Project Abstract

Project Overview

<p> <b></b></p><p><b><b>BACKGROUND OF THE STUDY</b></b></p><p><b><b></b></b></p><b><b><p><b>1.0 &nbsp; &nbsp; INTRODUCTION</b></p><p><b></b></p><b><p>The term audit is derived from the<br>latin verb “Audire” which means “to hear”. The origin of<br>audit dates from ancient times when the landowners allowed tenant farmers to<br>work on their land whilst landowners themselves did not become involved in the<br>business of farming. The landlords relied upon an overseer who listened to the<br>accounts of stewardship given by the tenants this period the word audit is<br>described as:</p><p>The ,independent examination of, and<br>expression of opinion on the financial statements of an enterprise by an<br>appointed auditor in pursuance of that appointment and in compliance with any<br>relevant statutory obligation.</p><p>Furthermore, the introduction of the<br>joint stock company increased the supply of capital for industry and commerce.<br>The small privately owned business, which was financed by a sole trader or a<br>partnership gave way to the form of organization now familiar as the limited<br>company. The body of shareholders delegated some of their members to act as a<br>board of directors, and periodically the board submitted accounts to the<br>shareholders so that they could be aware of the state of affair of the<br>enterprise in which they had an interest. It was therefore necessary for the<br>shareholders to satisfied the accounts presented of the directors did provide<br>an objective view of the state of affairs of the company.</p><p>The joint stock company Act of 1844<br>.was the fist legislation in Britain fore quire all incorporated businesses to<br>hand their annual financial statements examined by an auditor. Early auditors<br>were, in many cases non accountants who were required state whether the<br>accounts showed a `true and correct’ view of state of affairs of the, it was<br>the company’s Act 1900 that required auditor to be independent and it was not<br>until the 1948 Companied Act that he was required to be professionally<br>qualified. At this juncture, it was more appropriate to define audit as:</p><p>An exercise whose objective is to<br>enable auditors to express an opinion whether the financial statement give a<br>true and fair view (or equivalent) of the entity’s affairs at the period end<br>and of its profit and loss (or income and expenditure) for the period then<br>ended and have been properly prepared in accordance with the applicable<br>reporting framework (for example relevant legislation and applicable accounting<br>standards) or where statutory or other specific requirement prescribed the<br>term, whether the financial statements “present fairly”.</p><p><b>WHAT<br>IS INTERNAL AUDIT</b></p><p><b></b></p><b><p>Internal audit are those audit that are<br>being carried out by employees within an enterprise. Internal audit is an<br>independent appraisal functions established by the management of an<br>organization for the review of the internal control system as a service’, to<br>the organization. It objectively examines, evaluates and reports on the<br>adequacy of internal control as a contribution to the proper economic<br>efficiency and effective use of resource.</p><p>The institute of internal Auditors<br>(IIA), the professional body of internal auditors, define the function in the<br>following way. “Internal auditing is an impendent appraisal activity<br>within the organization, for the review of operations as a service to<br>management. It is a management control which functions by measuring and<br>evaluating the effectiveness of the controls”.</p><p>The scope of the internal audit within<br>an organization is broad and may involve topic such as the efficacy of<br>operations, there liability of financial reporting and investigating fraud,<br>safeguarding assets compliance with laws and regulations.</p><p><b>INTERNAL<br>AUDIT AND THE PREVENTION OF FRAUD</b></p><p><b></b></p><b><p>By definition, internal control is an<br>independent appraisal function within an organization, carried out by employees<br>of the organization, for the review of operations (financial and otherwise): as<br>a service to management. It is a management controls which functions, by<br>measuring and evaluating the effectiveness of other controls. Fraud or<br>irregularities, which arise in the conduct of the affairs of a company, may be<br>classified broadly into:</p><p>Defalcations involving the<br>misappropriate of money or goods, such acts may be performed by an individual<br>or group of individuals without the knowledge of the board of directors, or<br>sometimes, by the board with the intention of defrauding the member.</p><p>Fraudulent manipulation of , financial<br>statements not involving defalcation. The main reasons for this are:</p><p>To attempt to improve the apparent<br>position or the company e.g to justify a dividend that would not otherwise have<br>been payable or to assist in raising new finance: or To attempt to defraud the<br>tax authorities by &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; reducing<br>taxable profits.</p><p>The internal auditors should<br>continuously review the existing controls to ensure that they are followed and<br>update them when need be. This shall ensure that the occurrence of fraud is<br>prevented and that when any such ‘frauds occur, they are easily and timely<br>identified and reported to management. It is his duty to search for fraud, to<br>examine the books, accounts and control/processes/system with the objective of<br>discovering whether there have been defalcations or other irregularities by<br>directors or employees of the company. However, if the directors of the company<br>decide to defraud the members, there is not much the internal auditor can do.<br>Being a staff of the organization, he probable reports to the directors and<br>depends on the board for his remunerations, promotion and other employment<br>incentives.