Internal Auditing Efficiency as a Tool for Improving Company’s Performance
Chapter One
Objectives of the Study
General Objective
The overall objective of this study is to analyze the effects of internal audit practice on the organizational performance of Viewnet Ent.
Specific Objectives
The specific objectives are:
- To identify major factors that affect internal audit effectiveness on viewnet.
- To determine the effect of internal audit practices on the organizational performance of Viewnet Ent.
- To show internal audit practices in Viewnet Ent.
CHAPTER TWO
LITERATURE REVIEW
Introduction
The study’s literature review section examines the idea of internal audit and conducts research on the influences internal audit components have on organizational performance. The literature review is organized into four sections: the first portion covers the key ideas of internal audit; the second section covers the key elements that influence the efficacy of internal audit. Literature on internal audit practice and organizational performance is included in the third Section. The fourth section provides a summary of the relevant empirical literature. The conceptual framework for the investigation is presented in the final section.
Internal Audit
History of Internal Audit
It might be a control that has the potential to reach this decision by studying and judging the sufficiency and feasibility of other controls. IA provides organizations with analyses, recommendations, data, and analyses pertaining to the activities examined (Lenz.r, Sarens.G, and D’Silva). The responsibility of an inside reviewer is to do a free assessment of a firm employee’s performance, management style, and business-influencing potential. There are unwanted situations and outcomes in every business. Employees in inside review positions have a responsibility to help businesses comprehend and evaluate the risk by researching the business and advertising as a whole. Both the reviewer’s involvement and their objectivity apart from the offices they are evaluating allow them to spot danger and opportunities that might have gone unnoticed by others more intimate with the situation.
huge, scattered, complicated corporations’ proliferation The internal audit function developed quickly beginning in the early twentieth century. This growth led to the IIA’s establishment in 1941, and modern internal auditing owes much of its progressive expansion of the scope of internal audit activities and of the professionalization of the practice to these developments.
The development of professional underpinning’s for the profession, but, did not come all at once. It was not until 1947 that the IIA issued its first statement of responsibilities. The code of ethics was issued in 1968 and the standard in 1979. The first certified internal auditor (CIA) exams were written in 1974, indicated that there was, that time, deemed to be a recognized body of knowledge available for internal audit professionals. In 1973, the treasury board made it mandatory for all department and agencies to have internal audit performed on their system of financial administration. Department shall have financial audits performed, reviewing and appraising the effectiveness and efficiency of departmental system of financial administration, including the safeguarding of assets, ascertaining the extent of complains of departmental system and procedure with financial policies, regulation and other instruction of parliament, Treasury board and the department or agency. Internal auditors facilitate the development of suitable control as part of a wider risk strategy and provide assurance on the ratability of these controls.
Internal audit facilitate the development of suitable control as part of a wider risk strategy and provide assurance on the reliability of these control. Internal audit has developed a strong operational orientation, expanding its area of involvement beside financial compliance to include risk management (Marika Arena, 2013).
Risk management is an organization is important because organization operates in an environment with full of uncertainty. Therefore, the internal audit in today’s global world should shift away from traditional checking of volume of transactions to risk management and control. That is, it should focus on prevEnt errors and fraud rather than errors and fraud detection. Furthermore, the definition underscores internal audit’s contribution to accomplishment of organizational objectives.
Internal Audit Effectiveness
Internal audit effectiveness is largely determined by the internal audit department’s capacity to offer insightful discoveries and recommendations. Internal audit needs to establish its value to the company and become well-known inside the company. Internal audit should evaluate how it was carried out and continue to advance its advantages. The level of personnel expertise, the range of services provided, and the extent to which reviews are lawfully planned, carried out, and disclosed may all have an impact on the quality of reviews (Sawyer, 2013).
