Management Audit as a Tool of Achieving Organizational Objectives
OBJECTIVES OF THE STUDY.
Objectives of the study include:
- To ascertain if management audit assist the organization in achieving its objectives.
- To ascertain if there exist co-operation between management auditors and external auditors.
- To find out if management audit assists in the detection and prevention of fraud in the organization.
REVIEW OF RELATED LITERATURE
MILLICHAMP (1996) defined management audit as “an independent appraisal of an organization for the view of an management audit control system as a service to the organization. It objectively examines, evaluates and reports on the adequacy of management audit control as a contribution to the proper economic efficient and effective use of resource”.
Also NWEKE AND UMEZURIKE (1998) said: “Audit as the name implies is a review of operation and records, sometimes continuous undertaking within a business by special staff employed and directed by the management, management auditing is carried out by independent personnel, management auditors are employees of the firm and this independence is not always easy to achieve, however, it can assisted by:
- Having the scope to arrange its own priorities and activities
- Having unrestricted access to records, assets and personnel.
- Freedom to report to higher management and where it exists, to an audit committee.
- Management audit personnel with an objective frame of mind.
- Management audit personnel who have no conflict of interest or any restrictions place upon their works by management.
- Management audit personal having no responsibility for the work or for new system. A person cannot be objected about something he/she has taken responsibilities for. On the other hand, management auditor should be conducted on new or revised system.
- Management audit personnel who have no non-audit work since management audit are employees; it is difficult to ensure that they are truly independent in mind and attitude.
OBJECTIVES OF MANAGEMENT AUDIT
According to Adeniyi (2004), it state objectives of management audit as:
- Reviewing of existing accounting system and related management work. ii) Assisting in the implementation of new accounting system.
- Reviewing company polices in the light of changing business conditions and recommending appropriate improvement.
- The assessment of the adequacy, accuracy, timeliness and relevance of management information system.
- Lasing with external auditor for the purpose of complexes for effort and insuring that prompt and proper action is taken on engagement data.
- Identify and draw attention of management weakness in control or measures which are unsound to the organization.
- To assure the management that their management audit organization is adequately alright. viii)To carry-out special assignment giving by the audit committee from time to time.
- To carry-out special investigation on management request.
- To carry-out detail test of transactions and balances.
- To advice the management of various aspect of their operation such as matters involving financials.
- To make a professional opinion on the true and fair view of an organization financial statement.
Specifically, the act legislated in the following auditing objective among others:
- To report whether adequate and proper book of account were kept by the directors by implications, the director becomes responsible for the establishment of adequate control in the system for preventing and depreciation of forms and error.
- To report whether such books and records were in agreement with company’s profit statement and balance sheet.
- Whether this opposition to the statement gives a true and fair view of the company profit for the year and of its financial position at the end of the year.
CHARATERISTICS OF MANAGEMENT AUDIT
For understanding the nature of the organization being audited in the terms of its operating environment, its method of operation and its account polices and systems. Sources of data include the article and memorandum of association, partnership agreement, the relevant technical manual on method and operations organizations charge and administrative manual, legislation and accounting procurement affecting the organization.
- Plan of organization with particular references to allocation of staff duties.
- Authorization, recording and custody procedures including management check.
- Managerial supervision and renews including management audit.
Before this task can be effectively performed, some investigations were carried out, data was carefully collected analyzed. Especially, questionnaire and personal observation were used as instrument for the study; techniques were selected in the merit of each one and so combine together to satisfy the desire of the researcher. The method used could be grouped into two.
DATA COLLECTION METHOD
PRIMARY DATA: These include method of data collection in which data are directly collected from staff in a written down form, in this respect researchers uses:
- QUESTIONNAIRE: The writer of this project was giving permission by the organization Household products company Orlu to serve as questionnaire in the management audit department of the company and other department of the company. The questions asked were based on the various process, procedure and auditing guidelines used in carrying out the various operations. The effectiveness and adequacy if the questionnaire express their operation and their answered the questions to the satisfaction of the researcher. To ensure relevance and truthfulness of all information, the writer makes sure that the questionnaire was served under mutual and conducive atmosphere, with no element of compulsion or under pressure of the staff.
- PERSONNEL OBSERVATION: in the cause of this study, the researcher visited the company and was allowed to inspect around thus, enabling the researcher to personally observe information and get familiarize activities and recording of transaction on Household products company, most of the document were inspected such as petty cash book voucher, store requisition not store record cord, audit observation form, schedule of account, weekly product report and material utilization report.
DATA ANALYSIS, TEST OF HYPOTHESIS AND SUMMARY OF FINDINGS
To find answer to the first research question, some questionnaires has been passed to analyze its findings, this is shown in the table below.
SUMMARY, CONCLUSION AND RECOMMENDATION
Based on the research carried out on the topic management auditing as a tool for achieving organizational objectives, the researcher discovered the following from the results of the questionnaire served and the hypotheses that:
- There is a relationship between the management audit and organization.
- Management audit has an annual audit plan.
- The annual audit plan is submitted to the organization.
- Management audit report is not acted upon by management.
- There is no co-operation between management auditor and the external auditor.
- Management auditor assists the external auditor in his investigation.
- There is cordial relationship between the management auditor and the external auditor.
- Management audit has up to date management audit manual.
- Management audit shares information on management audit manual to the external auditor.
- Management audit assists in the detection and prevention of pilferage and fraud.
- The presence of an management auditor acts as a check against fraud.
- The employment of an external auditor does not assist in the fight against pilferage and fraud.
- The fear of penalties helps in the check against fraud.
Based on the findings of our research work the researcher concluded that management auditing indeed serves as a tool to management for Household Products Company and all organizations generally. Although some areas are still weak, with some effort the management audit can improve and carry out its objectives in the organization.
However, management audit has severed as checked against fraud and other activities of the staff which is one of the objectives of the management audit and the findings have revealed, is a tool to management not only in one but in all organizations because of its findings, objectives, the significance to organizations is general.
From the findings and problems discovered, the researcher will like to make the following recommendations.
- The management audit unit of the organization should keep ethical standard by keeping up to date management audit manual and train its management auditors in forensic accounting.
- Management audit units should always draw annual audit plan which is the focus of the company as it will help them to have efficient operation.
- The management audit unit of the organization should always submit their audit plan to the management who will have to be pro-active and take action according to findings of the plan.
- The researcher recommended that the management on their part should acknowledge the report submitted to the management and allocate more power to the management audit to ensure independence.
- The management audit unit should endeavor to carry out their audit work to other departments which is not often visited.
- The management auditor of the company should be subjected to ethical standard so that external auditor will not do the work of management auditor or the work of an accountant so that cordial relationship should be maintained and external auditor may rely on the work carried out by the management audit of the company.
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