The Role of Auditors in Fraud Prevention and Detection in an Organization

The Role of Auditors in Fraud Prevention and Detection in an Organization

CHAPTER ONE

OBJECTIVES OF THE STUDY

This research work is aimed at achieving the following:

To identify the causes of fraud in private enterprises.
To examine the statutory principle of auditors in relation to fraud.
To seek how the scope of present day audits can be entered to include prevention and not only discovery of fraud.
To suggest solution for combating fraud in private companies.

CHAPTER TWO

REVIEW OF RELATED LITERATURE

Conceptual framework

MILLICHAMP (1996) defined internal auditing efficiency as “an independent appraisal of an organization for the view of an internal auditing efficiency control system as a service to the organization. It objectively examines, evaluates and reports on the adequacy of internal auditing efficiency control as a contribution to the proper economic efficient and effective use of resource”.

Also NWEKE AND UMEZURIKE (1998) said: “Audit as the name implies is a review of operation and records, sometimes continuous undertaking within a business by special staff employed and directed by the management, internal auditing efficiency is carried out by independent personnel, internal auditor are employees of the firm and this independence is not always easy to achieve, however, it can assisted by:

Having the scope to arrange its own priorities and activities
Having unrestricted access to records, assets and personnel.
Freedom to report to higher management and where it exists, to an audit committee.
internal auditing efficiency personnel with an objective frame of mind.
internal auditing efficiency personnel who have no conflict of interest or any restrictions place upon their works by management.
internal auditing efficiency personal having no responsibility for the work or for new system. A person cannot be objected about something he/she has taken responsibilities for. On the other hand, internal auditor should be conducted on new or revised system.
internal auditing efficiency personnel who have no non-audit work since internal auditing efficiency are employees; it is difficult to ensure that they are truly independent in mind and attitude.

Objectives Of Internal Auditing Efficiency

According to Adeniyi (2004), it state objectives of internal auditing efficiency as:

Reviewing of existing accounting system and related management work.
Assisting in the implementation of new accounting system.
Reviewing organization polices in the light of changing business conditions and recommending appropriate improvement.
The assessment of the adequacy, accuracy, timeliness and relevance of management information system.
Lasing with external auditor for the purpose of complexes for effort and insuring that prompt and proper action is taken on engagement data.
Identify and draw attention of management weakness in control or measures which are unsound to the organization.
To assure the management that their internal auditing efficiency organization is adequately alright. viii) To carry-out special assignment giving by the audit committee from time to time.
To carry-out special investigation on management request.
To carry-out detail test of transactions and balances.

CHAPTER THREE

RESEARCH METHODOLGY

RESEARCH DESIGN

Before this task can be effectively performed, some investigations were carried out, data was carefully collected analyzed. Especially, questionnaire and personal observation were used as instrument for the study; techniques were selected in the merit of each one and so combine together to satisfy the desire of the researcher. The method used could be grouped into two.

DATA COLLECTION METHOD

PRIMARY DATA:

These include method of data collection in which data are directly collected from staff in a written down form, in this respect researchers uses:

QUESTIONNAIRE: The writer of this project was giving permission by MTN communications to serve as questionnaire in the internal auditing efficiency department of the organization and other department of the organization. The questions asked were based on the various process, procedure and auditing guidelines used in carrying out the various operations. The effectiveness and adequacy if the questionnaire express their operation and their answered the questions to the satisfaction of the researcher. To ensure relevance and truthfulness of all information, the writer makes sure that the questionnaire was served under mutual and conducive atmosphere, with no element of compulsion or under pressure of the staff.
PERSONNEL OBSERVATION: in the cause of this study, the researcher visited the organization and was allowed to inspect around thus, enabling the researcher to personally observe information and get familiarize activities and recording of transaction on MTN communications, most of the document were inspected such as petty cash book voucher, store requisition not store record cord, audit observation form, schedule of account, weekly product report and material utilization report.