According to this concept, internal audit has undergone a mindset shift from emphasizing accountability for the past to achieving future results to help audits function more effectively and efficiently. Since the concept benefits both the public and private sectors equally, it is employed in this study as a foundation for an analysis of the effectiveness of internal auditing in the public sector. According to this definition, internal audit has experienced a paradigm shift, moving from a focus on past accountability to enhancing future results to assist audited organizations in operating more effectively and efficiently. Since the concept equally benefits the public and private sectors, it is employed in this study as a foundation for analyzing the efficacy of internal auditing in the public sector (Sayage, 2016).
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
This Section gives the methodology that was used to accomplish the already established research objective. As a result, it presEnt the specific techniques employed to carry out the investigation on effects of internal audit practice on organizational performance of Viewnet Ent. This section consists of research design and the case selection for this study. Second, Types and sources of data instatement of data collection, third, the target population, Fourth, Sample of the study and Sample technique, and the last one methods of data analysis by preceding methods of data interpretation and presentation, are briefed accordingly.
Research Design
The study used a case study method was to enables the researcher to closely scrutinize the effect on internal audit practices on organizational performance of the company. This study employs on a descriptive case study design because the objective of the research is to assess the state of view, as it exists at present, i.e. to describe the assessment of internal audit effectiveness in Nigeria Viewnet Ent shipping and logistics service enterprises. The researcher were followed both qualitative and quantitative approach i.e. mixed approach about the factor influencing internal audit effectiveness.
Type of Data, Data Source and Data Collection Method
The study is included Primary data. The primary data were collected through questionnaire to those employees under each department. The questionnaires were adopted and modified from the prior authors and literature reviews (Alzeban. 2013), it also used interview with the department and division managers of Nigeria Viewnet Ent shipping and logistics service enterprise. In order to achieve the research objectives, the researcher were used two main tools of data collection Questionnaire and Interview. The questionnaires is prepared in the form of five item Likert-Scale type, where the lowest scale represent strongly disagree and the highest scale represent strongly agree. The interview is made with the officials/department heads, supervisors, and managers of the company. The type of interview is structured and semi structured type.
Population, Sample Size and Sampling Technique
The study population included respondent from Audit which is 25, general accounts which direct related are a total number of 8, from the operation 10, property administration and finance departmEnt are 17 respondEnt of the company with a total of 60 in number. In this regard, since the population of the study is small in number and not difficult to manage, the researchers used all samples out of the total population.
The total population of the study the researcher is used all sample of respondent. Thus, all employees of the institute is as a sample but only 55 questioners were returned and from these six members of the management was used for interview purpose from each department managers while the remaining was used to collect data through questionnaire.
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND INTERPRETATION
INTRODUCTION
This chapter contains the presentation, interpretation and discussion of the findings to provide responses to the research questions. It first gives the demographic information of the respondEnt and then presEnt the findings. Frequency tables, percentages and graphs, by the help of STATA and Microsoft office Excel were used to analyze the data. The findings relate to the effect of internal audit practices on organizational performance the case of Viewnet Ent.
The response rate results showed that out of the 60 questionnaires that had been dispersed to the respondEnt, 55 questionnaires were returned. This gave a response rate of 92% which according to Desalegn, (2016) is a very good response rate.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
This chapter of the thesis devoted to the summary of findings from descriptive analysis of data, study’s conclusion suggested recommendation for assigned bodies.
The study sought to accomplish the general objective of analyzing the effect of internal audit practice on organizational performance. It was based on this general objective and the other three specific objectives that analysis was made, from which the following findings are made.
SUMMARY OF FINDINGS
After careful analysis of the data, the following findings were made.
Findings on Internal Audit Effectiveness factors
- The study revealed that from the analysis, internal controls system set by management ofthe organization has positive impact on internal audit effectiveness because by improving these controls systems the main function of the organization is helping its purpose and creating its value 85.4% of the respondEnt believed that internal control tools or system implemented by management improves internal audit effectiveness.
- Thestudy found that with 56% respondEnt’ agreement rate, there is a positive relationship between good corporate governance and internal audit Corporate governance positively affects internal audit effectiveness with governance structure element with the highest success rate in the internal audit capability model.
- It was also found that internal audit performance is improved by risk management systemof the organization; it was supported by 85.4% of respondEnt’ agreement rate.
