The Challenges and Prospects of Auditing in a Computer Environment (a Case Study of Nigeria Mobile Telecommunication, Limited)
AIMS AND OBJECTIVE OF THE STUDY
Many organizations have seem to insist on using the traditional way of audit, due to the ignorant of the positive and negative effects of computer audit on the audit department of an organization. As such, I the researcher is embarking on this study using Mtel, Kaduna, as a case study to bring out the possible effects and defects of computer audit in an accounting system of an organization, after which the effects will be compare as against the defects, hence knowing whether to use computer audit or not. And my objectives are:
- To ensure proper accountability in financial management, in our organization (Mtel)
- To ensure, efficiency and effectiveness in the actualization of the organizational target.
- To ensure an equitable distribution of service in proportion to the money paid.
Base on the fact that every author has his/her own understanding as touching the subject matter “Auditing in a computer environment” this chapter is therefore aimed at reviewing some of those author’s contributions to provide this research work a theoretical basis for this study.
THE CONCEPTS OF AUDITING AND COMPUTER
There are two basic concepts here to be considered from various authors perspectives of reasoning, i.e. the concept of computer and the concept of auditing. They are: –
According to Dennis Longley and M. Shain 1987; computer is a device that performed pre – specified computations on any valid set of input data and delivers results within defined levels of accuracy.
According to dictionary of Computing; 2nd edition, 1986; computer is a device or system that is capable of carrying out a sequence of operation in a distinctly and explicitly defined manner.
Computer is any electronic machine which can accept data presented to it in a prescribed form, carryout some operation on the input and supply the required results in a specified format, as information or as signal to control some other machine or process. As postulated by Muzbau .O. Aloyelun, 2006.
Audit is an independent examination of, and expression of opinion on the financial statement of an enterprise by an appointed auditor in pursuance of that appointment and in compliance with any relevant law and regulation. As Postulated by John Nma Aliu, 2004.
Audit, being referred to as stewardship accounting, is the process whereby the managers of a business account or report to the owners of the business. By A.H. Millichamp, 1990.
According to Longman Dictionary of Contemporary English, 2001; Audit is to officially examine a company’s financial record in order to check that they are correct.
THE IMPACT OF COMPUTERS ON MANAGERS AND IN A BUSINESS ORGANIZATION
A computer being an electronic device that on receipt of an appropriate input is capable to processing the input according to assets of previously supplied instruction and then making the result available if desired.
The computer with it prime advantage of speed and accuracy is fast becoming an indispensable tool for several computers to be used more and more both for routine and sophisticated aspect of business information processing.
According to Stoner and Freeman 1986. in their book (MANAGEMENT, 4TH EDITION) states “The application of computer technology to management information and decision support systems has certainly had no effect on how managers perform their tasks and on how organization behave. An early study of the impact of increased structuring of middle management, increased status for some middle management positions, more differences between top and middle management and a recentralization of the organization.
The chief effect of computerization has been the ability of organizations to process (and create) proper work with ever-greater accuracy and speed, there has been little effect on the roles of managers and the structure of organizations. The segregation of middle managers into “Functionary and programmer” roles has not taken place. Infact, Paul Attewell and James Rule, Cite evidence that computerization may lead to an increase in the number of management levels. They have also found that access to information can strengthen the positions of subordinates.
The information of an elite and aloof top level of management has also not come to pass. The amount of use that top managers make of computer based information and computers themselves vary from organization to organization and are a matter of contention among management authors. And top management is not necessarily in control of the computerization of the organization e.g. Individual departments can often purchase micro – computer and power DSS Software directly without having a corporate EDP/MIS Decision on its purchase. In this way, middle managers are determining their information and system need for themselves and not having systems imposed on them from above. At the same time information system departments in organizations are under going changes. Many organizations are considering combining office automation, data processing and information communication functions into one department.”
OBJECTIVES OF INTERNAL CONTROL IN A COMPUTERIZED ACCOUNTING SYSTEM
The essence of internal control is to ensure that a business can be conducted in an orderly and efficient manner and in accordance with management policies. Though in a computer environment errors of crucial nature are almost non – existent, but strict internal control are needed to ensure that correct programme procedures are laid down and these procedures are operated as designed.
According to H. Washbrook 1971, to ensure control check list was provided for auditors and the following are the audit check list listed by him.
“Auditor using a computer audit check list must remember that controls must be considered on a global organization basis. A control on any particular aspect can thus be partly clerical, partly technical, and partly by management techniques and either completely within, or partly within and partly external to, the computer department.
This check list will deal with the main aspects of control within the computer department, but will not in general deal within the controls external to the computer department in so far as they are not related directly to it. Thus, for example, controls on the payment of wages in cash will not be dealt with because they are common to whatever method of wage payment is used and it is assumed that auditors and managers will be completely familiar with such aspects. For convenience of reference.
Checks and controls are listed under various main heading as below.
(b) Management and Personnel Controls:
- Is the manager of the computer department responsible to a member of general management status independent of function e.g. Chairman, Managing Director, Assistant Managing Director, General Manager.
- If not is he responsible to a functional head of sufficiently senior status, e.g. the financial director.