</p><p>Similarly, where the management .of<br>business wish to manipulate the a misleading impression without actually<br>diverting any of the business assets, the internal auditors cannot do much as<br>management misstate the assets or liabilities. While the more common target for<br>manipulations is stock, other areas are also susceptible.</p><p>financial statements to give It is<br>painful to observe that in practice, members in the employment of companies as<br>accountants, finance controller, internal auditors etc are used to, enhance and<br>perpetuate these management/ directors aided fraud. Members must always beings<br>to bear on all activities they are carrying out for clients and employees the<br>institute’s codes of professional conduct and ethics.</p><p>Misappropriation of cash may result<br>from the making of fictitious payments or the diversion of cash receivable. The<br>number of ways in which these may be done depend on the systems of control in<br>existence and the ingenuity of the person or persons involved. In many cases,<br>it is the attempt to cover of rather than the original theft that is detected.<br>So prevention of fraud is continuous review of controls and operations. The<br>opportunities for fraud will depend on the system of controls. Particularly,<br>important are those leading to segregation of duties. Although frauds involving<br>collusion are not uncommon, it is generally agreed that the chance of detection<br>rises with the number of people involved.</p><p><b>1.1<br>&nbsp; &nbsp; STATEMENT OF PROBLEM</b></p><p><b></b></p><b><p>Despite the fact that there are<br>installed control and check of resources, embezzlement and fraud of resources<br>misappropriate of funds, errors, irregularities and mistake stills find their<br>ways into the public enterprises.</p><p>Internal audit department was<br>established to reduce those excesses however, in Nigeria public enterprises<br>this is not so, as there are series of problem which has been hindered in the<br>internal audit efficiency.</p><p><b>1.2 &nbsp; &nbsp; PURPOSE OF THE STUDY</b></p><p><b></b></p><b><p>The broad objective of this is to<br>examine the effect of internal audit on managerial performances in public<br>enterprise (NNPC). However, some of the specific objectives are as follows:</p><p>· &nbsp; &nbsp; &nbsp;<br>To<br>identify the factors that hinder audit efficiency in NNPC as a public<br>enterprise.</p><p>· &nbsp; &nbsp; &nbsp;<br>Reduce<br>excesses of the internal auditing department of NNPC Identifying problems and<br>accountability in NNPC.</p><p>· &nbsp; &nbsp; &nbsp;<br>Examine<br>the factors that hinder internal audit efficiency and how these factors are<br>impinged. It is also shapes up performance of management</p><p><b>1.3 &nbsp; &nbsp; SIGNIFICANCE OF THE STUDY</b></p><p><b></b></p><b><p>The role of internal audit department is<br>called upon to play especially in public enterprise and the ignorance of the<br>employees makes this study important With sound internal audit, management that<br>is characterized by fraud, errors, irregularities, and mistakes in the public<br>enterprises which has resulted by the notion that government business are not<br>supposed to make profit is bound to be eliminated.</p><p>The management, employers, employees as<br>well as student benefit from this study.</p><p><b>1.4<br>&nbsp; &nbsp; RELEVANT RESEARCH QUESTIONS</b></p><p><b></b></p><b><p>Below are some questions that would be<br>answered during the course of this research works.</p><p>· &nbsp; &nbsp; &nbsp;<br>What<br>is the impact of internal audit on the performance in public sector</p><p>· &nbsp; &nbsp; &nbsp;<br>Does<br>establish control failed to enhance management performance in Nigeria public<br>enterprise (NNPC)</p><p>· &nbsp; &nbsp; &nbsp;<br>Is<br>there any factors that determine the performance of the management in NNPC</p><p>· &nbsp; &nbsp; &nbsp;<br>Does<br>effective internal audit enhance reduction of fraud?</p><p>· &nbsp; &nbsp; &nbsp;<br>Is<br>there any factor that prevent; internal audit from being effective and<br>efficient in NNPC.</p><p><b>1.5 &nbsp; &nbsp; STATEMENT OF THE HYPOTHESIS</b></p><p><b></b></p><b><p>To ensure a mere analytical result<br>oriented research, hypothesis are formulated and tested on the research<br>objectives.</p><p>The decision criteria are to accept the<br>null hypothesis (HO) and reject the alternative hypothesis (Hi)<br>or otherwise based on the result of the test performed. The research hypotheses<br>are stated below:</p><p><b>Hypothesis<br>1</b></p><p><b></b></p><b><p>HO: &nbsp; &nbsp; Internal audit has no significant impact on the reduction of<br>embezzlement in public enterprises</p><p>Hi: &nbsp; &nbsp; &nbsp; Internal audit has significant’ impact on the reduction<br>embezzlement in public enterprises</p><p><b>Hypothesis<br>2</b></p><p><b></b></p><b><p>HO: &nbsp; &nbsp; Established control has no significant effect on managerial<br>performance.</p><p>Hi: &nbsp; &nbsp; &nbsp; Established control has significant effect on managerial<br>performance.</p><p><b>1.6 &nbsp; &nbsp; DELIMITATION OF THE STUDY</b></p><p><b></b></p><b><p>The scope of limited to various<br>measurement of internal audit which are used in public enterprises. The<br>constraints to this study are time, in adequate information, lack of enough<br>literature on this subject arid information which are considered confidential<br>were not revealed by some of the staff.</p><p><b>REFERENCES</b></p><p><b></b></p><b><p>Adeniyi A. Adeniji: Auditing and<br>Investigation page 1,2, 12</p><p>Akpala A. (1991): Principles of<br>management. A Nigeria approach. Page 9 first edition, fourth edition, fourth<br>dimension publisher LTD.</p><p>Badmus Olusesan and Elegbede David<br>(2003): Auditing and Investigation page 1, first edition, Abel printers Lagos.</p><p>Etuk A.I.J (1989): Alarm system-Roles<br>of public accounts and audit committee. An unpublished paper presented at Work<br>Shop Organized by NNPC.</p><p>Isidore Ojuku Nwankwo: Auditing<br>concepts issues and principles page 114­124</p><p>Johnson<br>I.E (1992): Public sector accounting and financial control Lagos financial<br>training.</p></b></b></b></b></b></b></b></b></b></b></b></b></b></b> <br><p></p>