INTERNAL AUDIT AS A MEANS OF MANAGEMENT CONTROL IN PUBLIC ENTERPRISES (A CASE STUDY OF POWER HOLDING COMPANY OF NIGERIA, SAPELE STATION)

(Business Administration and Management)

INTERNAL AUDIT AS A MEANS OF MANAGEMENT CONTROL IN PUBLIC ENTERPRISES
(A CASE STUDY OF POWER HOLDING COMPANY OF NIGERIA, SAPELE STATION)


ABSTRACT
This project is on “Internal Audit as a Means of Management Control in Public Enterprises” with special reference to Power Holding Company of Nigeria (PHCN), Sapele Power Station.  Chapter one deals with background of the study, statement of the problem, objective of the study, significance of the study, scope of the study and operational definition of terms.  Chapter two base on literature where authorities in the filed of auditing were discussed.  This include method of introducing internal audit in a company, purpose of internal audit, essential of a good internal control system as well as responsibilities of internal audit and references.  Chapter three contains the methodology of research under this chapter the employed to source for data is both primary and secondary source.  The statistical tools employed is the use of table and simple percentage, limitation of the study.  Chapter four based on data presentation and analysis of result while chapter five entails the summary of findings, conclusion and recommendations.  The researcher discovered the internal audit may have been seen as cash functions which does not add value of an organisation product or service, it states that effective internal auditing can help reduce, identify ways to improve efficiency and minimize exposure to possible losses when there is no proper guard of assets, it therefore, recommends that trained accountant should help audit department so that their functions can be discharged effectively.
TABLE OF CONTENTS
CHAPTER ONE
Introduction                         
1.1    Background of the study                         
1.2    Statement of the study                             
1.3    Purpose of study                             
1.4    Research question                                 
1.5    Significance of study                            
1.6    Scope of the study                            
1.7    Limitation of study                            
1.8    Operational definition of terms                     
CHAPTER TWO  - Review of Related Literature   
2.1    Historical Background of the Case Study – PHCN            
2.2    Historical Development of Internal Auditing            
2.3    Definition of Internal Audit                            
2.4    How to Introduce Internal Audit in an Organisation            
2.5    Objectives/Purpose of Internal Audit                
2.6    How Internal Audit Aids Management Control            
2.7    Internal Control                                  
2.8    Essential Characteristics of Good Internal Control        
2.9    Internal Check                                    
2.10    Responsibilities of Internal Auditor                    
2.11    Comparison Between Internal Audit and External Audit        
CHAPTER THREE - Research methodology
3.1    Introduction                                    
3.2    Research Design                             
3.3    Population of the Study                            
3.4    Sampling size                                     
3.5    Sampling Technique                            
3.6    Research instrument                                 
3.7    Validity of the Instrument                            
3.8    Reliability of the Instrument                    
3.9    Method of Data collection                         
3.10    Method of Data analysis                         
CHAPTER FOUR  - Data Presentation and Analysis
4.1    Introduction                        
4.2    Data presentation                         
4.3    Data Analysis                            
CHAPTER FIVE – Summary, Recommendations and Conclusion
5.1    Summary                                  
5.2    Recommendations                        
5.3    Conclusion                                    
References                                
Appendix                                 
Questionnaire                                 

CHAPTER ONE
INTRODUCTION
1.1    Background of the Study
The word auditing has its origin from the Latin word audit meaning to hear essentially auditing to concern with an examination and inquiring into a statement of accounts.  The underlying records, documents, assets and liabilities by an independent person with a view to express an opinion as to compliance and correctness of the financial statement to relevant acts and regulations and communicating the opinion to interested users.
It origin has been traced to the early times of ancient Greek, Romans and Egyptians where they would ask group of persons to sit down and hear (or listed explanations from another group of persons concerned with the financial records).
In the middle ages, great landowners appoint persons who are called Stewards to manage the land for them.  Stewardship as it was called is the name given to the practice by which productive resources are managed by one person or group of persons on behalf of one person or group of persons.  The concept of stewardship gave rise to accountability where the servants or works has to render accounts to the master as at when required to do so.
Since the shareholders gave their resources for expansion of the company they are very much interested in the sincerity and truthfulness attached to the director hence, they decided to engaged the services of a professional labeled “Auditor” to ascertain the fruitfulness of the records so maintained and presented.
In the early days of auditing, the prime qualification for the position of an auditor for his integrity and independence of mind would  be sought for his position, the matter of technical ability being entirely secondary.  Consequently upon this, the function of the auditor in those days were confused with that of an accountant.
This issues under consideration in this research work involves another special kind of auditors.
Many organisations have found a need for internal audit, internal auditors are employees of the organisation and they work exclusively for the organisation.  Internal auditing can be therefore defined as an independent appraisal activity with an organisation as a service to management.  It is a managerial control which functions by measuring and evaluating the effectiveness of other control.  
Agbawe (2005) described internal audit as “Audit conducted by an employee of an organisation into any area of its affairs”.  This is usually a day-to-day activity involving pre-payment audits, post-payment audits and other audit functions. Internal audit involves the following process.
i.    An Appraisal Activity:-  The internal auditors job is to appraise the activity of other not to perform a specific part of start processing for example a person that spend his time checking employment expenses claim should not to be performing an internal audit function.
ii.    A Service to Management:- Management request that;
a.    Its policies are fulfilled
b.    The information it requires to manage effectively is reliable and complete the internal auditor is required to produce this information.
c.    The organisation assets are safeguard.
iii.    Management Control:- Within any system the internal auditor is required to evaluate and measure the internal control effectiveness of the system, his role as an internal auditors include;
a.    Being concerned with the implementation of social responsibility policies adopted by top management for example, energy saving.
b.    Being concerned with response of the internal control mechanism to external stocks.
c.    Being concerned with the internal control systems to errors.
d.    The internal auditor acts as a consultant on internal control matters.
e.    Auditing the information given to management particularly interim accounts and management accounting reports.
f.    Taking a share of the external auditor’s responsibility in relation to the figures in the annual accounts.

