom are the age groups 30-39 years and 19 years or less, both of
which have a percentage of 10%. Table (2)
0
10
20
30
40
50
60
70
MALE FEMALE
SEX DISTRIBUTION
IMANI IDEG
Sex No Percentage No Percentage
Male 3 30.0% 3 30.0%
Female 7 70.0% 7 70.0%
Total 10 100.0% 100.0% 100.0%

43
Table 2: Age Distribution- Intercity STC
Age No. Percentage
19 or less 2 10.0%
20-29 4 20.0%
30-39 2 10.0%
40-49 3 15.0%
50 or more 9 45.0%
Total 20 100.0%
On the other hand, respondents from IMANI had their ages falling between 19 and 50 years
and above. Five (50.0%) of the respondents from IMANI had their ages falling between 20
and 29 years old. The same number respondents were from IDEG. Two (20.0%) of the
respondents had their ages falling from 30 and 39 years old. Four (40.0%) of the respondents
from IDEG had their ages falling between 30 and 39 years old. None of the respondents from
IDEG had their ages falling between 40 and 49 years old.
AGE DISTRIBUTION
19 OR LESS
20-29
30-39
40-49
50 OR MORE

44
Table 3: Age distribution-Civil Society Organizations (IMANI & IDEG)
AGE DISTRIBUTION (IMANI)
19 OR LESS
20-29
30-39
40-49
50 OR MORE
AGE DISTRIBUTION (IDEG)
19 OR LESS
20-29
30-39
40-49
50 OR MORE
IMANI IDEG
Age No. Percentage No. Percentage
19 or less 1 10.0% 1 10%
20-29 5 50.0% 5 50%
30-39 2 20.0% 4 40%
40-49 1 10.0% 0 0%
50 or more 1 10.0% 0 0%
Total 10 100.0% 10 100%

45
4.3.4 Educational Qualification
From Intercity STC,majority of the respondents hold a degree, masters or a PhD. 50% of the
respondents possess a degree, masters or a PhD, forming the majority. 25% of the
respondents are professionals and closely in third position are diploma/HND holders who
form 20%. None of the respondents hold a WASSCE certificate whiles just 5% hold other
qualifications. Table (3)
Table 4: Educational Qualification- Intercity STC
Highest Qualification No. Percentage
WASSCE 0 0.0%
DIPLOMA/HND 4 20.0%
DEGREE/MASTERS/PHD 10 50.0%
PROFESSIONAL 5 25.0%
OTHERS 1 5.0%
Total 20 100.0%
Educational Qualification- Intercity STC
On the other hand, none of the respondents from IMANI had professional qualification.
Respondents from IDEG had a professional qualification
0
1
2
3
4
5
6
7
8
9
10

46
Table 5: Educational Qualification- Civil Society Organizations (IMANI & IDEG)
IMANI IDEG
Highest Qualification No. Percentage No. Percentage
WASSCE 0 0.0% 0 0.0%
DIPLOMA/HND 0 0.0% 0 0.0%
DEGREE/MASTERS/PHD 10 100.0% 9 90%
PROFESSIONAL 0 0.0% 1 10%
OTHERS 0 0.0% 0 0.0%
Total 10 100.0% 10 100%
Educational Qualification- Civil Society Organizations (IMANI)
0
1
2
3
4
5
6
7
8
9
10

47
4.3.5 Departmental Distribution
From Intercity STC, the department with the greatest share of respondents is Accounting and
finance. Accounting and finance has twelve members which represents 60% of the
respondents. Administration and Other departments are both in second place with 15% each.
Also, sales and marketing has a percentage of 5%, same for technical. None of the
respondents are from the Human Resource department. Table (4)
Table 6: Departmental Distribution- Intercity STC
Department belonging to No. Percentage
Sales and marketing 1 5.0%
Administration 3 15.0%
Technical 1 5.0%
Accounting and Finance 12 60.0%
Human Resource 0 0.0%
Other 3 15.0%
Total 20 100.0%
0
1
2
3
4
5
6
7
8
9
Educational Qualification- Civil
Society Organizations (IDEG)

