Internal Control System and Financial Accountability: An Investigation of Nigerian South-Western Public Sector

This study examines the effect of internal control system on financial accountability, in terms of effective and efficient financial operation, compliance with applicable laws and regulations. Reliable financial reporting, transparency and flow of information were obtained primarily from a random sample of 354 Heads of Units in the Account and Audit Departments, in 65 Ministries of the Southwestern Nigeria. These participants were directly involved in the management, financial planning and controls. The 222 fully completed and returned questionnaires were coded and analysed using descriptive analysis and regression technique. The results of the study revealed that internal control system had a positive effect on financial accountability, in terms of effective and efficient financial operation, compliance with applicable laws and regulations, reliable financial reporting, transparency and flow of information with the mean scores of 4.22, 3.91, 3.86, 3.81 and 3.47 respectively. The regression results also showed that control environment, control activities, risk assessment, information and communication and monitoring and evaluation significantly impact on financial accountability in public sector. The ANOVA with the F = 16.995, p 0.05 showed that all the components of internal control system had significant effect on financial accountability in public sector. Therefore, the study concluded that internal control system put in place in the public sector is well established and adequate for effective and efficient financial accountability with adequate use of all channels of communication and information flow for proper financial accountability. This study recommends that the internal control unit should be encouraged to maintain their independent role, such that the internal auditor should be adequately independent from those responsible for the financial operation, as well as to be able to provide additional assurance on cost efficiency and effectiveness of the internal control system.