THE EFFECT OF INTERNAL AUDITING IN THE MANAGEMENT OF ORGANIZATION RESOURCES

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The development of modern auditing should be credited to the great expansion in industries and institutions which has took place during the industrial revolution. At that time when there was small business transactions and proprietors took active part in the management of their business, Hold/Hospitality segment were not developed and they fully were not utilized by most Nigerian citizens because they have not discovered the values, hereby limiting the financial reasonability of such organization. It was perhaps fact that there was little or no need for auditing.

       However as business transactions increased in Hotel/Hospitality segment, government channels few percentage of their budget towards the segment, where shareholders are not the managers to account for their capitals, the need for the managers to account to the government and shareholders became necessary. In order words the origin of auditing is as a result of the separation of ownership from control. It was instituted to protect the interest of ownership by ensuring that financial statements are justified. Since ownership has been separated from control, the need for those managers entrusted with the owners financial economic resources to present their financial reports to their employers. The result or reports might contain errors, non-disclosure of relevant information frauds, and other regulations. For his reasons, the owners may hold some reservation is about the creditability of the managers reports.  For the satisfaction of the owners and justification of the managers reports it becomes necessary to invite on independent person, who did not partake in the preparation of the reports, for the purpose of examining and expressing an opinion as to the truth and fairness of the reports.

The independent party’s duly is not just mere examination of the account from which the financial statement were prepared, rather includes collection of all relevant information necessary to satisfy section(s) of (CAMA). Many professional bodies in accountancy, auditing and various scholars have offered definition and explanation as to what audit actually means.

       Kwame Gyasi  (2010:16) an internal guide to auditing, defines auditing as “the independent examination and investigation of the evidence from which a financial statement has been prepared with a view to enabling the independent examiner to report whether in his opinion and according to the best of information and explanation obtained by him. The statement of property drawn up and gives a true and fair view from this definition it can be deduced that auditing is the processes of assessing the financial statement of an organization or association which the person undertaking the task is not a member of the organization, with the aim of ensuring that these financial statement were truly prepared from the actual records of financial events and the statement truly represent the financial position of the organization.

1.2 STATEMENT OF THE PROBLEM

       The primary and goal of establishing any business is for profit making, whereby the track is missed, the business will face downright collapse”. One of the major factors affecting management of resources is terms of government establishment is lack of effective internal control system which is as a result of internal audit. Many organizations have collapse due to the ineffectiveness of their internal control system which leads to ineffective administration incompetence in accuracy of those holding position of authority on trust. Many corporate organizations that do not establish internal audit department for the purpose of internal checks and balances have encountered high rate of fraud, inaccurate and incomplete records. Some organizations have internal audit department but due to the fact that the technical man power is defective they have encountered the above mentioned problems or loopholes in their internal control system. All these problems mentioned above pose a lot of difficulties to the organization in achieving their organizational goals. In the high of the above, thus is the matter of great concern to the research by finding and showing the effective of internal audit in the management of the organizational resources.

1.3 OBJECTIVE OF THE STUDY

i.     This study will enlighten the reader or the general public about the effect and needs to establish internal audit unit in an organization.

ii.    Managers and investors will also through this work know the value of internal audit reports present to them.

iii.    It also helps investors to tackle mishandling of funds, fraudulent act and inappropriate use of their capital and assets.

iv.    Finally, this study assist researchers an related topics, business students and readers in widening their knowledge

5.0 SUMMARY, CONCLUSION AND RECOMMENDATION

5.1 SUMMARY OF FINDINGS

This is an investigation study on the effect of internal auditing in the management of organizational resources. While the work was going on, research questions were formulated and used to prepare the questionnaires and copies of the questionnaires were distributed to the account department, which consist of the account audit and administrative staff.

The data collected from (30) thirty staff were analyzed and presented in a tabular form using percentage. Through the analysis of data, the researcher was able to discover the usefulness of internal audit function in the organization and following findings were made on the activities of internal audit unit, it was discovered that the unit was engaged in the following operations.

i.            Stock verification

ii.           Checking of accounting records

iii.         Evaluation of various department

iv.         Detection of errors and fraud

v.          Provision of management function

vi.         Ensuring implementation of management policies in relation to the use of resources

5.2 CONCLUSION

       Based on findings and the above discussion, the following conclusions were made;

A.  Imo Concorde hotel, Owerri, sees internal audit very vital in operations

B.  The organization under study perceived some element of ineffectiveness in the internal audit department ie in their internal audit programs

C.  There are various forms of problem bindering the full effectiveness of the internal audit program

D. The effectiveness of the internal auditor can be boost by increasing the independence in the operation of the internal audit unit