THE USE OF AN INTERNAL AUDIT AS AN AID TO MANAGEMENT CONTROL
ABSTRACT
This study is aimed at ascertaining the use of internal audit as an indispensable aid to management control in any co-operate organization or establishment, the management set standers targets and policies for the attainment of the organizational goals. But an organ to see to the general control of operations and furnish the management on deviations, varies and co-operate should exist to enable the management exert its control.
Internal Auditing within an organization reviews operations at the organization within an established policy and guidelines and provide the managers with reports, conclusion and recommendation on the result of its reviews. It is in these connection that internal audit render an unqualified assistance to the managements cont
TABLE OF CONTENTS
CHAPTER ONE
INTRODUCTION
1.1 PURPOSE OF THE STUDY
1.2 SIGNIFICANCE OF THE STUDY
1.3 SCOPE AND LIMITATION
1.5 DEFINITION OF TERMS
CHAPTER TWO
2.1 LITERATURE REVIEW
2.2 DEFINITION OF INTERNAL AUDIT
2.3 FUNCTIONS OF INTERNAL AUDIT
2.4 STAGES IN INTERNAL AUDIT PLANNING
2.5 SPECIAL AREAS OF INTERNAL AUDIT CONTROL IN AN ESTABLISHMENT
2.6 IMPLICATION OF INTERNAL AUDIT IN MANAGEMENT CONTROL IN ALL ESTABLISHMENT
CHAPTER THREE
3.1 SUMMARY OF FINDINGS
3.2 CONCLUSION
3.3 RECOMMENDATION
BIBLIOGRAPHY
CHAPTER ONE
Internal audit has been of great assistance to management.
There is need to discuss why internal audit should exist in an organization.
Internal audit is as old as civilization. It was used in ancient Egypt and the Roman Empire. The common areas of internal auditing action throughout its history have been examining, veriting and reporting.
The growth of business management has bring about the development of internal audit as a useful aid to management control. In this present day, there is a continuous increase in size of business which creates an ever widening gap between management and the actual field of operations. In this case, it is only internal auditor that provide a link throughout the whole organizations.
For as the chain of responsibility lengths, so does the responsibility grow delays, misinterpretation and misjudgments. This hinders the running of an efficient and prosperous business.
Internal auditors are those employed by the management, but they are not managers rather they serve as advisers to the management. They provide to the management all necessary information needed for the running of the business. Internal auditing is an element of managerial control and is responsible for measuring the effectiveness of such controls.
The main objective of this study is to draw attention to the
invaluable role or input of an effective control in an organization, tendered by internal audit unit. In all the overall purpose of internal auditing is to assist management in achieving the most effective administration of the operations of the establishment.
The internal auditor ensures that the organizations business is conducted in an orderly and efficient manner.
He also ensures that the management policies are strictly adhered to likewise he ensures that resources are economically, effectively and efficiently utilized in achieving the management objectives.
Furthermore he ensure strict compliance with statutory requirements, securing as far as possible the completed Furthermore he ensure strict complacence with statutory requirements, securing as far as possible the completeness, accuracy and reliability of the records as well as safeguarding the organizations assets.
The trend of amalgamation of industries into lager units
tenders the management more technical and scientific. The internal audit will increasingly and alluring the manual account to be verified as an instrument of management before they are accepted by the statutory auditor.
The internal auditors duties in an organization or management is as follows:-
The scope of this study will be limited only to the operations
of internal audit in a privately owned establishment. While the scope of auditors work depends on the terms of reference issued to him, clearly stated by the management. Lack of a clearly statement of internal auditors duty is deleterious to his confidence, moral and prestige and this can result in friction between him an other members of staff.
Management of the inception, issue clear director to all staff of internal audit department and keep all of them informed when there are changes in its scope and duties.
A. AUDITING: Auditing can be defined as an independent examination by a statutory appointed person called the auditor to investigate an organization, it record and the financial statements prepared from them, and thus form an opinion on the accuracy and correctness of the financial statement.
B. INTERNAL AUDITOR: This is a person employed by the management and entrusted to be in charge of the audit unit, he is neither a manger nor an external auditor rather he keeps each department manager on his toes and the result in continuous improvement.
C. EXTERNAL AUDITOR OR STATUTORY AUDITOR:
He is an outside auditor contracted by and is accountable to the shareholders admits report is addressed to them.
D. INTERNAL CONTROL: This is defined by the institute of chartered accountants as the whole system of control, financial and otherwise (including internal check, internal audit another forms of controls), established by the management in other to carry on the business of an organization in an orderly and efficient manner, ensure adherence to management policies safeguard the asset and secure as far as possible the completeness and accuracy of the records.
E. INTERNAL CHECK: It is defined as the allocation of authority and work in such a manner as to afford checks in routine transactions today to day work by means of the work of one person being proved inadequately by another or the work of a person being complementary to that of another.
MANAGEMENT CONTROL: This entails measuring and comparing what we have achieved or accomplished with a pre-determined standard which had been set according to plan and taking appropriate steps to correct deviations and also ensure that the finished products agree with the stipulated objective and plan. It is also a monitoring of organizational activity and resources utilizations to ensure that the predetermined standards are met and plan carried out.
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