The Importance of Internal Audit of Public Sector Management (A Case Study of Ministry of Finance, Imo State)

The Importance of Internal Audit of Public Sector Management (A Case Study of Ministry of Finance, Imo State)

Chapter One

OBJECTIVES OF THE STUDY.

Objectives of the study include:

To ascertain if an internal audit assists the Imo state ministry of Finance in achieving its objectives.
To ascertain if there exists co-operation between internal auditors and external auditors.
To find out if internal audit assists in the detection and prevention of fraud in the organization.

CHAPTER TWO

REVIEW OF RELATED LITERATURE

INTRODUCTION

MILLICHAMP (1996) defined internal audit as “an independent appraisal of an organization for the view of an internal audit control system as a service to the organization. It objectively examines, evaluates and reports on the adequacy of internal audit 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 is carried out by independent personnel, internal auditors 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 audit personnel with an objective frame of mind.
Internal audit personnel who have no conflict of interest or any restrictions place upon their works by management.
Internal audit 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 audit personnel who have no non-audit work since internal audit are employees; it is difficult to ensure that they are truly independent in mind and attitude.

OBJECTIVES OF INTERNAL AUDIT

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

Reviewing of existing accounting system and related management work.
ii) Assisting in the implementation of new accounting system.

Reviewing company 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 audit 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.

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.

RESEARCH POPULATION AND SAMPLE SIZE

Out of the population of 120 staff, the researcher judgmentally selected 92 staff members, as the target population. The population is involved directly with decision making process. The targeted population of the study comprises of all staff of Imo state ministry of finance state.

Since the population of the organization (Imo state ministry of finance state) has a staff of 120, it was not easy to obtain data for the whole population, therefore for ease in collecting and analyzing data, the researcher decided to select a sample from the population.

This population consists of staff drawn from some important departments within the company who are associated directly or indirectly within the application of accounting information on decision making process. The method used in the cause of this research work is the random sampling approach in which 92 of the staff were sampled out of the entire department.

CHAPTER FOUR

DATA ANALYSIS, TEST OF HYPOTHESIS AND SUMMARY OF FINDINGS

DATA ANALYSIS

To find answer to the first research question, some questionnaires has been passed to analyze its findings, this is shown in the table below.

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

SUMMARY FINDINGS.

Based on the research carried out on the topic internal auditing as a veritable control machinery for public sector management, the researcher discovered the following from the results of the questionnaire served and the hypotheses that:

There is a relationship between the internal audit and organization.
Internal audit has an annual audit plan.
The annual audit plan is submitted to the organization.
Internal audit 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.
Internal audit has up to date internal audit manual.
Internal audit shares information on internal audit manual to the external auditor.
Internal audit assists in the detection and prevention in Imo state ministry of finance.
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 indeed serves as a veritable control machinery to management for Household Products Company and all organizations generally. Although some areas are still weak, with some effort the internal audit can improve and carry out its objectives in the organization.

However, internal audit has severed as checked against fraud and other activities of the staff which is one of the objectives of the internal audit and the findings have revealed, is a veritable control machinery 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 internal audit unit of the organization should keep ethical standard by keeping up to date internal audit manual and train its internal auditors in forensic accounting.
Internal audit units should always draw annual audit plan which is the focus of the organization as it will help them to have efficient operation.
The internal audit 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 audit to ensure independence.
The internal audit 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 audit of the organization.

References

Adeniyi, A. Adeniji, (2004). Auditing and Investigation, Value Analysis Consult Publishing, Imo state.
Adeniyi, A. Adeniji, (2010). Auditing and Assurance Services, Value Analysis Consult Publishers, Imo state.
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 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, Imo state.

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