1.0 Introduction
1. I Background of the Study
There has been an increasing attention in the system of internal audit in the recent past. This is due mainly to the increasing size of most business units and the complexity of most modern business unit which have encouraged the adoption of different system.
The development of these different systems leads to the efficiency of management and subsequently the output of the management process. Systems such as internal audit, accounting control, electronic data processing system among others are adopted in management for the sole purpose of achieving target goals and objectives ensuring the safeguarding or organizations and the completeness and accuracy of records.
Internal audit is a component of the internal control system set up by management. The history of internal audit system could be traced back to the time when human beings began to form organization to achieve goals which they could not achieve themselves as single individuals. The question of management and co-ordination of effort become essential immediately two individuals or more come together to achieve a common goal.
Over the years, these organizations have grown in physical size and expand vastly in operations and because of this various kinds of irregularities have cropped in ranging form unintentional errors, to frauds.
1.2 Statement of Problem
An English adage says that “knowing to problems is half the cure” some o f the problems of internal audit are:
- Many companies do not maintain internal audit section at all
- Many workers do not co-operate with the internal audit.
- The workers do not understand their jobs well and this causes ineffectiveness.
- The internal audit sections do not perform routine checks of day to day financial transactions of the firm.
- The internal audit does not review existing procedure form time to time with a view of reporting on non-compliance.
- The internal audit section is usually under staffed.
1.3 Objectives of the Study
The purpose and objectives are outlined below:
- To find out if there is an internal audit section in the firm
- To find out if routine checks are carried out
- To find out if the internal auditor and the workers do co-operate, and to what extent
- To find out if the internal auditor reviews from time to time existing procedures.
- To find out if the workers or staff understand their function correctly.
- To find out if the internal audit sections have adequate number of staff.
1.4 Research Question
To conduct an adequate research work and to help in ensuring effective management in an organization through internal auditing, the following research questions will guide this research work.
- Does internal audit department aid management in the effective use of resources?
- How effective is the use of internal audit to avoid the degree of inadequate management ineffective discharge of it duties?
- Does the existence of an effective internal audit department reduce the frequent cases of mismanagement, fraud, embezzlement of fund and non-challant attitude of workers in an organization
1.5 Significance of the Study
Internal audit has become so imperative that auditors now call for its existence in every organization. This is because a good system of internal audit facilitates the detection of frauds, errors and other irregularities that could manifest in an organizations accounting system.
In recent times, a good system of internal audit has been recognized by management as a valuable tool for effective carrying out of its responsibilities and auditors have pressed for improvement in internal audit system in their effort to be of assistance to their clients.
It is hoped that this work will be if immense benefit not only to the management of the organization but also the auditors. This research will also be of a great use to those intending to write on similar topics especially students writing projects, to who it will serve as a material for reference if kept in the library.
1.6 Scope of the Study
The research ids designed to cover the general principles and procedures of internal control as propounded by experts in the field of accounting, the company and Allied matters Act (CAMA) of 1990 and other recognized accounting and auditing bodies which will provide basis for application in the organization.
The study will also examine the organization ranging form formation through its objectives areas or operation, structures, budgeting, general administration, cash and in general, internal audit procedure with a view to identify areas of weakness if it exist.
1.7 Limitation of the Study
In the course of this work, some constraints were discovered which stood as a stumbling block: such as:
Time Factor:
Due to the limited period of time given for this work and extensive search for material was done in order to do a thorough investigation in to the problems being worked on.
Economic Depression:
The persistent downward trend to the limitations of this study. It was difficult under this economic condition to source fund for the finance of this research work.
However, this study will not delve into staff fielding or probe management efficiency as these may call for a separate work in future. The thoroughness of this work has also been limited by the vast number of branches the selected firms have and it is on the strength of this Constraint that the study is being conducted on only the head office of the organizations.
1.8 Definition of Terms
Auditing:
An audit is an independent examination of and expression of opinion on the financial statement of an enterprise, by an appointed auditor in pursuance of that appointment and in compliance with any relevant statutory obligation.
Management:
This is the extent of care and prudence applied me handling resources. Management as used in this study can also refer to senior members. They are people who formulate and enforce policies, and they are also the decision makers.
Effective:
This means achieving a programmed objectives or goals.
System:
A system is an entity which is composed of a number of attributes and is also composed set of relationships which connect the object. It is a predesigned set of rules and procedures to ensure continuity and efficiency of activities.
Control:
Control is essentially a management function that deals with the measurement and correction of performance of the subordinates with a view to achieving organizational objectives with maximum efficiently and at a minimum cost.
Internal Audit:
Internal audit is the independent appraisal activity within an organization for the review of accounting financial and other operation as a basis for protective and constructive service to management. This definition is adopted form the definition given on the responsibility of internal auditors.
Fraud and Irregularities:
In the auditing practices, the committee's guideline on fraud and other irregularities, fraud is defined as the irregularities involving the use of criminal deception to obtain an unjust or illegal advantage. Irregularities are used to refer to alteration or distortions of financial statements for whatever purpose.
