of Content v
1.0 Introduction 1
1.01 Background of Research 1
1.2 Statement of Problem 3
1.3 Objective of the Study 4
1.4 Research Question 5
1.5 Research Hypothesis 6
1.6 Scope and Limitation of the study 7
1.7 Significance of the Study 8
2.0 Literature Review 9
2.1 Historical Development of Internal Audit 9
2.2 What if Internal Audit? 10
2.3 Why is Internal Audit Important? 11
2.4 Historical Background of the Company PZ Industries PLC 12
2.5 Purpose of Internal Audit in PZ 14
2.6 Objectives and Scope of Internal Auditing in
2.7 Effect of Internal Audit in PZ 18
2.8 Relationship with External Auditors 19
2.9 Review by other people or Review of other
people’s Related work. 20
2.10 Relevance of Internal Auditing to Management Efficiency and Effectiveness 21
The Advantages of Internal Audit Over
External Auditing as a Tool to Management
decision Making. 22
3.0 Research Methodology 25
3.1 Research Design 25
3.2 Data Collection Method 25
3.3 Sample size and Procedures 28
3.4 Data Analysis 29
3.5 Reliability of Data 30
4.0 Presentation and analysis of Data 31
4.1 Internal audit aids corporate management in an organisation. 31
4.2 Testing of the Hypothesis 40
5.1 Summary 48
5.2 Conclusion 49
5.3 Recommendations 50
BACKGROUND OF RESEARCH
method of examining the evidence of financial transactions could be traced back
to the time when there was need to transact business beyond one’s immediate
needs. But such method of examining or checking the evidence of such
transaction-known as Audit did not start immediately until after the trade by
barter era. It came at a time when individuals noticed that no one is self
sufficient thus, the need for individuals to pool resources together to form
what is known today as business.
as the central directing and controlling elements in a business organization
came as a result of individuals pooling their resources together to strengthen
their co-ordinate and integration of specific activities in the organization to
ensure effectiveness and efficiency of human cooperation in recent times,
business organization are increasing due to scientific breakthrough and
economic development. As a result, the need for decentralization, which means authority
is systematically delegated or pushed down the line in an organization arises.
This makes corporate management becomes so complex and the increasing volume of
trade among business organization have made the art of management so complex
and challenging. The only managers with mastered skills in modern scientific
method of management can cope with the increasing demand required by their
addition to this complexity of corporate management, is the increasing wave to
fraud and misappropriation of funds in the private and public sectors of the
economy at large. In an attempt to cope
with this situation and keep their business profitable, management have to look
inwardly to increase control system, by which all the policies and activities
are put to check to conform with the set objectives. This involves the
subdivision of duties by means of which no one person is entirely responsible
for one transaction but a some stage of its performance, each person work come
to the notice of at least one other person.
audit also forms a integral part of this internal control system, which is a
management function, which appraise the problems, and performance of every
department in the organization.
STATEMENT OF PROBLEM
managers may delegate their authority but the responsibility to get the
assignment done cannot be delegated, but rather rest on the managers. In this
understanding managers manage conceptual system which will ensure that physical
assets represented by conceptual assets are protected and managed properly. Since
management can only manage through delegation of authority, it is only through
a good internal auditing system that the top managers can check the level of
compliance to delegated authority. Internal audit is needed to ensure that all
delegated duties are carried out effectively and also that the policies and
procedures of the company are adhered to strictly, this include the following:
audit are not independent.
are employed by management and therefore are responsible to the management.
of them are responsible to the director of financing accounts.
are not professionally qualified.
are not well paid.
OBJECTIVES OF THE STUDY
audit is not primarily aimed at detecting Fraud and errors, or dinging fault
with accounting staff of an organization.
Naturally, in the process of examining the documents which from the
basis of a financial statement, the auditor, may detect fraud or errors and
weaknesses in the accounting system.
primary objectives of audit is the examination of all available and relevant
evidence by the auditor with intent to reporting on the correctness and to be
able to determine the following:
determine the extent to which management does not allow auditors to perform
examine the level of education of internal audit staff.
determine the extent to which internal audit staff are professionally qualify.
examine the salaries of internal audit staff as compared with other company’s
determine the relationship between the internal audit department and the
Accounting Department and Management.
introduction of internal control by management is not enough to safeguard asset
without internal audit department which exercise a managerial control which is
concerned with measuring and evaluating the continuous effectiveness of the
internal control system of an organization.
internal auditor well paid in the organization
ii. Who is
the internal audit department responsible to.
iii. What is
the level of qualification required for employment into the internal audit
department of the organization.
The above question should be considered without further
research project will based on the following hypothesis.
1.5.1 Ho: Internal
audit aids corporate management in an organisation.
Hi: Internal audit does not aid corporate
1.5.2 Ho: Internal
auditing makes frauds and embezzlements less possible in an organization.
audit does not make frauds and embezzlements less possible in an organization.
1.5.3 Ho: Internal
audit helps management to keep proper control of its assets, activities and
audit does not help management to keep proper control of its assets, activities
1.5.4 Ho: Internal
audit gives confidence to management on its activities.
audit does not give confidence to management on its activities.
SCOPE AND LIMITATION OF THE STUDY
study focused on the importance of internal audit as awn aid to corporate
management. Internal auditing is a
component of internal control system.
Through, this study will not concern itself with the review of the
internal control system. Thus, the study
of auditing in its producers, programmers and the standard of the general
auditing and its functions will not be covered in this study. However, auditing and internal control system
that involves internal auditing will be emphasized.
financial system has witnesses some set back from auditor, due to unfaithful
people of the nation.
introduction of an Auditor in a public and private enterprises has mis-used by
some Auditors as opportunity to become over-right affluence.
independence of an Auditor has also voided due to mis-management of the
SIGNIFICANCE OF THE STUDY
process of allocating financial resources from the surplus sector of the
Economy to the deficient sector in the course of generating economic activities
is guided with series of regulations to ensure that the totality of the
financial system is operated with some measure of sanity. Hence, we have such regulatory agencies like
the Banks, National Insurance Art, the securities Exchange Acts, and the other
operators of the financial system are expected to carryout their operation
strict compliance to these regulation failing which the erring company is
penalized by various means which at the extreme may include the outright with
drawal of the operating licence of such company e.g the case of savannah Bank