CHAPTER ONE

INTRODUCTION

The main aim of this research work is to under-study the effectiveness and efficiency of internal audit as a tool for management control. An attempt will be uncover the attitudes and behaviors of internal auditors towards and practice of auditing.

Auditing as the analysis in the past, present and future data is to provide a strong basis of management action which in turn provides a strong basis in the organization. The essence of the effect of internal auditors in an organization is to ascertain and control as well as to provide the organization with appropriation information for decision making.

BACKGROUND OF THE STUDY

An audit process can be said to have taken place when an individual reviews a range of activities, which he has himself accomplished. In most audits, a person may query the correction of the records being auditor and if given another chance whether he would improve upon has former performance. In fact it must do some things to monitor the operation to assure the achievement of established objectives, and the same exercise could be applicable to complex organization employing many people.

The word ‘’audit’’ is a Latin world meaning ‘’he hears’’ was derived from the Latin word ‘’audire’’ since in ancient time by early merchant.  In the traditional sense it initial objective is to detect fraud and clerical error, but in recent times audit techniques were influenced by several development.

The first was the tremendous growth of many industries during and subsequent to the industrial revolution. This resulted to the operation of business becoming more voluminous and complex.

 It was no longer practicable for owner or top manager to have enough contexts with the various operations, with in tension of trying to view satisfactorily the effectiveness of performance.

Although we can build a supervisory system to keep on over view but it becomes difficult for him to know whether the interest of the business are being complied with? Are assets being properly safeguarded? Are the various employees functioning efficiently? Are the approaches still effective in the light of larger organization? At the turn off the century, there was this urge for the determination of the fairness of reported financial status. The ultimate respond to these needs is that he must have further help. Assigning one or more individual, to be directly responsible for reviewing activities and reporting on the above mentioned activities. Earlier, auditing was very much accounting owented, whole internal auditors are financially oriented checker and more a policemen then a co-worker. Very recently internal audit function is being carried out directly as part of their basic management role to assist in the managerial problems and also include the non-financial areas. It has established itself as a valued and respective part of the top management; through it own self-development and dedication.

The internal audit was introduced in Nigeria on the threshold of independence when the Nigeria economy was fairly strong and several ministries and extra ministries agencies were made self-accounting to ensure more autonomous control, reflecting some type of operational activity and level of coverage.

STATEMENT OF PROBLEM

The need for effective and efficient performance of the organization depends on the management and the execution of his management to keep records so as to determine the return of invested capital.

The researcher opinion is that most organization do not apply auditing technique in executing their organization project and those who do, have faulty application years back, many internal auditors emphasized one audit objective that is the auditing of project for inventory valuation and income determination as it is an end.

Consequently, many organizations, failed to collect information in a form that will be suitable for other purpose suitable questions such as this could be asked or raised. 

i)          The consequence of not maintaining proper internal checks and internal control.

ii)         Why is it that organization fail in its financial decision despite the quality information supplied by the internal auditors 

iii) Why is it that auditing information supplied to the organization for it decision are sometimes at cross road with underlying record despite the fact that those record are examiner by internal auditors, these and other questions demand answer that will affect he effective operation of internal auditors in term of its survival and position in the organization.

SCOPE OF THE STUDY

A research works is never an easy task, there are occasions where the researcher will encounter some difficulties research is therefore not an exception. A research work of this nature needs enough time for facts findings but the time given for the whole research work was too short considering the fact that only tow free lectures days was given every week which is not actually enough for the researchers to collect sufficient data (raw material) it is important to stress here that this research work is not purely based on a practical experience per says therefore an in depth discussion not be under taken. This study in fends to found out why and what is really responsible for the capacity in proper effectiveness and efficiency of internal auditor. It is also proper to stress him that this work is limited to the effective and efficiency of internal auditor.

DEFINITION OF TERMS

In the role of the internal auditor for effectiveness and efficiency, here the cost ascertainment to him involved he determination of the methodological approach he will employed as to achieve his aim in either for accounting, administration/ stores departments and production, engineering department of services this is to explain some works which might be technical for users of this research work.

AUDITING

Auditing can be define as the independent examination of and expression of opinion on the financial statement of an enterprise by an appointed person or persons called auditor in pursuance of that appointment and incompliance with any statutory regulation.

INTERNAL ADUIT

Internal auditing may be defined as the independent appraisal from within an organization of its internal control.

INTERNAL CONTROL

It is the entire system of control which include accounting, financial, management and administrative control or otherwise which are established by the management in order to carryout the business of the organization in an orderly manner.

INTERNAL CHECKS

It is the day to check of the company’s business transaction.

MANAGEMENT

It is the process of planning, organizing leading and controlling the efforts of he organization member aimed at achieving set goals target.

DECISION MAKING

This is the process of planning, choosing a solution to a problem given that at least two alternative solutions exist.

EFFICIENCY

This is the degree to which in puts are used in relation to a given level of output.

FRAUD

This is defined as criminal development whereby a fraudster tries to convert materials or money valve belonging to someone else into his private use by dubious means.

EFFECTIVENESS

It is the degree to which a goal or target is met. It entails doing the right things

AUTHORITY

This is the right to command base upon the power to exercise it.

RESPONSIBILITY

This is an obligation to use authority to see the duties are performed.