Internal Audit as a Tool in Achieving Organizational Objectives. (A Case Study of First Bank Plc, Agbara)
OBJECTIVES OF STUDY
Internal audit is a tool and a way to help organizations achieve their set goals or objectives. The main objectives of the study are as follows:
- To examine the effectiveness of internal audit in an organization.
- To show how internal audits assist in management operations.
- To show how organizational hierarchy has influenced the internal audit department.
- To ascertain how the internal audit department is a base in achieving value for money audit
REVIEW OF RELATED LITERATURE
Management audit is a systematic examination of the systems, procedures, and management processes of the organization to determine the extent to which that are operating effectively in achieving the objectives of the organization and indicate where improvements are required. It is sometimes referred as “operation audit” and the process can be termed management auditing “operational auditing”.
According to professor Epstem, “the management audit is concerned with management appraisal, but in a context of evaluating management performance in totality.
While another author, Finch F. define it as “An audit of a company’s policies, objectives, techniques and processes, resulting in a set of conclusions on managerial effectiveness and efficiency, and recommendations on possible way of increasing performance and profitability Hano Yohannesen gave his definition as a systematic assessment of standards and techniques of management.
A very recent and professional qualified competent author, Caneson L., in his contribution to the accountancy professional magazine of ACCA of India, gave views as “an independent appraisal activity within the organization. For comprehensive and critical examination of process and functional area of management”.
The Internal Control Integrated Framework published by The Committee of Sponsoring Organizations (COSO) is the recognized standard for establishing internal controls. COSO defines internal control as:
“a process, effected by an entity’s board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories:
- Effectiveness and efficiency of operations
- Reliability of Financial Reporting
- Compliance with applicable laws and objectives”
The first objective deals with the entity’s achievement of basic business objectives. The second refers to the reliability of financial information (both internal and external) that is used by decision makers. The third deals with complying with laws, regulations, and policies.
Research methodology is the process of collecting data for research projects.
This chapter describes the techniques and procedures used by the researcher in conducting the study and gathering the data for the study.
This research is designed to survey the application and the Internal Audit as a tool for achieving organizational objective. It includes the description of the population of the study, the sample size, sampling techniques, source of data, method of data collection and method of data analysis and testing hypothesis.
This research is design to ascertain the Internal Audit as a tool for achieving organizational objective. This work is descriptive incline and a survey research.
The research is based on the Internal Audit as a tool for achieving organizational objective and its uses in an organization.
The population selected was designed to obtain adequate and diverse views regarding the level and the Internal Audit as a tool for achieving organizational objective.
DATA ANALYSIS AND INTERPRETATION
This chapter will show presentation, analysis and the interpretation of data collected and the finding of the study out of eighteen questionnaires that were administered, only eighty were carefully completed and returned.
The data collected were analyzed in percentages. The questionnaire has two sections.
SUMMARY, RECOMMENDATION AND CONCLUSION
SUMMARY OF THE STUDY
Internal Auditing has been seen as the independent appraisal activity with an organizations for the review of the accounting, financial and other operations as a basis for protective and constructive science to management. It is a type of control, which functions by measuring and evaluating the effectiveness of other types of control.
The study has revealed the following:
(a).The scope of duties of the internal Auditor and his staff which is limited in terms of independence and wide in other areas like operations. This is evidence by the fact that internal Auditors appointed by the management and is also disciplined by management.
(b). Staff is no competent enough due to their low qualifications. The staff does not have the opportunity to undergo orientation course before assigned duties.
(c).Though the internal auditors has no significant authority over the accounts and administration sections but he has a lot of responsibilities and he is independence to a considerable degree. The internal auditor can be seen to be favorably placed in the organization hierarchy.
(d).The conflict of interest among the managers used to jeopardize the activities of the internal Auditor this is because as the directors have opportunity to visit a branch of bank at any given time. And desire to know the activities of the bank; the managers want their interest to be protected.
(E). Unskilled employees/workers:
It was observed that those who are employed to do the accounting work have little or no skill in accounting work. Some were employed into section to protect the interest of one manager or the other. In a situation where someone read social science will be employed to perform the work of an accountant. It will render the financial records useless and the aim of external auditors will not be achieved.
RECOMMENDATION OF THE STUDY
On the basis of the findings and discussions in this study, I hereby make the following recommendations:
1. The need to orientation courses:
Employees apart from those in audit department need to be told why there is need for internal control. They should know that instituting good control procedures is not an insult to the integrity of present employees.
A writer puts the following as the advantage of job relation and forced vocations.
(a) More than one employee becomes familiar with certain duties and procedures so that replacement of employees in case of emergency is less difficult.
(b) It broadens the training of personnel in general.
(c) Rotation frequency serves as a general check on the efficiency of the employee on vocation.
(d) Irregularities which may have been committed by an employee may be discovered while the employee is on vacation and his duties are assumed by someone else.
As A.J Anderson, put it budgetary and reporting controls are in effective without the active participation of a senior management in the review process. There should be need to improve the system of internal audit so that it is a real asset to management by finding as management or efficiency audit. Internal audit department must realize that they have been designed to help management run the organization effectively.
2. The issue of visiting auditors to Area offices.
It was gathered that auditors are permanently at the head office and are only in areas office when the need arise which is riskily as the visiting auditor may not be familiar with all the operating aspects of the area offices. He may not also have free and independent mind to glue good and unbiased judgment. The auditor should make an unscheduled visit to the area offices.
3. Review of the Accounting system and relative internal control:
Duties should be allocated in such a way that one persons job is independently proved or checked by another’s. Different jobs should be allocated to different people to call for checks and balances.
4. Development of educational and professional qualifications:
Internal Audit staff should be encouraged to have sound personal, educational and professional qualification. The personal qualities to be cultivated the idealism, leadership, mental capacity and alertness.
They should also posse’s constructive and analytical ability, a mastery of modern auditing procedure and practices, excellent knowledge of accounting theory and a good knowledge of language communication.
CONCLUSION OF THE STUDY
For aims of internal check as stated by E, H Woolf is seen to be present thereby indicating a high degree of internal control. These aims are
i. To facilitate the breakdown of accounting procedures so as to avoid bottlenecks and to establish an even flow of work.
ii. To pin down the definite person responsible for particular acts, omission by segregation of tasks.
iii. To obtain confirmation of factor entries by the creation and prevention of necessary records.
iv. To reduce to a minimum the occurrence of fraud and errors.
v. The presence of the high level of internal control as well as the internal check is commended able in view of the diversified nature of activities.
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