ABSTRACT
This study is on the roles of internal auditors and management of fraud and wastages in business organization. Many objectives were set among which are: to identify the nature, types and major causes of fraud and wastages. Two Hypothesis were also tested to determine if or not the hypotheses might be instrumental in fraud and wastages occurrences in business organizations. In arriving at the data used, both primary and secondary data were used. The primary data includes questionnaires distributed to sampled staffs and management of KEDCO Plc. The secondary data includes materials form published textbooks, internet, articles and newspapers. These were tested using Z-test statistics. Data were analyzed and some of the findings include inadequate control measures took the most significant causes of fraud and wastages followed by deliberate intent and management ignorance. Finally, I recommended that proper internal control measure should be put in place, and other measures that will help to facilitate it like: inspection, review and observation. Trustworthiness, competence and integrity of employees and their understanding of prescribed policies and procedures.
TABLE
OF CONTENTS
Title page - - - - - - - - - - -i
Declaration - - - - - - - - - - -ii
Approval page- - - - - - - - - - -iii
Dedication- - - - - - - - - - - -iv
Acknowledgement- - - - - - - - - - -v
Table of contents- - - - - - - - - - -vi
Abstract- - - - - - - - - - - -viii
CHAPTER
ONE
INTRODUCTION
1.1 Background of the study - - - - - - - - -1
1.2 Statement of problem - - - - - - - - -2
1.3 Objective of the study - - - - - - - - -2
1.4 Research questions - - - - - - - - -2
1.5 Statement of hypothesis - - - - - - - - -3
1.6 Purpose of the study - - - - - - - - -3
1.7 significance of the study - - - - - - - - -3
1.8 Slope and limitation of the study - - - - - - - -4
1.9 Definition of terms - - - - - - - - -5
CHAPTER
TWO
LITERATURE
REVIEW
2.0 Introduction - - - - - - - - - -6
2.1 Conceptual Framework - - - - - - - - -6
2.2 Objectives of internal audit - - - - - - - -7
2.3 Characteristics of internal audit - - - - - - - -8
2.4 Functions of an internal audit - - - - - - - -10
2.5 Responsibility of an internal
auditor to management - - - - -12
2.6 Internal auditing as an aid to fraud
prevention - - - - - -14
2.7 Theoretical Framework - - - - - - - - -16
2.8 Empirical Review - - - - - - - - -20
CHAPTER
THREE
RESEARCH
METHODOLOGY
3.1 Introduction - - - - - - - - - -24
3.2 Research Design - - - - - - - - - -24
3.3 Data collection Method - - - - - - - - -24
3.4 Research population and sample size - - - - - - -26
3.5 Validation and reliability of the
instrument - - - - - -27
3.6 Method of data analysis - - - - - - - -27
3.7 Decision criteria for validation of
hypotheses - - - - - -28
CHAPTER
FOUR
DATA
ANALYSIS AND RESEARCH FINDINGS
4.1 Introduction - - - - - - - - - -29
4.2 Data Analysis - - - - - - - - - -29
4.3 Test of Hypothesis and Summary of
Findings - - - - - -35
CHAPTER
FIVE
SUMMARY,
CONCLUSION AND RECOMMENDATIONS
5.1 Summary - - - - - - - - - - -36
5.2 Conclusion - - - - - - - - - -36
5.3 Recommendations - - - - - - - - -37
References - - - - - - - - - -38
Appendix - - - - - - - - - -41
CHAPTER
ONE
INTROUCTION
1.1 BACKGROUND
OF THE STUDY
At the beginning
of the century, most businesses are small and sole-operated. The
owners/managers are overly involved with most of the decision making. As
business grows in size and complexity, professional managers take position of
the owners and the operators (Jones, M.J., 2008).
Consequently,
they rely heavily upon streams of accounting and
statistical report which summarizes current happenings and conditions in the
enterprise. The information carried by these streams of report enables
management to
control and direct the enterprise in order to assure management
that the information received are both reliable and accurate. A system of
internal audit is developed to monitor the activities of the company.
The need for
maintaining the adequate efficient and effective internal audit, therefore
cannot be overemphasized especially in days when Nigeria’s economy still is
witnessing depression and every company is making effort in ensuring that
wastage, waste, misappropriation are or
avoided, and to ensure that assets are
being secured.
Some problems
were noticed during the cause of this research; problems within the company,
these problem researcher noticed that there was ineffective co-operation
between the internal audit and management, audit reports were sometimes ignored
by the management. The relationship between the internal auditor and external
auditor was strained making work harder for the external auditor. The lack of
internal audit to prevent waste and fraud within the company thereby preventing
an error free working condition.