48
Departmental Distribution- Intercity STC
On the other hand, at IMANI, two respondents (20.0%) of the respondents belong to the sales
and marketing department. Three (30.0%) of the respondents belong to the finance and
administrative department. Five (50.0%) of the respondents were from the supply chain
department. On the other hand, four (40.0%) of the respondents from IDEG were from the
finance and administrative department but six (60.0%) of the respondents from IDEG were
from other departments.
Table 7: Departmental Distribution-Civil Society Organizations (IMANI & IDEG)
IMANI IDEG
Department belonging to No. Percentage No. Percentage
Sales and marketing 2 20.0% 0 0.0%
Finance and Admin 3 30.0% 4 40.0%
Technical 0 0.0% 0 0.0%
Internal Control 0 0.0% 0 0.0%
Supply Chain 5 50.0% 0 0.0%
Other 0 0.0% 6 60.0%
Total 10 100.0% 10 100.0%
0
2
4
6
8
10
12

49
Departmental Distribution-Civil Society Organizations (IMANI)
Departmental Distribution-Civil Society Organizations (IDEG)
4.3.6 Years of Experience
Six of the respondents have about 0-5years of experience in their current position, which is
the same for those with 15 years and above worth of experience. They both form the highest
percentage share of 30%. Respondents with 10-15years of experience make up 25%. Whiles,
those with 5-10 years of experience are at the bottom with 15%. Table (5)
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Sales and
marketing
Finance and
Admin
Technical Internal Control Supply Chain
0
1
2
3
4
5
6
Sales and
marketing
Finance and
Admin
Technical Internal
Control
Supply Chain other

50
Table 8: Years of Experience
Years of experience in current position No. Percentage
0-5 6 30.0%
5-10 3 15.0%
10-15 5 25.0%
15 and above 6 30.0%
Total 20 100.0%
Years of Experience
4.4 Section B-The Audit Report and associated perception
4.4.1 Ever seen an Audit Report
Nineteen (95%) of the respondents have seen an audit report before. Just one of the
respondents, which represents 5% have never seen an audit report. Table (6)
Table 9: Ever seen an Audit Report
Have you ever seen an audit report? No. Percentage
Yes 19 95.0%
No 1 5.0%
Not sure 0 0.0%
Total 20 100.0%
0
1
2
3
4
5
6
0-5 years 5-10years 10-15years 15 and above

51
4.4.2 Importance of audit report
The greatest proportion of the respondents believes that an audit report is important. 85% of
the respondents are in the affirmative. None said no but, 15% of the respondents are not sure
of the importance of the audit report. Table (7)
Table 10: Importance of audit report
Do you think it is really important? No. Percentage
Yes 17 85.0%
No 0 0.0%
Not sure 3 15.0%
Total 20 100.0%
Ever seen an Audit Report
Yes
No
Not sure
Importance of Audit Report
Yes
No
Not sure

52
4.4.3 Essence of Audit Reports
Two (10%) of the respondents mentioned that to reveal compliance to legislation gives them
the real essence of audit reports in their firms. On the other hand, 20% feel that to pass true
and verdict on financial statements give them a real essence of audit reports. 60% think that
both of the two criteria listed above gives them real essence of audit reports but 10% think
that some other criteria gives them that real essence.
Table 11: Essence of Audit Reports
Which of the following gives you the real essence of audit reports
in your establishment?
No. Percentage
To reveal compliance to legislations 2 10.0%
To pass true and verdict on financial statements 4 20.0%
Both 12 60.0%
Other 2 10.0%
Total 20 100.0%
SECTION B – Audit Compliance and True and Fair View
4.5.1 Whether or notTRUE AND FAIR view principle Supersedes or Overrides compliance
to legislation
Essence of Audit Reports
To reveal compliance to
legislations
To pass true and verdict on
financial statements
Both
Other