CHAPTER FOUR

DATA ANALYSIS, TEST OF HYPOTHESIS AND SUMMARY OF FINDINGS

TESTING OF HYPOTHESES

The hypothesis was tested using data collected from questionnaire distributed.

HYPOTHESIS ONE

HO: There is no relationship between the internal auditing efficiency and organization.

HI: There is a relationship between the internal auditing efficiency and organization.

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

SUMMARY FINDINGS

Based on the research carried out on the topic internal auditing efficiency for improving companies performance, the researcher discovered the following from the results of the questionnaire served and the hypotheses that:

There is a relationship between the internal auditing efficiency and organization’s performance.
auditing has an annual audit plan.
The annual audit plan is submitted to the organization.
internal auditing efficiency report is not acted upon by management.
There is no co-operation between internal auditor and the external auditor.
internal auditor assists the external auditor in his investigation.
There is cordial relationship between the internal auditor and the external auditor.
auditing has up to date internal auditing efficiency manual.
auditing shares information on internal auditing efficiency manual to the external auditor.
auditing assists in the detection and prevention of pilferage and fraud.
The presence of an internal auditor acts as a check against fraud.
The employment of an external auditor does not assist in the fight against pilferage and fraud.
The fear of penalties helps in the check against fraud.

CONCLUSION

Based on the findings of our research work the researcher concluded that internal auditing efficiency indeed serves as a tool to management of MTN COMMUNICATIONS and all organizations generally. Although some areas are still weak, with some effort the internal auditing efficiency can improve and carry out its objectives in the organization.

However, auditing has severed as checked against fraud and other activities of the staff which is one of the objectives of the auditing and the findings have revealed, is a tool to management not only in one but in all organizations because of its findings, objectives, the significance to organizations is general.

RECOMMENDATION

From the findings and problems discovered, the researcher will like to make the following recommendations.

The auditing unit of the organization should keep ethical standard by keeping up to date auditing manual and train its internal auditor in forensic accounting.
auditing units should always draw annual audit plan which is the focus of the organization as it will help them to have efficient operation.
The auditing unit of the organization should always submit their audit plan to the management who will have to be pro-active and take action according to findings of the plan.
The researcher recommended that the management on their part should acknowledge the report submitted to the management and allocate more power to the internal auditing efficiency to ensure independence.
The auditing unit should endeavor to carry out their audit work to other departments which is not often visited.
The internal auditor of the organization should be subjected to ethical standard so that external auditor will not do the work of internal auditor or the work of an accountant so that cordial relationship should be maintained and external auditor may rely on the work carried out by the internal auditing efficiency of the organization.

References

Adeniyi, A. Adeniji, (2004). Auditing and Investigation, Value Analysis Consult Publishing, Lagos.
Adeniyi, A. Adeniji, (2010). Auditing and Assurance Services, Value Analysis Consult Publishers, Lagos.
Akanet, Solomon, (1998). Auditing and Instructual Manual for Accounting Student, 7^th edition, London Publications.
Anthony & Welsch (1974). Fundamentals of Management Accounting, Richard D. Irwin, INC.
Bird, Peter (1971). A Casebook on Auditing Procedures 2^nd edition, The General Educational Trust of the Institute of Chatered Accountant.
Chambers: Andrew D. et al, (1987). internal auditing efficiency 2^nd edition, Pitman Publishers.
Dijk, Van, Williams, and J.C. (1990). Expert Systems in Auditing Macmillan Publishers.
Howard, L. R. (1976). Principle of Auditing 19^th edition, McDonald & Evans, London.
Kola, Olowookere (2001). Fundamentals of Auditing. 2^nd Analysis, Consult Publishing, Lagos.
Millichamp, A. H. (1990). Auditing: A Complete Course Text, 5^th edition, D. P. Publication.
Millichamp, A. H. (1996). Auditing and Instructual Manual for Accounting Student, 7^th edition, London Publication.
Nweke and Umuzunike (1998). Auditing update, Publication by Scholab Books Co. Ltd Onitsha.

Other Topics