1.2 STATEMENT OF PROBLEM
Often,
management and internal audit department function were seen as contradictory
rather than complementary. Internal audit department is setup to ensure
adherence to management policy but this objective cannot be achieved because of
interference and undue influence by the top management.
More so, monthly
or quarterly internal audit report as the case may be in an organization is
expected to provide information required by management to determine how
effective their policies and implementation are. It is on this realization that
this study will attempt to determine how effective are those information to aid
management in solving day to day problems. It signifies defects or problems;
the research will examine number of them namely:
i.
There exists no relationship
between the internal audit and management.
ii.
Internal audit does not assist in the detection and prevention of waste.
iii.
Internal audit does not assist in
detection and prevention of fraud.
1.3
OBJECTIVES OF THE STUDY
Objectives of the study include:
i.
To ascertain if the duties of the
internal auditor assist management in taking informed decision.
ii.
To find out if internal audit
assists in the detection and prevention of fraud.
iii.
To detect if internal audit helps in checking waste
1.4
RESEARCH QUESTIONS
i.
What is the relationship between
the internal audit and management?
ii.
Does internal audit assist in the detection and prevention of fraud?
iii.
Does internal audit assist in the
detection and prevention of waste?
1.5 STATEMENT OF HYPOTHESIS
To justify the
research topic, internal audit as an aid to management and to enable the
researcher to draw a logical conclusion, there is need to make guesses as
solutions to the topic which are subject to acceptance and rejection are based
on the result of the test.
HYPOTHESIS ONE
H0:
There
is no relationship between the internal audit and management.
H1:
There
is a relationship between the internal audit and management.
HYPOTHESIS
TWO
H0:
Internal
audit does not assist in the detection and prevention of waste and fraud.
H1:
Internal
audit assist in the detection and prevention of waste and fraud.
1.6
PURPOSE OF THE STUDY
The purpose of the study is to determine
the extent of co-operation between the internal audit and management.
i.
To ascertain the extent of
co-operation between the internal auditor
and external auditor.
ii.
To evaluate the extent to which
internal audit helps in preventing waste and fraud.
iii.
To find out if internal audit is
equipped enough to prevent an error proof working condition.
1.7
SIGNIFICANCE OF THESTUDY
The benefits of the study to:
The Internal
Audit-Internal audit within an organization is effective for efficient work of
the general staff. The internal audit in an organization will help detect,
minimize or eliminate fraud in an organization. Internal audit assist the
management in the smooth running of the organization by complying with the
policies, laws and regulation.
Internal audit
in an organization will help to review and appraise the effectiveness, adequacy
and application of accounting, financial and other controls in order to promote
effective control at the lowest possible cost. Whether an internal audit
department could help to determine the reliability and integrity of financial
and other data produced within the organization, thereby securing the jobs of
employees.
The management
of the organization Management will experience an error free working
environment maintained by internal audit.
Management will enjoy the reduction or
elimination of waste and fraud within the organization.
The general staff will be effective and
dedicated.
Management will enjoy a healthy
relationship between it and internal auditors.
1.8 SCOPE AND LIMITATION OF THESTUDY
This research
work is to evaluate internal auditing in an organization using soap, detergent
and KEDCO as a case study. The research work particularly focuses on the
internal audit as an aid to management in themay and baker plc and drug field specialty
Limitation
There are
constraints encountered in carrying out this research work, this includes;
Time Factor: This research work was conducted
simultaneously with normal academic work within a short period of time in which
some valuable information could be obtained.
Financial Difficulty: In an effort to
have a sufficient research material to be able to write extensively on the
subject matter, the researcher was faced with some financial predicament
considering high cost of not only education materials coupled with the high
transport fare.
1.9 DEFINITION OF TERMS AUDITING
It is defined as
a process of carrying out an independent examination 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.
Internal Audit: Millichamp 1996, defined
internal audit as “An independent appraisal of an organization for the view of
the 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 of
their sources”.
Internal audit
reviews existing accounting system and related internal work. It assists in the
implementation of new accounting systems. It identifies and draws attention to
management weakness in control or measures which are unsaid to the
organization. To investigate and eliminate waste and fraud, thereby ensuring
the survival of the organization.
Internal Auditor: He is an employee of a
particular firm as related to its operation. It is in itself an internal
control which reports the effectiveness of the other controls.
Its objective is
to help manager in discharging their responsibilities and to evaluate
compliance with cooperate procedure within the organization.
Management: It is a body charged with the
responsibility of planning, directing and controlling of all the activities
within the organization. Therefore management control is the process by which
managers assure that resources are obtained and used effectively and
efficiently in the accomplishment of the organizations goals (Anthony and
Welsch,1974).
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