ABSTRACT
The study focuses on the impact of internal audit on the effective
management performance with particular references to Afikpo North Local
Government Area, Ebonyi State. Data were collected using primary data
collecting instruments such as interview, questionnaires, books etc. the
collected data were analyzed, tabulated and presented using table and simple
percentages and the population size (N) = 50, sample size (n) = 40 was used in
determining the respondents’ degree of response. The major findings made in the
course of this study is that, the extent to which internal audit has impact on
the organization’s management performance is much satisfactory. Hence, business
organization without internal audit unit are prone to liquidation because, the
fraudulent acts and irregularities going on in the organization will not be
revealed. Internal audit has great impact on management performance. Effective
internal audit unit ensures effective and functional internal control system.
On recommendations, business organizations should ensure compliance to rules
and regulations regulating auditing. Management organizations should adhere to
the advice of internal auditors to ensure effectiveness in their performance.
Plans should be made to revitalize internal control system so that the rate of
fraud and other irregularities will be reduced to the bearest minimum.
CHAPTER ONE
INTRODUCTION
1.1
GENERAL
STATEMENT OF THE STUDY
Azubuike,
(2005) define internal audit as an independent appraisal activity within an
organization for the review of operation as a service to management. Internal
audit has helped organizations to accomplish their goals and objectives,
bringing a systematic disciplined approach to evaluate and improve the
effectiveness of risk management control and governing processes.
Banabas,
(2014) also defined internal audit as an independent objective assurance and
consulting activity designed to add value and enhance an organization
performance or operation. Internal audit is a catalyst for improving
organizational governance, management controls by providing insight and
recommendations based on analysis and assessment of data and business processes
with commitment to integrity and acceptability.
The
professionals who carryout internal audit activities in business organizations
are known as Internal Auditors. They are employees of the organization. The
scope of internal auditing with organizational governance, risk management and
management controls over efficiency, effective of separations (including
safeguarding assets) the reliability of financial and management reporting and
compliance with laws and regulations. Internal audit is a recognized strategic
function in both public and private organization. The information provided by
the internal audit department to senior managers and audit committee members
helps them to set-up goals, affects their managerial performance and as well
cub or mitigate risk. Performance indicator constitutes a key factor in any
department.
1.2 STATEMENT
OF THE PROBLEM
There are lots of problem in every
business organization both public and private sectors. This is as a result of
the complexity in modern techniques and the increased size of various business
units.
In
discussing the impact of internal audit on the effective management performance
of business organization, the following challenges facing the effectiveness of
internal audit in the management of business organizations are identified.
i.
Lack of impropriety
ii.
Lack of auditing control
iii.
Lack of independence of the internal
control
iv.
Incomplete recording of the business
transactions.
v.
Noncompliance and adherence to
accounting standards and guidelines
1.3 OBJECTIVES
OF THE STUDY
The
main objective of the study is;
i.
To determine the impact of internal
audit on the effective management performance of business organization.
ii.
To determine the extent to which
internal audit comply to rules and regulations regulating auditing in business
organizations.
iii.
To determine the effect of internal
audit on the organizational assets and liabilities.
iv.
To ascertain the influence of internal
audit on the performance of organizations.
1.4 RESEARCH
QUESTONS
i.
What is the impact of internal audit on
the effective management performance of business organization?
ii.
To what extent has internal audit
complied with the rules and regulations regulating auditing in business
organzations?
iii.
What is the effect of internal audit on
the organizational assets and liabilities?
iv.
What is the influence of internal audit
on the performance of organizations?
1.5 STATEMENT
OF HYPOTHESIS
The
following assumptions were made for the study. It gives the idea that effective
management can be achieved through internal auditing and that of internal
auditing is the only ingredient for effective management. It is also assumed
that the staff and management of Afikpo North Local Government Council will
co-operate by completing and returning the questionnaires on time and as well
provide the necessary information needed for the successful completion of this
project.
1.6 SIGNIFICANCE
OF THE STUDY
This
study will be of great importance to the following;
The
prospective researchers, educational institutions, government, analysts,
students and the general public.
To
prospective researcher, it will benefit future researcher who may want to carry
out further research on this study by serving as a secondary source of data.
To
educational institutions, this research work will serve a library material of
educational institutions, such as a partial fulfillment of the requirement for
National Diploma (ND).
To
students, it will enable them to carry out further research by giving them
guidelines and guidance and as well broaden their knowledge on the
contributions of internal audit on the effective management performance of
business organizations.
To
members of the general public, it will serve as a source of vital information
on internal control and internal audit, thereby helping those who may wish to
invest in any business organization to know the actual areas to checking and
examine the company before investing.
1.7 SCOPE
OF THE STUDY
This
research work covers a great deal of the topic focuses on the impact of
internal audit on the effective management performance in Afikpo North Local
Government, Ebonyi State.
This
research work also covers this following:
i.
The roles which internal audit performs
in an organization.
ii.
The effect of this role to overall
performance of business organization.
1.8 LIMITATION
OF THE STUDY
This
research project is designed to comprehensively cover internal auditing as tool
for effective accountability with particular reference to Afikpo North Local
Government. The distribution of questionnaire restricted to hamper the
successful execution of this research including the researcher himself who tend
to hinder the work due to excessive concentration on his ND programme.
1.9 DEFEINITION
OF TERMS
i.
Audit:
the
Audit Practice Committee (APC) defined “Audit” as the independent examination
of, and expression of opinion on the financial statement of enterprise by and
appointed auditor in pursuance of that appointment and in compliance with any
relevant statutory obligation.
ii.
Auditing:
is
the financial auditing as the process of examining an organization (or
individuals) financial records to determine if they are accurate and in
accordance with any applicable rules (including accepted accounting standards),
regulations and laws.
iii.
Internal
Auditor: According to Investopedia (10th
September, 2014) an internal auditor is an employee of the company charged with
providing independent and objective evaluations of company’s financial and
operational business activities including its corporate governance.
iv.
Internal
Audit: is an independent, objective assurance and
consulting activity designed to and value to management performance of
organization. It helps organization to accomplish its objective by bringing a
systematic disciplined approach to evaluate and improve the effectiveness of
risk management, controls and governance process.
v.
Financial
Statements: this are the integral parts of the
annual reports of every company the purpose of which is to reveal relevant
information as required by law, about the financial position, performance and
charged in useful to a wide range of users in making economic decisions.
vi.
Internal
Control: according to Barnabas (2011), internal control is a
summation of company’s components (including its resources system, process
culture, structure and tasks) that help the employees to achieve management
objectives.
vii.
Management:
This
is the process of achieving organizational goals and objectives through the use
of people and other resources of the organization. When a management is defined
as a process, it refers to the functions performed by all managers.
viii.
Performance:
It
can be seen as the accomplishment at a given task measured against preset known
standards of accuracy, completeness, cost and speed.
ix.
Business
Organization: It is an entity aimed at carrying on
commercial enterprise by providing goods and services to meet needs of the
customers or clients.