EFFECT OF INTERNAL AUDIT IN AN ORGANIZATION

CHAPETR ONE

INTRODUCTION 

1.1        Background of the study

1.2        Statement of problem

1.3        Objective of the study

1.4        Research Hypotheses

1.5        Significance of the study

1.6        Scope and limitation of the study

1.7       Definition of terms

1.8       Organization of the study

CHAPETR TWO

2.0   LITERATURE REVIEW

CHAPETR THREE

3.0        Research methodology

3.1    sources of data collection

3.3        Population of the study

3.4        Sampling and sampling distribution

3.5        Validation of research instrument

3.6        Method of data analysis

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS AND INTERPRETATION

4.1 Introductions

4.2 Data analysis

CHAPTER FIVE

5.1 Introduction

5.2 Summary

5.3 Conclusion

5.4 Recommendation

Appendix

 

Abstract

This study is effect of internal audit in an organization. The total population for the study is 200 staff of first bank, Enugu state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up accountants, human resource managers, customer care officers and marketers were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies

 

 

 

 

 

 

 

 

 CHAPTER ONE

INTRODUCTION

• Background of the study

The method of examining the evidence of financial transactions could be traced back to the time when there was need to transact business beyond one’s immediate needs. But successful Management as the central directing and controlling elements in a business organization came as a result of individuals pooling their resources together to strengthen their co-ordinate and integration of specific activities in the organization to ensure effectiveness and efficiency of human cooperation in recent times, business organization are increasing due to scientific breakthrough and economic development. As a result, the need for decentralization, which means authority is systematically delegated or pushed down the line in an organization arises. This makes corporate management becomes so complex and the increasing volume of trade among business organization has made the art of management so complex and challenging. The only managers with mastered skills in modern scientific method of management can cope with the increasing demand required by their position. In addition to this complexity of corporate management, is the increasing wave to fraud and misappropriation of funds in the private and public sectors of the economy at large. In an attempt to cope with this situation and keep their business profitable, management have to look inwardly to increase control system, by which all the policies and activities are put to check to conform to the set objectives. This involves the subdivision of duties by means of which no one person is entirely responsible for one transaction but at some stage of its performance, each person work come to the notice of at least one other person. Internal audit also forms a integral part of this internal control system, which is a management function, which appraise the problems, and performance of every department in the organization.

• STATEMENT OF PROBLEM

Corporate managers may delegate their authority but the responsibility to get the assignment done cannot be delegated, but rather rest on the managers. In this understanding managers manage conceptual system which will ensure that physical assets represented by conceptual assets are protected and managed properly. Since management can only manage through delegation of authority, it is only through a good internal auditing system that the top managers can check the level of compliance to delegated authority. Internal audit is needed to ensure that all delegated duties are carried out effectively and also that the policies and procedures of the company are adhered to strictly, this include the following:

 

1. Internal audit are not independent.
2. They are employed by management and therefore are responsible to the management.
3. Some of them are responsible to the director of financing accounts.
4. They are not professionally qualified.
5. They are not well paid.

OBJECTIVES OF THE STUDY

An audit is not primarily aimed at detecting Fraud and errors, or dinging fault with accounting staff of an organization.  Naturally, in the process of examining the documents which form the basis of a financial statement, the auditor, may detect fraud or errors and weaknesses in the accounting system. The primary objectives of audit are the examination of all available and relevant evidence by the auditor with intent to reporting on the correctness and to be able to determine the following:

1. To determine the extent to which management does not allow auditors to perform their function.
2. To examine the level of education of internal audit staff.

iii. To determine the extent to which internal audit staff are professionally qualify.

1. To examine the salaries of internal audit staff as compared with other company’s staff.

v.To determine the relationship between the internal audit department and the Accounting Department and Management.

1.4 RESEARCH HYPOTHESES

For the successful completion of the study, the following research hypotheses were formulated by the researcher;

H₀: Internal audit does not make frauds and embezzlements less possible in an organization.

H₁: Internal audit does not make frauds and embezzlements less possible in an organization.

H₀²: Internal audit does not help management to keep proper control of its assets, activities and responsibilities.

H₂: Internal audit helps management to keep proper control of its assets, activities and responsibilities.

1.5 SIGNIFICANCE OF THE STUDY

The process of allocating financial resources from the surplus sector of the Economy to the deficient sector in the course of generating economic activities is guided with series of regulations to ensure that the totality of the financial system is operated with some measure of sanity.  Hence, we have such regulatory agencies like the Banks, National Insurance Art, the securities Exchange Acts, and the other operators of the financial system are expected to carry out their operation strict compliance to these regulation failing which the erring company is penalized by various means which at the extreme may include the outright with drawal of the operating licence of such company e.g the case of savannah Bank in distress.

 

1.6 SCOPE AND LIMITATION OF THE STUDY

The study focused on the importance of internal audit as an aid to corporate management.  Internal auditing is a component of internal control system.  Through, this study will not concern itself with the review of the internal control system.  Thus, the study of auditing in its producers, programmers and the standard of the general auditing and its functions will not be covered in this study.  However, auditing and internal control system that involves internal auditing will be emphasized. The Nigeria financial system has witnesses some set back from auditor, due to unfaithful people of the nation. The introduction of an Auditor in a public and private enterprises has mis-used by some Auditors as opportunity to become over-right affluence. The independence of an Auditor has also voided due to mis-management of the companied. The researcher encounters some constrain which limited the scope of the study;

1. a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study
2. b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
3. c) Organizational privacy: Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.

 1.7 DEFINITION OF TERMS

INTERNAL AUDIT: Internal audit is a dynamic profession involved in helping organizations achieves their objectives. It is concerned with evaluating and improving the effectiveness of risk management, control and governance processes in an organization

ORGANIZATION: An organization or organization is an entity comprising multiple people, such as an institution or an association that has a collective goal and is linked to an external environment.

1.8 ORGANIZATION OF THE STUDY

This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study

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