53
Majority of the respondents believe that to reveal compliance to legislations supersedes
passing true and verdict on financial statements. Forty five percent (45%) of the respondents
agree to the former whiles, just 25% go with the later. 30% of the respondents believe that
none of them supersedes the other.
Table 12: Whether or notTRUE AND FAIR view principle Supersedes or Overrides
COMPLIANCE to legislation
With reference to question 8, which of the above supersedes the
other?
No. Percentage
To reveal compliance to legislations 9 45.0%
To pass true and verdict on financial statements 5 25.0%
None 6 30.0%
Other 0 0.0%
Total 20 100.0%
4.5.2 Audit Compliance to Legislations
Six of the respondents form IMANI (60.0%) strongly agrees that there should be adherence
to audit regulation and four of the respondent representing 40.0% also agree that there should
be adherence to audit regulation. None of the 10 respondent disagrees to that. In contrast two
of the respondents from IDEG (20.0%) strongly agree that there should be adherence to audit
Whether or not TRUE AND FAIR view principle Supersedes or Overrides
COMPLIANCE to legislation
To reveal compliance to
legislations
To pass true and verdict on
financial statements
None
Other

54
regulation and eight of the respondent representing 80.0% also agree that there should be
adherence to audit regulation. None of the 10 respondent disagrees to that.
Out of the 10 respondent, only two of the respondents form IMANI (20%) agrees to it that the
regulations regarding public sector are duly followed. Three of the respondent disagree
representing 30% of the total respondent while five (50%) strongly disagree. Majority of the
respondent strongly disagree that regulations are duly followed at the public sector. In
contrast out of the 10 respondent from IDEG, four (40%) agree to it that the regulations
regarding public sector are duly followed. Five of the respondents disagree representing 50%
of the total respondent while one (10%) was not sure. Majority of the respondent disagree
that regulations are duly followed at the public sector.
Table 13: Audit Compliance to Legislations-Civil Society Organizations - IMANI
VARIABLE Strongly
Agree
% Agree % Disagree % Strongly
Disagree
% Not
Sure
%
Sample 10.00 100% 20.00 100% 20.00 100% 20.00 100% 20.00 100%
Adherence to
audit regulation
9 90.0% 6 30.0% 0 0.0% 0 0.0% 0 0.0%
Regulations are
duly followed
0 0.0% 2 10.0% 3 15.0% 0 9 45.0%
Regulations
have a bearing
in the public
sector
2 20.0% 9 45.0% 1 5.0% 0 0.0% 2 10.0%
Adherence to
audit regulation
in public sector
1 10.0% 1 5.0% 1 5.0% 2 10.0% 1 5.0%
Importance of
audit
compliance
1 10.0% 1 5.0% 3 15.0% 1 5.0% 0 0.0%

55
Audit Compliance to Legislations-Civil Society Organizations - IMANI
Table 14: Audit Compliance to Legislations-Civil Society Organizations - IDEG
VARIABLE Strongly
Agree
Disagree
% Not
Sure
%
Adherence
to audit
regulation
3 30.0% 2 10.0% 0 0.0% 0 0.0% 0 0.0%
Regulations
are duly
followed
0 0.0% 1 5.0% 2 10.0% 3 0 0.0%
Regulations
have a
bearing in
the public
sector
1 10.0% 3 15.0% 0 0.0% 1 15.0% 1 5.0%
Adherence
to audit
regulation in
public sector
1 10.0% 2 10.0% 6 30.0% 0 0.0% 5 25.0%
importance
of audit
compliance
0 0.0% 5 25.0% 2 10.0% 0 0.0% 6 30.0%
0
2
4
6
8
10
12
14
16
Adherence
to audit
regulation
Regulations
are duly
followed
Regulations
have a
bearing in
the public
sector
Adherence
to audit
regulation in
public sector
Importance
of audit
compliance
Not Sure
Strongly Disagree
Disagree
Agree
Strongly Agree

56
4.5.3 True and Fair View
Out of the 10 respondent from IMANI, six (60%) agree that true and fair has a bearing a
financial reports while two (20%) strongly agree. Only two (20%) of the respondent disagree.
But out of the 10 respondent from IDEG, eight (80%) agree that true and fair has a bearing a
financial reports while two (20%) of the respondent were not sure. None of the respondent
disagrees
Three (30%) of the respondent from IDEG strongly agree that audit regulations have a
bearing on the performance of the audit work in the public sector. Two of the respondent
representing (20.0%) also agree while two (20%) also disagree. Three (30%) of the total
respondent were not sure. At the other hand, two (20%) of the respondent from IMANI
strongly agree that audit regulations have a bearing on the performance of the audit work in
the public sector. Four of the respondent representing 40.0% also agree while two (20%) also
strongly disagree. Two (20%) of the total respondent were not sure. (Table 17)
0
2
4
6
8
10
12
14
16
Adherence
to audit
regulation
Regulations
are duly
followed
Regulations
have a
bearing in
the public
sector
Adherence
to audit
regulation
in public
sector
Importance
of audit
compliance
not sure
stongly disagree
disagree
agree
strongly agree

