1.0 Introduction
1.1 Background of the Study
Internal auditing can be defined as an independent appraisal of activities within an organization for the review of operation as a service to management. It is a managerial control function which functions by measuring and evaluating the effectiveness of other controls. The internal auditor objectively examines, evaluates and reports on the adequacy of internal control as a contribution to the proper, economics, efficient and effective use of resources.
Internal audit is the function of records appraising the procedures and organization of a business and reviewing effectiveness of the system of internal check. It is widely accepted that virtually nothing in the society should be spared on independent review. The object is to promote the utmost efficiency and security conducting a business. Attempts have been to trace internal auditing back to ancient times.
Perhaps the greatest stimulus to the development in the U.K was the establishment in the court of the principle that a local authority treasurer is personally accounting funds this led to the appointment of an internal auditor to the treasurer's staff whose initial task was to perform a pre-audit for the treasurer before the district audit arrived.
However, efficient an organization is set out to be, procedural deadwoods is certain to accumulate unless conscious and regular steps are taken to discard what is out modeled. Once this is appreciated, the internal auditor can work amicably and advantageously as an instrument of management control.
Contemporary internal audit provides a constructive service to all branches of management. It is now concerned to appraise the effectiveness of internal control in operational areas such as production or marketing as well as in the traditional area of accounting and finance.
Internal auditor seeks for effectiveness, economy and efficiency. This is because internal auditors intended to become a better acquainted with the procedures and auditing activities could be carried on, continuously, once a year when outsider auditing services were utilized.
As a further inducement to the development of internal auditing, public accountant were about the same time finding to the expression of an opinion that they could seldom perform the other types of detailed verification as efficiently as could the company own specialist.
1.2 Statement of the Problem
The problems identified in this area of study include the following:
- The funds and properties of the organization entrusted to certain individual employees of the organization in most cubes, these individuals works are not brought under thorough surveillance.
- The result is that much of these funds and properties are diverted to personal use.
- Measures that could be taken to address the problem arising from these internal auditing, so that it can be effectiveness and reliable tools to management in the performance of its functions.
1.3 Purposes of the Study
The purposes of this study are the following:
- To identify the functions of the internal audit department.
- To ascertain whether or not adequate and efficient internal control system exists in Nigeria breweries.
- To identify problems that hinders the efficient performance in the system.
- To suggest solution to these problem.
- To find out whether internal auditing is an instrument for effective management of companies.
1.4 Research Questions
Based on the information in the statement of the problem the research question are:
- What are the functions of the internal audit department
- Does efficient and adequate internal control exist in Nigeria Breweries Plc. Aba?
- Are there any problems that hinder the performance of the internal auditing to eliminate these problem departments?
- Is internal auditing an instrument for effective management of companies?
- What solutions should add to eliminate these problems?
1.5 Significance of the Study
- This research work is expected to be the immense benefit to the management of every organization that has internal auditing department so that the internal auditing can make effective use of the department in their administration.
- It also expected to segregate duties this is particularly important in any organization because it prevents both intentional and errors.
- This research work is also expected the physical control over assets and records. The most important type of protective measure for safe-guarding assets is the use of physical precaution, such as the use of store rooms and store keepers for inventory to ensure the orderly transfer of material to production processes and to prevent misappropriation.
1.6 Scope of the Study
The study is restricted to companies in the financial sector. Company performance indices were identified and defined and used to test the effective management of an auditor.
These financial statements were analyzed to examine the influence of this internal auditing as an instrument for effective management of companies.
1.7 Limitations of the Study
- Lack of instrument necessary to carrying out the research work successfully.
- Lack of adequate information on the school liberary and magazine
- Time constraint; the time set aside for the study is very short.
However, the researcher intends to carryout the study successfully, thereby seeking information from company. It should be public or published when done. It is in most cases not at the appropriate time for a research purposes. It is hoped that both limitation would not affect the relevance of our findings.
1.8 Definition of Terms
Internal Audit:
Is an element of internal control system set up by management of an enterprise to examine, evaluates and reports on accounting and other control on operations.
Internal Control:
This is the whole system by management in order to carry on the business of the enterprise in an orderly and efficient manner.
Operational Audit:
is an audit that is set for a specific set of operation, for example those that carried out in one department.
Management Audit:
Is an enquiry on the effectiveness and efficiency of management. It is also cackled efficiency or operations audit; it helps to determine whether the objectives of an organization are being achieved under management.
