1.0 Background to the Study
1.6 Scope of Study
1.7 Limitation of
Scope and Objectives of Internal Audit
Internal Control System
Features of Internal Control System
Internal Auditors and Internal Controls
2.6 Relationship between Internal Auditors and External Auditors
3.0 Research Methodology
3.1 Research Design
3.4 Research Instruments
3.5 Research Questions
3.6 Research Hypothesis
3.7 Conduct of Field Work
Data Analysis, Presentations and
Presentations and Analysis of
Hypothesis Testing and Interpretations
Interpretations and Comments
Summary, Recommendations and Conclusion
Summary of Findings
BACKGROUND TO THE STUDY
has been a high record of business failure in the world today; and this usually
is as a result of management inefficiency in the area of prevention and
detection of fraud and other irregularities. Managements of businesses have
taken several measures to combat this problem. Some of these measures among
others include: the establishment of -
Internal Control System (ICS);
Internal Audit Unit (IAU);
Total Quality Management (TQM);
Team Building; and
Organizational Control processes such as
policies and procedures
control system is seen as a means of monitoring every other control system in a
business organization and it is considered as the most important measure that
needs to be strengthened in order to ensure business success.
auditors as an instrument in the hand of the management, and through the
Internal Audit Unit (IAU), have been making effort in ensuring the
effectiveness of the Internal Control System (ICS), monitoring of every other
control measure put in place by the management as well as the pursuance of the actualization
of the organisational goals and objectives.
of internal auditors;
to separate the Internal Audit Unit (IAU) from accounting department
auditors involvement in fraud
involvement in fraud
role of godfather/Abusive use of authority
auditors independence level
PURPOSE OF STUDY
order to have a clear definition of direction, this research work will be aimed
at identification of:
role of internal auditors on the effectiveness of the Internal Control System
in an organization;
contributing to the challenges of internal auditors in discharging their
And the possible way out of addressing
the problems of internal auditors, ensuring the absolute functionality of the
Internal Audit Unit (lAU) on Internal Control System effectiveness.
following are the research questions formulated as a guide in the course of
this research work;
i. Are the services of internal auditors needed
in an organization?
the absence of internal auditors have effect of the organisational Internal Control
the Internal Control System of an organization be strengthened?
the internal audit department (Internal Audit Unit) be separated from other department in the organization?
internal auditors focus only on accounting records and leave every other business
internal auditors in an organization be independent?
Management ensure internal auditors' independence?
can you say about management effort in ensuring internal control system
internal auditors in an organization need to be well motivated and remunerated
in ensuring their full commitment?
internal auditors need to be employees of the organization?
xi. Should internal auditors in an organization be professionally
effecting this study, the following statistical hypothesis are formulated as
research hypothesis, to guide in the provision of tentative solutions to the
highlighted problems and challenges facing internal auditors in ensuring the
internal Control System effectiveness.
Null Hypothesis (Ho)
Alternative Hypothesis (HI)
i. Ho -
That the services of internal auditors are not needed in an organization.
Hi - That the services of internal auditors are needed in
ii. Ho -
That the absence of internal auditors will not have effect on the Internal
Control System (ICS) effectiveness.
- That the absence of internal auditors will have effect on the Internal
Control System (lCS) effectiveness.
iii. Ho -
That Internal Control System need not to be strengthened.
- That Internal Control System need to be strengthened.
iv. Ho -
That internal auditors in an organization need not to be professionally
- That internal auditors 10 an organization need to be professionally
v. Ho - That
the internal auditors should not be independent in an organization.
- That the internal auditors should be independent in an organization.
vi. Ho - That
management should not intensify effort in ensuring Internal Control System
Hi - That
management should intensify effort in ensuring Internal Control System
vii. Ho -
That management should not ensure internal auditors independence.
Hi - That
management should ensure internal auditors independence.
SIGNIFICANCE OF STUDY
who are the investors and the providers of capital of businesses, have suffered
from different forms of problems as a result of management inefficiency (ices);
and of which has been the reason for failure of some prospective investors from
investing their resources on businesses today. Some of these problems include;
Loss of invested fund and request for
fund (money) on liquidation, arising from total business failure upon which the
investors may be called to provide more· fund in setting the business
indebtedness to its creditors;
Non-declaration of/inconsistent dividend
payment as a result of poor business performance; and
Poor growth on
capital and continuous falling in market share due to management
incompetence and other irregularities surrounding business operation.
Auditors, whose work are concerned with investigating and formulating opinion
on the true and fair view of the companies' financial statement; find the scope
of their work more widened in organizations where reliance cannot be placed on
the work of internal auditors; as such case will requires very deep
investigation as if the presence of the internal auditors are not felt.
order to provide ways of preventing the occurrence of the above pose
challenges, effort will be made on this research work to assist in restoring
back confidence in both immediate and prospective investors' mind on the
securities on their investment on businesses, and also the external auditors in
placing reliance on the work of internal.
1.6 SCOPE OF STUDY
research work will be focused on the role of internal auditors on the
effectiveness of Internal Control System (lCS), by considering how relevant are
internal auditors in
Nigeria Plc - Otta Branch.
it will cover the scope of
Addressing the problems of internal
Providing external auditors with
measures in placing reliance on the work of internal auditors and the Internal
Control System (lCS):
Building the investors' confidence in
business managers (management).
1.7 LIMITATION OF
of enough data requirement is one of the major problems facing or confronting research
work in the developing country like Nigeria. The data gathered in most cases, are
not only inadequate but also, they are grossly unreliable.
another problem that serves as limitation for this research work is the time constraints.
The time required to carry out this research work is limited than ideal for the
study, and will in tum not ensure deep investigation on the subject matter and
thereby reducing the scope to what can be achieved within the time frame.
which is the most important recourse in any research work is another limitation
of this study. A good and successful research work requires high financial
commitment, so as to access larger aspect of the population under consideration
and to be able to generalized findings on the entire population.
DEFINITIONS OF TERMS
the course of this research work, there are some terms and concept whose
meanings are not obvious in the context of the study: the meaning of which are
to be explained under this heading.
terms and their definitions:
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 the any relevant statutory obligation.
Adequate Control: Present
if management has planned and organized (designed) in a manner that provides
reasonable assurance that the organization's risks have been managed
effectively and that the organization's goals and objectives will be achieved
efficiently and economically.
board is an organization's governing body, such as a board of directors,
supervisory board, head of an agency or legislative body, board of governors or
trustees of a contained within the risk tolerances established by the risk
specific internal audit assignment task or review activity, such as an internal
audit, control self-assessment review, fraud examination, or consultancy. An
engagement may include multiple tasks or activities designed to accomplish a
specific set of related objectives.
is the activity that involves provision of fund or money to where and at when
illegal act characterized by deceit concealment or violation of trust. These
acts are not dependent upon the threat of violence or physical force. Frauds
are perpetrated by parties and organizations to obtain money property, or
services; to avoid payment of loss
of services; or to secure personal or business advantage.
combination of processes and structures implemented by the board to inform,
direct manage and monitor the activities of the organization toward the
achievement of its objectives.
is the process of the organizing and controlling of the affairs of a business
or a sector of a business.
• Risk: The possibility of an
event occurring that will have an impact on the achievement of objectives. Risk
is measured in terms of impact and likelihood.
• Standard: A
professional pronouncement promulgated by the Internal Audit Standards Board
that delineates the requirements for performing a broad range of internal audit
activities, and for evaluating internal audit performance.