57
Out of the 10 respondent from IMANI, two (20%) strongly agree that adherence of audit
regulation pose some limitations to the performance of audit work in the public sector. Two
(20%) of the respondent agree. Two (20%) disagree while two (20%) also strongly disagree.
Two (20%) of the respondent were not sure. In contrast out of the 10 respondent, only two
(20%) strongly agree that adherence of audit regulation pose some limitations to the
performance of audit work in the public sector while eight (80%) also strongly disagree.
(Table 15)
Two (20%) of the respondent strongly agree that audit compliance are of importance. Two
(20%) of the respondent also agree .Four 0f the respondent representing 40% disagree while
two (20%) of the respondent strongly disagree. On the contrary seven (70%) of the
respondent agree that audit compliance are of importance while only three (30%) of the
respondent disagree. (Table 15)
True and Fair View - IMANI
0
1
2
3
4
5
6
Audit present
a true
performance
True and fair
has a bearing
on financial
reports
Adherence
pose a
limitation to
financial
statements
Financial
statements is
indicative of
future growth
and survival
Importance
of true and
fair view
supersedes
the audit
compliance
Not Sure
Strongly Disagree
Disagree
Agree
Strongly Agree

58
Table 14: True and Fair View - IMANI
VARIABLE Strongly
Agree
Disagree
% Not
Sure
%
Audit
present a
true
performance
2 20.0% 3 15.0% 0 0.0% 0 0.0% 0 0.0%
True and fair
has a bearing
on financial
reports
1 10.0% 4 20.0% 1 5.0% 0 0.0% 0 0.0%
Adherence
pose a
limitation to
financial
statements
0 0.0% 2 10.0% 2 10.0% 2 10.0% 0 0.0%
Financial
statements is
indicative of
future
growth and
survival
0 0.0% 5 25.0% 1 5.0% 0 0.0% 0 0.0%
Importance
of true and
fair view
supersedes
the audit
compliance
0 0.0% 1 5.0% 4 20.0% 0 0.0% 1 5.0%
True and Fair View- IDEG
0
2
4
6
8
10
12
14
NOT SURE
STRONGLY DISAGREE
DISAGREE
AGREE
STRONGLY AGREE

59
Table 16: True and Fair View- IDEG
VARIABLE Strongly
Agree
Disagree
% Not
Sure
%
Audit
present a
true
performance
8 80.0% 3 15.0% 1 5.0% 1 5.0% 1 5.0%
True and fair
has a bearing
on financial
reports
6 60.0% 5 25.0% 0 0.0% 0 0.0% 3 15.0%
Adherence
pose a
limitation to
financial
statements
2 20.0% 2 10.0% 4 20.0% 0 0.0% 5 25.0%
Financial
statements is
indicative of
future
growth and
survival
1 10.0% 5 25.0% 1 5.0% 2 10.0% 5 25.0%
Importance
of true and
fair view
supersedes
the audit
compliance
1 10.0% 1 5.0% 6 30.0% 0 0.0% 4 20.0%
4.6 Section C- Audit Reports and Public Sector Auditing
4.6.1 Public sector accountability and Audit Reports
Most of the respondents do not believe that the audit report is not an end to itself as far as
public sector accounting is concerned. 50% of the respondents affirmed to the above
statement, while 35% do not. Three of the respondents (representing 15%) are not sure.

