CHALLENGES OF INTERNAL AUDIT
CHAPTER ONE
1.0 INTRODUCTION
1.1 BRIEF
OVERVIEW OF THE SUBJECT OF STUDY
It is generally agreed that finance is the main
stay of any economy, be it public or private sector. It is equally true that no
meaningful development could be achieved without finance and proper management,
as a result of this, many organizations establishes difference systems of
control or ensure smooth running of their business of which internal auditing
is an integral part.
Basically, internal auditing
ensures that all activities of the organization are carried out by employees
according to laid down procedures.
The introduction of new
technologies e.g. the invention of
computerized audit system which posed challenges to the internal audit staff
and their work, the update of their knowledge to meet with these challenges in
the face of manipulation of these to perpetrate fraud is desirable. Moreso, the
requirement of new auditing standards will make the staff of internal audit to
update their knowledge and adjust to the current practice.
Auditing as a key factor in
controlling every kind of organization with financial and economic aspect
serves as a sort of checks and balances in the financial and administrative
procedure of any organizational setup. Apart from explaining the concept of
auditing and it’s operations, emphasized
is laid on the problem areas in the account of governance, accounts
maintained by the government and
procedures involved in auditing government accounts.
The need for maintaining and
adequate, effective and efficient
internal audit system, therefore cannot be over emphasized especially in days
like these when Nigeria economy is with
effort in ensuring that wastage, pilferage, misappropriation and checked or
avoided and to ensure that asset are being secured.
1.2 STATEMENT
OF THE PROBLEM
i. often
management of public sector and internal audit department function are seen as
contradictory rather then complementary.
ii. Internal audit department which is set up to ensure adherence to
management policy may not achieve their main objective because of interference
and undue influence by top management.
iii.
That the internal
audit adequately equipped with.
iv.
That better and
well-trained professional should be employed for efficiency and effectiveness.
1.3 OBJECTIVE
OF THE STUDY
i. To identify the problems in internal audit department of public
sectors.
ii. Finding ways of improving on the internal audit of public
sector.
iii.
To explain the
meaning and significance of internal audit as an aid to public sector.
iv.
Assist other
researcher to obtain useful information that will serve as input for further
research work.
1.4 RESEARCHOF HYPOTHESIS
Considering the problem definition of this study
and it’s objectives. The following hypothesis are developed to be tested in
this project.
Hi:
Internal audit is of importance to aid management of public sector
performances.
Ho:
Internal audit is not importance to aid management of public sector
performances.
1.5 RESEARCH
QUESTIONS
The following research questions are used as a
guide to collect information.
i.
How is the account of
state ministry being audited?
ii.
What are the
procedures involved in caring out audit of the state ministry?
iii.
What are the problems
being encountered by the auditors in auditory state ministry?
iv.
Is there any laws
binding the auditing of account of the state ministry?
1.6 SIGNIFICANCE
OF THE STUDY
The significance of this study is to enable the
researcher to know:
a.
If internal audit
within an organization is effective for internal control system.
b.
Whether internal
audit in public sector organization complies with sector management policies,
law and regulation.
c.
If internal audit in
public sector organization will help to defect minimization fraud in an
organization (State Ministry).
d.
Some procedures,
techniques add principles involve in auditor government parastatals.
1.7 DEFINITION
OF TERMS
In the course of writing this project, there are
some technical terms used that needs to be understood very well before a
project can have a good meaning to the reader, these terms include the
followings:
AUDIT:
Is the independent examination of the financial statement of an enterprise and
the expression of an opinion of such financial statement by an appointed auditors
as to whether it shows true and fair view of the state of affairs of the
enterprises in accordance with the terms of his agreement, the observation of
statutory regulation and professional requirement.
AUDIT REPORT:
Generally refers to any written report by an auditor in accordance with the
term of his appointment. It is an medium through which are auditor expresses
his opinion.
INTERNAL
CONTROL SYSTEM: A system within an organization
designed to provide reasonable checks regarding the achievement of the
organizational objective.
IRREGULARITY: Is
the intentional distortion of financial records and report for what ever
purpose.
FRAUD: The
use of deception to obtain an unjust or illegal financial advantage.
ERROR: Unintentional
misstatement in or omissions of amounts or disclosures from an entity’s
accounting records or financial statements.
ILLEGAL ACTS: Refers
to any act that is contrary to law.
PUBLIC SECTOR:
Is all organization, which are
established, being operated and controlled by the government on behalf of the
public.