- Are the responsibility of the head of the computer department to his management and the staff of the computer department to its managers suitably defined in job specification and organization chart?
This chapter states and analyzed the research methods used in this study, i.e. the sampling methods procedures employed, research population and sample size, the instruments or tools used in data collection and the statistical technique used in analyzing the data collected.
Here the method used are selected by the researchers, but depends largely on a number of factors e.g the nature of the organization, the project title, the time available, the researchers approach, accessibility to information etc. this project is on “the challenges and prospects of auditing in a computer environment.”
I, the researcher used a combination of three method to get relevant information, opinion and data from the management and staff of the company under study. The methods applied are interview, questionnaire and observation methods respectively.
1. Interview Method: This has to do with face to face conversation, between the interviewer (one that ask questions) and the interviewee (the one that answer questions)
2. Questionnaire Methods: This refers to a combination of structured questions about the case study on sheet of paper by the researcher for respondents to answer.
3. Observation Method: This is a method of collecting data by just looking and noticing.
AREA OF THE STUDY
I, the researcher, is studying the entire aspects or components that makes up the organization under study, (MTEL NIGERIA), but much concentration is on the accounts/audit departments.
RESEARCH POPULATION AND SAMPLE SIZE
The Research population for this research work is the entire employees of MTEL Nigeria, Kaduna Area Office Which Summed up to 37 workers (Marketing – 26, Operation – 19, Audit Staff – 2). A sample size of (4) respondent is taken out of the whole for the purpose of this study.
DATA PRESENTATION AND ANALYSIS
This chapter deals with the presentation and analysis of the primary data collected from MTEL, Kaduna office, through questionnaire. And the sample percentage ratio method is chosen for this research work, since it is easy and simple to understand to everyone.
In this chapter, I, the researcher make my analysis based on the questionnaire administered to MTEL, Kaduna. Not withstanding, the analysis is based on the response received from the employees on the various questions on the questionnaire (see appendix)
SUMMARY, CONCLUSION AND RECOMMENDATION
In this chapter, I the researcher will present a summary of my findings, with conclusion and some recommendations, which if properly adhered to or practiced, will enhance effectiveness in organizations (M-TEL Kaduna)
After much data has been gathered from this survey research, through interviews, questionnaires and documentary research, I, the researcher has summed every detail up as: – The organization (M-TEL Kaduna) is aware of the effects of computer on the general day to day running of an organization, even though they do not deem it necessary for all the departments.
It is also noted that, computer audit is not appreciated by the organization, hence provision for computer were not made for, in the audit department. As a result, the office becomes boring and these staff goes to other office to link – up themselves to the global village.
Finally, the audit staff most times tends to be redundant, due to the size of the organizations area office here in Kaduna; and inadequate office responsibilities.
This research work has clearly shown the effect of computer audit on an organization (M-TEL) and the Likely Challenges in its Operations, but though in all, the advantages are more than the disadvantages, hence, can be embarked upon in organizations.
Furthermore, it has shown or established a fact that M-TEL, Kaduna, though being aware of the effect of computer audit on an organization, still didn’t deem it necessary to introduce it, into the organization.
Finally, it has been able to highlights that the general management efficiency and effectiveness can be enhanced and facilitated through computer audit.
With regards to the findings made above, it has become necessary for the researcher to make some recommendations, which if properly adhered to will alleviates the problems encountered in the audit of the organization (M-TEL).
The management of M-TEL, Kaduna, Should make sure, a separate office is created for the auditors, hence, allowing them an amount of independence and freedom to do their jobs without any interference and disturbance, besides, the auditors office is accountable to the headquarters, and not the immediate area office.
The management of M-TEL, Kaduna, should introduce computer audit into the system, as such furnishing the audit department/office with computer (s), which will inturn, make the office lively and not bored for the staff, since computer also, has the ability to entertain, etc and further facilitate their work.
Furthermore, being aware of the fact that all the employees of M-TEL, Kaduna are computer inclined, the management should arranged for auditing software, other than the software in the other departments, i.e. making only audit staff to be conversant with their audit software, and the audit software in use, should not be limited to one, but as much as are relevant, hence, safeguarding the data base financial information of the organization.
Finally, it is anticipated that the recommendations made here in, if implemented by the organization will help in giving her a new face lift and improving the general job performance and appraisal of Nigeria Mobile Telecommunication Limited (M-TEL) Kaduna, in particular and organizations in general.
- Ayeni J.O.A (1992) Fundamental of Computing University of Lagos.
- Aslin P.P and Etal (1986) Dictionary of Computing Stockton Press.
- Biggs W.W. (1974) Spice of Peglers Practical Auditing HPH. Publishers Limited.
- Dennis Longley & Etal Data and Computer Security (1987) Stockton Press.
- John W. (1976) Computer and Auditing Pitman Press, Bath Aaron.
- John A.N. (2004) Practical Auditing: Question and Answers. Allegiance Publishing.
- Millichamp A.H. (1990) Auditing: An instructional Manual for Accounting Students. DPP Publication
- Muzbau A.O (2006) The Essentials of Computers Perfect Prints, Kaduna.