60
Table 17: Public sector accountability and Audit Report
Is the audit report an end to itself as far as public sector
accountability is concern?
No. Percentage
Yes 7 35.0%
No 10 50.0%
Not sure 3 15.0%
Total 20 100.0%
4.6.2 Audit reports, fraud and mismanagement
Majority of the respondents believe that audit reports can reveal fraud and mismanagement in
the public sector. 85% agree with the above statement. None where in the negative, while
three of the respondents (representing 15%) are not sure. Table (18)
Table 18: Audit reports, fraud and mismanagement
Can audit report reveal fraud and mismanagement in the public
sector?
No
.
Percentag
e
Yes 17 85.0%
No 0 0.0%
Not sure 3 15.0%
Total 20 100.0%
Public sector accountability and Audit Report
Yes
No
Not sure

61
4.6.3 Audit report and forecast
Sixteen (80%) of the respondents say that audit reports have the ability to forecasts a
company’s doom. Three, which represents 15% of the respondents, disagree. Just 5% of the
respondents are not sure.
Table 19: Audit report and forecast
If yes, can the audit report forecast doom for a company? No. Percentage
Yes 16 80.0%
No 3 15.0%
Not sure 1 5.0%
Total 20 100.0%
Audit reports, fraud and mismanagement
Yes
No
Not sure
Audit report and forecast
Yes
No
Not sure
4th Qtr

62
4.6.4State Auditors (Ghana Audit Service) and effective audit
Four (20%) of the respondents think that the state auditors are adequately resourced to
perform a good audit. The same number of respondents thinks otherwise. But 60% of the
respondents are not sure if the state auditor’s resources are adequate or not. Table (20)
Table 20: State Auditors and effective audit
Are the State Auditors adequately resourced to perform a good
audit?
No. Percentage
Yes 4 20.0%
No 4 20.0%
Not sure 12 60.0%
Total 20 100.0%
4.6.5 Audit reports and remedial actions on management
Out of the total respondents, 65.0% agreed that, management issues identified by audit
reports lead to a change in management of the company whereas 5.0% did not agree and
30.0% weren’t sure
State Auditors and effective audit
Yes
No
Not sure

63
Table 21: Audit reports and change in management of the company
Can the management issues identified by audit reports lead to a
change in management of the company
No. Percentage
Yes 13 65.0%
No 1 5.0%
Not sure 6 30.0%
Total 20 100.0%
4.6.6 Auditing in the Public Sector and meeting its purpose
Most of the respondents believe that auditing in the public sector serves its purpose. Half of
the respondents say that auditing in the public sector serve its purpose. On the other hand
45% of the respondents think otherwise. 5% were not certain. Table (16)
Table 22: Auditing in the Public Sector and meeting its purpose
Does auditing in the Public Sector serve its purpose? No. Percentage
Yes 10 50.0%
No 9 45.0%
Not sure 1 5.0%
Total 20 100.0%
Audit reports and change in management of the company
Yes
No
Not sure

64
4.7 Section D- Post Audit Report: the role of the Public Accounts Committee of
Parliament.
4.7.1 Responsibility of Public Accounts Committee of Parliament (PAC)
Public Accounts Committee Responsibility
Fourteen (70%) of the respondents have knowledge about the responsibilities of the Public
Accounts Committee in public sector responsibility. Two (10%), on the other hand, have no
idea about the Public Accounts Committee’s responsibility. Lastly, four (representing 20%)
are not sure if they know those responsibilities. Table (23)
Table 23: Responsibility of Public Accounts Committee
Are you aware of Public Accounts Committee's responsibility in public
sector responsibility
N
o.
Percent
age
Yes 14 70.0%
No 2 10.0%
Not sure 4 20.0%
Total 20 100.0%
Auditing in the Public Sector and meeting its purpose
Yes
No
Not sure
4th Qtr

65
4.7.2 Follow ups made by Public Accounts Committee
With respect to weather the Public Accounts Committee of Parliament has followed up on
any 50% of the respondents were not sure if any follow ups had been made by the Public
Accounts Committee on any management issues raised from their corporations audit reports.
Two of the respondents (representing 10%) were positive that the Public Accounts
Committee had made some follow ups. On the other hand 40% of the respondents said no.
Table (24)
Table 24: Follow ups made by Public Accounts Committee
Has the Public Account Committee of Parliament followed up on any
management issues raised from your corporations Audit Reports?
No.
Percent
age
Yes 2 10.0%
No 8 40.0%
Not sure 10 50.0%
Total 20 100.0%
Responsibility of Public Accounts Committee
Yes
No
Not sure
4th Qtr

LONG ESSAY COMPLETE

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