ABSTRACT
The
researcher embarked upon this study to help small-scale business organization
in pinpointing some of the need for auditing and investigation.
Kicking against the effective of
small-scale business. So recommendation
can be made to offset the situation.
Base on this finding, the researcher believes if those recommendations
are carried out the survival and growth of small scale business will be a
reality.
In the process of carrying involved in
this are money, time information gathering etc.
This research project is composed of five chapters.
Chapter one is about the background of
the study, statement of the problem, purpose of the study, the scope of the
study and the significance of the study.
Chapter two is
review of related literature, chapter three is about research design and
methodology, chapter four is findings and chapter five is about the discussion
of result, conclusion, recommendation and limitation of the study.
TABLE
OF CONTENTS
Title page
Approval page
Dedication
Acknowledgement
Abstract
Table of contents
CHAPTER ONE
INTRODUCTION
1.1
Background of the study
1.2
Statement of the problem
1.3
Purpose of the study
1.4
The scope of the study
1.5
The significance of the
study
CHAPTER TWO
REVIEW
OF RELATED LITERATURE
2.1
Preamble
2.2
Auditing and duties of
auditors
2.3
Audit evidence and
sources of audit evidence
2.4
Management audit,
efficiency audit, audit of a sole trader and purpose of audit
2.5
Investigation and kinds
of investigation
2.6
Potential client for
investigation
2.7
Stages involves in
carrying out investigation
2.8
Investigation of fraud
CHAPTER THREE
RESEARCH
DESIGN AND METHODOLOGY
3.1
Research design
3.2
Source of data
3.3
Location of data
3.4
Tools of analysis
CHAPTER FOUR
FINDINGS
CHAPTER FIVE
5.1
Discussion of results
5.2
Conclusion
5.3
Recommendation
5.4
Limitation of the study
References
Appendix
CHAPTER
ONE
INTRODUCTION
1.1
BACKGROUND TO THE STUDY
The work of an
auditor in any organization cannot be looked beyond or over emphasized. This is because in earlier years when there
was no auditor to take proper care of the organizational financial statement,
many organizations like small scale business organization, manufacturing
companies and even private companies suffered frauds and errors in their
business.
The enterprises
that existed at the time were mostly joint ventures with a limited life. In such cases, the ascertainment of profit
was simple. It was equal to the surplus
of cash in hand at the end of the venture.
One should also remember that where audits were conducted at this time,
it was not because of any statutory provisions, and that responsibilities and
duties of an auditor had not been clearly defined. Most of fraud is being committed by the staff
of those organizations especially small-scale business organization because of
this, there is need for auditing and investigation in small scale business
organization.
Since small scale
business is a business that has little fund and materials. It is very crucial to employ the service of
an auditor. The auditor is concern
merely to ascertain the correctness of sums of money received and disbursed,
checking the accuracy of individual entries in a cash record and verifying the
balance of cash in hand at a particular point in time. In so doing, frauds, and
errors can be easily detect and prevent.
An auditor is the
only person authorized by law to conduct auditing and investigate on any
financial matter concern organization (including small scale business).
Investigation is a
special inquiry into the financial affairs of a business. An auditor need proper investigation to help
him carryout his auditing duties.
Finally, the major
important need for auditing and investigation in small scale business
organization is to make sure that the business grow with its little financial
back up coupled with total minimum of frauds and errors. Auditing help in ensuring that o material,
financial or otherwise is misused.
1.2
STATEMENT OF THE PROBLEM
Problem arise in
the application of normal auditing principles and procedures to audits of small
scale business organization employing a smaller number of administrative staff.
Substantial
domination of the accounting and financial management functional by one person
is also one of the major problem that the organization is suffering from.
Limitations on the
effectiveness of internal control owing to the small number of employees. Thus, the provision of check whereby the work
of one person is proved independently (or is complementary to the work of
another) be absent to a considerable extent.
Whilst internal control including internal check may be effective for
its primary purpose as a check on management itself.
Inadequate
management support for internal auditing is also one of the major problem the
organisation is encountering. We had to
assume that the management and auditor were in conflict then the task of the
auditor would not be able to rely in any way on the explanations and
information given to him by management.
He was likely to be false and the audit process would become both costly
and detailed.
The organization
is also suffering from inadequate accounting records since one person is
handling the financial management function, we find out that frauds and errors
can be easily committed by that person.
1.3
PURPOSE OF THE STUDY
The purpose of
this study is
a.
To find out the extent of
substantial domination of the accounting and financial management function by
one person affect the organization’s internal control system.
b.
To ascertain the extent
of limitation on the effectiveness of internal control owing to the small
number of employees.
c.
To find out if proper
auditing and investigations were made by the auditors by all the information
and explanations obtained to the best of their knowledge and belief were
necessary for the purpose of their audit.
d.
To determine to what
extent the organization suffered from inadequate accounting records.
e.
To ascertain the extent
of inadequate management support for internal auditing.
1.4
THE SCOPE OF THE STUDY
Considering the
circumstance and predicaments of business, it is apparently obvious that there
is no business that can survive without encountering one kind of problem
especially in small-scale business organization. According to James Bades, all firms’ faces
risk but they are proportionally greater in the small firm.
The failure of a
production batch in small firms may spell disaster while a similar failure or
problem in a large organization.
Causes of frauds
and errors by the management staff are one of the major problems that the
organization is encountering.
Financial problem
is a major problem for small-scale business organization in Nigeria sources
of fund for this category of business.
Inability to borrow is difficult because of the small amount of asset
they have.
The organization
is also seriously suffering from marketing problems due to lack of experience
in the field, poor human relations, unable to meet customer’s demand.
Since the
organization is operating with small amount of fund and asset they are
suffering from production problem due to lack of production facilities,
insufficient of raw materials for production, poor product planning, lack of
purchasing policy and sources of supply and also lack of ware housing.
The organization
is seriously suffering from research problems such as illiteracy and human
behaviour.
Major weaknesses
in the system of internal control is minor errors which is caused by the
management staff of the organization by not keeping the appropriate financial
statement due to false manner of entering accounting transaction.
1.5
THE SIGNIFICANCE OF THE
STUDY
The relevance of
the study cannot be over emphasized as a successful completion of this study.
The need for
auditing and investigation in small scale business organization help the
organization to employed a qualified auditor to enable the management staff of
the organization to keep adequate accounting record. So that the financial statements prepared by
the management can only be accurate and reasonable. If the organization employed a qualified
auditors it will help the organization to detect and prevent errors and frauds
easier.
Finally, the need
for auditing and investigation will help for survival and substantial growth of
the organization.
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