Accounting Project Topics

Management of Fraud and Wastage in a Business Organisation; Implication for Internal Audition

Management of Fraud and Wastage in a Business Organisation; Implication for Internal Audition

Management of Fraud and Wastage in a Business Organisation; Implication for Internal Audition

Chapter One


Objectives of the study include:

  • To ascertain if the duties of the internal auditor assist management in taking informed decision.
  • To find out if internal audit assists in the detection and prevention of fraud.
  • To detect if internal audit helps in checking waste.



MILLICHAMP (1996) defined internal audit as “an independent appraisal of an organization for the view of an internal audit control system as a service to the organization. It objectively examines, evaluates and reports on the adequacy of internal audit control as a contribution to the proper economic efficient and effective use ofresource”.

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, internal auditing is carried out by independent personnel, internal auditors are employees of the firm and this independence is not always easy to achieve, however, it can assistedby:

  • Having the scope to arrange its own priorities andactivities
  • Having unrestricted access to records, assets andpersonnel.
  • Freedom to report to higher management and where it exists, to an auditcommittee.
  • Internal audit personnel with an objective frame ofmind.
  • Internal audit personnel who have no conflict of interest or any restrictions place upon their works bymanagement.
  • Internal 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, internal auditor should be conducted on new or revisedsystem.
  • Internal audit personnel who have no non-audit work since internal audit are employees; it is difficult to ensure that they are truly independent in mind and attitude.


According to Adeniyi (2004), it state objectives of internal audit as:

  1. Reviewing of existing accounting system and related internalwork.
  2. Assisting in the implementation of new accountingsystem.
  • Reviewing company polices in the light of changing business conditions and recommending appropriateimprovement.
  1. The assessment of the adequacy, accuracy, timeliness and relevance of management informationsystem.
  2. Lasing with external auditor for the purpose of complexes for effort and insuring that prompt and proper action is taken on engagement data.
  3. Identify and draw attention of management weakness in control or measures which are unsound to the organization.
  • To assure the management that their internal audit organization is adequately alright.
  • To carry-out special assignment giving by the audit committee from time to time.
  1. To carry-out special investigation on management request.
  2. To carry-out detail test of transactions and balances.
  3. 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 theyear.





In this chapter, the research is going to be enumerating on the way and process of approach of collecting data to arrive at an answer or solution to the existing problems as mentioned. A good knowledge of research is very important for virtually everyone in the field of carrying out a research is the ability to evaluate the result of a research to judge or not a given study has being properly carried out in such a way that one can confined in its finding an extent of its relevance to the decisionfactor.


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.




It is usual in research project to make preposition, the essence of such preposition is to shed light on the objective problems of the study under investigation. The previous chapter of this research work has addressed the various aspects of this research problem. Raw data must be noted, it has no meaning and usefulness until they are critically analyzed to generate decision. The primary aim of this chapter is the presentation and analysis of data which will come with the fact and figure relating to our research work.



Based on the research carried out on the topic internal auditing as an aid to management, the researcher discovered the following from the results of the questionnaire served and the hypotheses that:

  • There is a relationship between the internal audit and management.
  • Internal audit has an annual audit plan.
  • The annual audit plan is submitted to the management.
  • Internal audit reports to the management of the organization.
  • Internal audit report is not acted upon by management.
  • There is no co-operation between internal auditor and the external auditor.
  • Internal auditor assists the external auditor in his investigation.
  • There is cordial relationship between the internal auditor and the external auditor.
  • Internal audit has up to date internal audit manual.
  • Internal audit shares information on internal audit manual to the external auditor.
  • Internal audit assists in the detection and prevention of waste and fraud.
  • The presence of an internal auditor acts as a check against fraud.
  • The employment of an external auditor does not assist in the fight against waste and fraud.
  • The fear of penalties helps in the check against fraud.


Based on the findings of our research work the researcher concluded that internal auditing indeed serves as an aid to management for Household Products Company and all organizations generally. Although some areas are still weak, with some effort the internal audit can improve and carry out its objectives in the organization.

However, internal audit has severed as checked against fraud and other activities of the staff which is one of the objectives of the internal audit and the findings have revealed, is an aid 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.

  1. The internal audit unit of the organization should keep ethical standard by keeping up to date internal audit manual and train its internal auditors in forensicaccounting.
  2. Internal audit units should always draw annual audit plan which is the focus of the company as it will help them to have efficientoperation.
  3. The internal 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 theplan.
  4. The researcher recommended that the management on their part should acknowledge the report submitted to the management and allocate more power to the internal audit to ensureindependence.
  5. The internal audit unit should endeavor to carry out their audit work to other departments which is not oftenvisited.
  6. The internal auditor of the company should be subjected to ethical standard so that external auditor will not do the work of internal 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 internal audit of thecompany.


  • Adeniyi, A. Adeniji, (2004). Auditing and Investigation, Value Analysis Consult Publishing, Lagos
  • Adeniyi, A. Adeniji, (2010). Auditing and Assurance Services, Value Analysis Consult Publishers, Lagos.
  • Akanet, Solomon, (1998). Auditing and Instructual Manual for Accounting Student, 7thedition, London Publications.
  • Anthony & Welsch (1974). Fundamentals of Management Accounting, Richard
  • Irwin, INC. Bird, Peter (1971). A Casebook on Auditing Procedures 2ndedition, The General Educational Trust of the Institute of Chatered Accountant
  • Chambers: Andrew D. et al, (1987). Internal Auditing 2ndedition, Pitman Publishers.
  • Dijk Van, Williams, and J.C. (1990). Expert Systems in Auditing Macmillan Publishers.
  • Howard, L. R. (1976). Principle of Auditing 19thedition, McDonald & Evans, London.
  • Kola, Olowookere (2001). Fundamentals of Auditing. 2ndAnalysis, Consult Publishing, Lagos.
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