INTERNAL AUDIT EFFICIENCY IN BENUE STATE
2.2 Historical Development of Internal Auditing - - 11
2.3 Conceptual Framework - - - 15
2.5 Internal Auditors’ Role in Detecting Fraud - - -22
2.6 Nature and Purpose of Public Sector - - - -37
2.7 Basic Procedures Authority and Responsibility of
Internal Audit Institution - - - 45
2.8 Internal Audit Trend to Corporate Performance Improvement - - - 54
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary of Findings - - - 93
5.2 Conclusions - - - 94
5.3 Recommendations - - - 94
References - - - 96
Appendices - - -
-100
CHAPTER ONE
INTRODUCTION
1.1 Background to the study
Public Accountability is the hallmark of modern democratic
governance. Democracy remains a paper procedure if those in
power cannot be held accountable in the public for their acts
and omissions, for their decisions, policies, and their
expenditures. Public Accountability is the basic tenet of
democracy (Cook, 1998).
Accountability in the public sector throughout the world is
being given serious attention in view of the fact that the
government is the highest spender of public fund. Those in
responsibilities requiring them to render their stewardship
accounts to those for whom the authority is held in trust
(Syvester, 2013). The general public is increasingly requiring
public officers to be accountable by demonstrating effective
use of public assets and funds in the delivery of services and
pursuit of government objectives (Obazee, 2006). One the mechanism that ensures public accountability is the internal
audit unit.
Internal audit system is the whole system of control
financial and otherwise established by the management in
order to carry on the business of the enterprise in an orderly
and efficient manner, ensure adherence of management
policies safeguard the assets and secure as far as possible the
completeness and accuracy on the records.
A company’s and organization accounts control practices
such as internal auditing is widely believed to be crucial to the success of an enterprise as it acts as a powerful brake on the
possible deviations from the predetermined objectives and
policies. This means that an organization that put in place an
appropriate and adequate system of accounting controls is
not. Okezie (2004) states that an enterprises internal audit
functions can significantly affect the operations of the
enterprise and many have impact on the ability of the entity to
remain a going concern.
Internal audit is a long standing function and an effective
tool of management in much organization’s it has been a recognized component of organizations in both the private and
public sectors. Internal auditing is often seen as an overall
monitoring activity with responsibility to management for
assessing the effectiveness of control procedures which are the
responsibility of other functional managers.
Internal auditing which is often seen as constituting a
large and significant aspect of an organizations financial control
system is a vehicle to success and survival. Rittenberg and
schivieger (1997) state that internal auditing is making
increased importance in many today’s global organizations by assisting management in evaluating controls and operations
and thereby providing an important element of global control.
Some types of internal audits date back thousands of
audits before the birth of Christ. Interestingly, the scope of
these early audits was in many ways akin to that of the modern
internal audit, both included an examination of the correctness
of the accounting records and an evaluation of the propriety of
activities reflected in the accounts.
Emphasis was on improving management control over the activities of the organization. Such broad emphasis was not to
reappear on the wide scale until after World War II. In the
United States, there was little need for internal auditing in the
colonial period because there was little in the way of large
industry. Infact, accounting textbooks of the period never
referred to the subjects of internal auditing or internal control.
In government, however, the need for an audit function was
recognized; the first U.S congress in 1789 approved an act that
includes a provision for the appointment of the treasury, a
controller, and an auditor. The auditor’s job, basically a clerical function, was to receive all public accounts, examine them, and
clarify the balances.
Concerned about the negative financial performance of
majority of government owned companies in Nigeria, Fubara
(1982) examined the reason for prolonged abysmal
performance and established that government owned
companies perform very poorly in terms of profitability criteria
set for them. He attributed the poor performance to inept management insufficient funds, paucity of technology and
incongruent management organization-government objectives.
Dogo (1990) had alleged that government owned
enterprises in Nigeria do not seemed to guarantee proper and
up to date record thus making auditing difficult, if not
impossible. A company’s accounting control practices such as
internal audit is widely believed to be crucial to the success of
an enterprise as it acts as a powerful brake on the possible
deviation from the predetermined objectives and policies. This
means that an organization that put in place an appropriate and adequate system of accounting controls is likely to perform
better in financial terms than those that do not.
As Okezie (2004) puts it “an enterprise internal audit
function can significantly affects the operations of the
to remain a going-concern. Conrad (2003) had portray Enron’s
demise as a consequence of a “few unethical ‘rogues’ or ‘bad
eggs’ acting in absence of any control”. Thus inadequate
control system may negatively affect an organization’s success.
According to Hermanson and Rittenberg (2003) the existence of
an effective internal audit function is associated with superior organizational performance………..
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