- The study also found that management support improves internal audit effectiveness; Thefinding depicts that management‘s support is constantly and considerably related to internal audit effectiveness. It means that the more management support internal audit the more effective it will It is supported by 80% of respondEnt’ agreement rate.
Findings on Internal Audit Impact on Organizational Performance
- The association between the internal audit independence and organizational performanceis positive and strong; the study found that the more independent the internal audit function is the more effective the performance of the organization This finding supported by 71% questioner and 83% interview respondEnt. Accordingly, internal audit function played a role in governance which affects the performance of the organization providing for its position and powers in the framework of the company.
- There is a positive and moderate relation between professional competency and organizational performance of the company. All interview respondEnt and 73% of questioner respondEnt agreed that professional competency enhances internal audit
- Internal Audit standards and organizational performance of the company have a positive and strong the study found that internal audit standards affect the organizational performance of the companies, internal audit assess and contribute to the enhancement of risk management, control and governance using a systematic and disciplined way in the industry and that the structure of internal audit in improving its objectivity is solid. 86% of respondEnt agreed that Internal Audit standards enhance internal audit effectiveness.
- There exists positive and strong relation between internal control system and organizational performance of the company. The study found that internal audit classifies and evaluates the organization’s internal control system as a basis for reporting upon its efficiency and
- In general Internal Audit practice affects the organizational performance of the
Findings of Internal Audit practice of Viewnet Ent
S The study found & showed by the high average value of 4.2 (84%) of the strong presence of well-established internal audit procedures at viewnet.
S The study also found that in Viewnet Ent, the independence of internal auditors are highly compromised since the managing director directs the kind of audit exercise to be conducted and the even in certain instances the reporting is negotiated.
CONCLUSION
The study concludes that, in general management support improves internal audit effectiveness in the organization it is specifically revealed by internal controls, corporate governance and risk management process. Evident from the study responses in agreement from the questionnaires which ranged from 85.4% to 56.0% and all respondEnt from the interviews that agreed that management support enhances internal audit effectiveness. It Implies that the more the management support the more effective internal audit function will be.
The study also concludes that IA practices have a significant effect on the organizational performance of Viewnet Ent. Where the internal audit practice is emphasized, clearly, it can affect positively and strongly on organizational performance of the company. From the findings, , independence of internal audit, professional competency, internal audit standards and internal control had a strong and positive association with organizational performance of the company, the study found that a unit increase in these variables would lead to increase in organizational performance of the firms.
Internal Auditors in independence are highly compromised since usually they are considered as employees of management, and hence the opinions of Internal Auditors’ reporting to the assigned organ as merely a formality to fulfill requiremEnt of the board. The management of Viewnet Ent considers that the role of the Internal Auditors is supposed to work for them – by persuading the IA to involve in management functions. It is in this area that the impairment of the IA task’s independence poses a threat. They lack sufficient power to commence audit tasks, especially when it affects member of the supervisors and managers.
RECOMMENDATION
On the basis of the study findings, the following recommendations are made for internal audit practice effect on organizational performance:-
- Viewnet Ent‘s management should try to ensure they fully support internal audit tasks atall times by improving the current status of internal control system, corporate governance of the company & risk management For both of them to achieve their objectives and reach the collective vision, they should work together.
- In order to implement good internal audit independence in Viewnet Ent, managers need toknow that they should be concerned about the interrelationships between internal audit independence and organizational performance. As such, there is need for the internal auditors to constantly update themselves with the changing times and technologies and sharpen their knowledge & skills.
- The IA function must be independent of the activities being audited and must also beindependent from main organization tasks. The department of internal audit must be able to exercise its assignment on its own initiative in all units, department & divisions, establishmEnt and functions of the
- Finally,the study sought to investigate the determinants IA factors that influence organization performance. However, the variables used in the analysis did not include all factors that can affect organizational performance of the company. Thus, future research could incorporate factors such as technical skill of Internal Auditors, logistic supportand qualification and experience of the
Reference
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