INTRODUCTION

1.      BACKGROUND OF STUDY

Auditing has been defined by the international auditing practicing committee (IAPC) as an independent examination of and the expression of an opinion on the financial statement of an enterprise by an appointed auditor in accordance with relevant statutory obligation and professional requirement.

Internal auditing

On the other hand appeared on the business scene much later than auditing by public accountant. The principal factor in its emergence was the extended span of control faced by management in concern, employing thousand of people and conducting operations from widespread locations.

          Deflation and improperly maintained accounting records were obvious problem under these circumstances. The growth in the volume of transaction resulted in substantial bills for business that endeavored to solve the problem by continuing to engaged the services of public accountants.

The solution was of course

To provide the needed auditing service on an internal basis, particularly as the magnitude of the problem made it possible for one or more persons to specialize in such auditing services and devoted their full time to the need of single company.

          Other advantages also resulted form an internal approach to the problem. Internal auditors tended to become better acquainted with the procedures and problem of the company and the auditing activity could be carried on continuously, rather than once a year when outside auditing services were utilized.

          As a further inducement to the development of internal auditing public accountant were a the same time facing an increasing demand for independent audit, leaving to the expression of opinion on financial statement they recognized that they would perform the older type of fraud detection or verification as effectively as could the company’s own specialist.

          A number of institutions have been established by both the states and the federal government of Nigeria. Their rule derives from the fact that they normally comprise the largest single collection of highly specialized people.

          Government appreciates the invaluable role they can play in the overall development of the country through the provision of well rained middle and higher level man power for various department of government and the private sectors. in view of this, the huge investment by government should be controlled, safeguard and made result oriented. The role of internal audit, as the “watchdog” of those controls established by the institutions becomes the only sure means of controlling the institutions activities.