INTERNAL AUDIT: A TOOL FOR MANAGEM ENT CONTROL

(Accounting)

INTERNAL AUDIT:  A TOOL FOR MANAGEM ENT CONTROL

ABSTRACT

            In order to carryout any management functions effectively the top management of an organization will need information to plan, organize, direct, co-ordinate and control the activities of the organization. The management will generally not time or expertise to collect and analyze the pies of information it needs for its management functions.  Accordingly, the internal auditor is usually appointed to do this on behalf of the management.The internal auditor does not only provide management with information but also give management the necessary assurance that operations are being carried on in accordance with plans and led down procedures.Therefore, the internal audit department gives necessary aids to management. This study examined the way in which the internal audit assist management in the discharge of their responsibilities.Based on the conclusions, the work made some recommends, the research is of the opinion that the work would be of help to the management.

TABLE OF CONTENTS

CHAPTER ONE:

1.0              Introduction

1.1       Purpose of study

1.2              Significance of the study

1.3              Scope and limitation of study

1.4              Definition of terms

CHAPTER TWO:

2.0              Definition of internal auditing

2.1       Scope and objective of internal audit

2.2              Essential elements of internal audit

2.3              Internal control system and internal check

2.4              Essential feature of internal control

2.5              Tool of effective management

2.6              System and procedure of internal audit

CHAPTER THREE:

3.0              Summary of findings, conclusion and recommendation

3.1       Summary of findings

3.2              Conclusion

3.3              Recommendation

Bibliography

CHAPTER ONE

 

1.0              INTRODUCTION:

Internal audit is a large and significant part of management control of both large and small organization.  The role of internal auditor has evolved from concentration of the detection and prevention of errors and fraud in the present day emphasis to reviewing system of internal control.

The Chartered Institute of Public Finance and Accountancy, define internal audit as an independent appraisal activity within an organization for the review of operation as a service to management.  It is a management control which functions by measuring and evaluating the effectiveness of other controls.The problems which always exist between the managers/director to the owner of business, were solved by appointing an independent person called “auditor” to investigate the report on findings.

Internal auditor is concerned with the implementation of social responsibility policies adopted by top management.

Internal audit that is established to provide a continuous and complete audit of the accounts and records of the company with use of the following:

(i)                 internal procedures system

(ii)               internal check

(iii)             pre-audit jobs

These would help in the managerial control of the organization.

The overall purpose of internal auditing is to assist management in achieving the most effective administration of operation of the business.

1.1       PURPOSE OF THE STUDY:

The purpose of this research work are as follows:

(i)                 to evaluate the determinant for effective tools in management control.

(ii)               To assess the effects of internal auditing on internal control system of an organization.

(iii)             To investigate the type of responsibilities internal audit has with the chief executive of the organization under which he operates.

(iv)             To examine the effect management interference on the internal auditors functioning with the respect to errors and fraud in the organization.

1.2              SIGNIFICANCE OF THE STUDY:

(i)                 It helps in assessment of the effect of internal audit on the internal control system of an organization.

(ii)               It helps to evaluate the determinants for effective tools in the management control of organization.

(iii)             It helps to examine the effect of management interference in the internal auditors functioning with respect to fraud and error in the organization.

(iv)             It helps to evaluate the determined factor of kind or skill required of internal auditor.

(v)               It helps to examine the effects of management interference in the internal auditors functioning with respect to true and fair view of the organization financial statement.

1.3              DEFINITION OF TERMS:

AUDIT:

This is defined as an independent examination and expression of an opinion on the financial statement of an enterprise on organization by an appointed person called “auditor”.

AUDITOR:

The person auditor is a qualified professional accountant.

AUDIT WORKING PAPERS:

These are records of audience gathered by the auditor before, during and after audit work.

ENGAGEMENT LETTER:

Before an auditor commences any professional work he should agree in writing the precise nature and scope of the work to be carried out by him.

INTERNAL CONTROL:

This is defined as “the whole system of controls, 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 to management policies, safeguard the asset and secure as far as possible the completeness and accuracy of the records.

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