1.2    Statement of the Problem
The reports of audit committees in most enterprises have been pointed to one thing “management control” and this can be traced to poor internal control in the system.  Consequently, this has led to rising cases of fraud, errors and other accounting irregularities.
As a result, equity owners and customers alike are worried and at time frustrated over the growth of this problem, one of the ways of curtailing this ugly phenomenal is to put in place a monitoring and controlling devices to checkmate the activities through the instrument of internal audit. Moreover, with the increase in technological advancement, product lines, increase in the number of branches, internal control function demand not only re-appraisal of its adequacy and efficiency, but also it’s roles as an internal audit as a means of management control has to be tested internal control measures includes all internal checks, internal audit and all other control necessary for the organisation to achieve good effectively and efficiency.

1.3    Purpose of the Study
The purpose or objectives of this study are stated below:
i.    To investigate the role of internal auditing in an organisation.
ii.    To find out the usefulness of internal audit service to the management of an organization.
iii.    To examine the nature of internal auditing in a public organisation.
iv.    This study will as well help the researcher to identify the institution and make necessary recommendation for future improvement.

1.4    Research Questions
The following are some research questions that will serve as instrument of direction and focus in this research study.
i.    Who are the internal auditors in an organization?
ii.    What is the importance of internal audit department to the organisation?
iii.    What are the functions of the internal auditors in the organisation?
iv.    Are the functions of the internal auditor the same as those of the accountant?
v.    How does internal audit aid management control in an organization?
vi.    Is there any significant relationship between internal auditing and the level of management control in an organisation?

1.5    Significance of the Study
The significance of this study therefore is to expose management and employees of an organization to the importance of internal audit department which among other things include the rendering help to management of an organisation resource and also to act as an instrument of management control.

1.6    Scope of the Study
This study is designed to find out all role that the internal audit plays in an organization and how it acts as means of control to management in public enterprise.
To achieve this, the researcher decided to limit himself to just one among the enterprises which is Power Holding Company of Nigeria (PHCN), Sapele Branch Power Station.

1.7    Limitation of the Study
1.    Finance: - This is the most problem that the researcher faced.  Due to the level of the researcher financial status, the cost of acquiring the necessary information and materials like textbooks, handout and journals articles to write up the project work.
2.    Time:- Because of the short time given to this work and also because of the project is written alongside with other academic activities, the researcher could not meet up with the requirement of the work.
3.    Distance:-  Not all the necessary information were obtained due to long distance from the researcher’s residence to the area were materials are available.  This led to not meeting up with the demands of the project.

1.8    Operational Definition of Terms
i.    Auditing:- This is the independent examination and inquiring into a statement of accounts, the underlying records, document, assets and liabilities by an independent person with a view to express an opinion as to compliance and correctness of the financial statement of relevant acts, regulation and communicate the opinion to interested users.
ii.    Internal Auditing:- Internal auditing is the independent appraisal of the functions and quality of performance of an organisation by a specially assigned staff as part of the internal control system.
iii.    Internal Auditor:-  This is an employed staff of an organisation that engages in the examination of records and put them in an accepted state for the external auditor to place reliance on.
iv.    Audit Trait:- This is an internal control measure or procedure where general evidence are lifted off a transaction in order to trace occurrence and authenticity of the transaction.
v.    General Control:-  This involve all the various control employed by management e.g. segregation of duties, organisation structure etc. they restate to the environment within which the audit work is carried out.
vi.    Management:- This is a process of directing, coordinating, and influencing the operation of an organisation in order to obtain desired results.
vii.    Auditor:-  This is an independent professional who possesses the integrity and objectivity and usually carried out auditing of an organisation, company or enterprise.
viii.    Internal Control:- This is the system of control, financial or otherwise, established by management in order to secure as far as possible the accuracy and reliability of the records, run the business in an orderly manner and safeguard the company’s assets, its objective being the prevention or early detection of fraud and errors.  It may include internal auditing.

 

TERMS AND CONDITIONS

Using our service is LEGAL and IS NOT prohibited by any university/college policies

You are allowed to use the original model papers you will receive in the following ways:

1. As a source for additional understanding of the subject

2. As a source for ideas for your own research (if properly referenced)

3. For PROPER paraphrasing ( see your university definition of plagiarism and acceptable paraphrase)

4. Direct citing ( if referenced properly)

Thank you so much for your respect to the authors copyright.


For more project materials

Log on to www.grossarchive.com

Or call

+2348130686500

+2348093423853

500
Leave a comment...