THE IMPACT OF INTERNAL AUDITING IN IMPROVING PRODUCTIVITY IN AN ORGANIZATION
(A CASE STUDY OF ZENTUS NIGERIA LTD AFIKPO, EBONYI STATE)
Most profitable private sector organization does not have an internal audit department, they believe that internal auditors offer their services to the highest bidder and they cannot afford to pay them. It is important to establish and run an internal audit department in spite of the factor that the organization makes profit. The project is carried out of investigate the role and extent of responsibility of internal auditing in improving productivity in the organization, a study of Zentus Nigeria Ltd. Afikpo, Ebonyi State. the work highlighted the need for internal control system in private organization. Internal auditing is used to discover fraud and error in the various book of account of the organization. The researcher used descriptive method and longitudinal survey design trend. data were gathered from both primary and secondary sources. Management should always meet up with their responsibility of installing, maintaining effective and efficient internal control system hence it will enhance the orderliness of operations. The project will be of great value to all those who may desire to fight weakness in their control system and will offer assistance to people who may decide to research more on this topic.
TABLE OF CONTENTS
5.1 Summary of Findings
5.4 Suggestion For Further Studies
LIST OF TABLES
1.1 BACKGROUND OF THE STUDY
This research is meant to view the effective management performance and productivity improvement of any organization. Most firms have deemed it fit to introduce an internal audit in addition to an external audit, they need the services of an internal auditor in order to enhance the efficiency of their operation.
Internal auditing has proof of an indispensable tool in improving productivity in most organization including profit oriented institutions. Internal auditing is an independent appraisal of the function and qualify of performance of an organization for the review of the financial accounting and its operation as a basis for protective and constructive service to management.
According to Woolf (1985), internal audit is an element of the internal control system set up by the management of an enterprise to examine, evaluate and report on accounting and other controls on operation. It exist either voluntarily or in certain circumstance because of statutory requirements.
There are no precise functions for an internal auditors since he does not have any statutory responsibilities.
Aguolu (2002) states that the functions of an internal auditor are specified by the management who appointed him or by an audit committee where this exist. Specific responsibilities of the internal auditors depends on the entity’s size, structure and management requirements. They includes the following.
It is not the duty of the internal auditor to establish the system of internal control. This remains the duty of management however, being skilled in accounting and being part of the management team, internal auditor is expected to make substantial contributions in setting up a good system of internal control, once set up, it becomes his responsibility to ensure its efficiency and effectiveness.
Historical Background Study Of ZENTUS Nigeria Limited Afikpo
According to the managing Director of Zentus Nigeria Limited Afikpo, the company started business properly in 1977 as a sole proprietorship business. The company started with the sales of timber (plank) and later extended into block industry business in 1989 at his residence Zentus Lodge-Ndibe road Afikpo. In 1990 given the need to have a good office to transact business and the increasing rate of sales, the block industry was moved to No. 1 $ 2 E timber market road where it presently has its head office. as a result of extensive research Zentus Nigeria Limited has maintained five (5) strategic branches in Nigeria, They are Located at Lagos, Onitsha, Abakiliki, Aba and Ndibe beach. They trade on items such as Palm oil, roofing sheets, building materials, timber and beach sand respectively. Presently, the company is an authorized distributor of Emenite roofing sheets, super quality roofing and ceiling sheets.
Consequently, the company was given certificate of incorporation on 29th May 1989 as a limited liability company under the company and allied matters decree (CAMA) 1990) of Nigeria, which confers a legal status on all its business. The administration department of Zentus Nig. Ltd could be described as the life wire of the organization. According to the managing director, the department comprises of all the sections connected with the administration set up of the company. The company has thirty seven (37) workers employed and they are usually transferred from one branch to another every two years for control purposes and eliminated conspiracy but the general manager is exempted in this exercise.
The company is a strong player in all its line of business and has secured not just a firm assurance of future financial health but also the goodwill of all the main thrust to customers are;
General Description of the area of Study
Internal audit is a basis and indispensable tool for effective business control that production companies and government department have found the need to introduce internal audit units to review their operations and records periodically with a view to ensure the updating of their financial records. Internal auditing appeared on the business scene much later than auditing by public accountants. The principal factor in its emergence was the extended span of control faced by management in employing thousands of people and conducting operations form wide spread locations.
For internal auditing to be worthy of the name it is essential that personnel who are independent in all respect perform the functions of the internal auditor. In order to ensure the independence of the internal auditor he should not perform any routing functions which is part of the implementation of the system of internal control but to carry out a review of the system, for example, checking the accuracy of sales invoice after they have been prepared forms part of the system of internal control. Internal auditors appears to be better acquainted with procedures and problems of the institution and the auditing activity could be carried on continuously rather than the annual statutory auditing as compulsorily entrenched in the company and allied matters Decree (CAMA) 1990.
1.2 STATEMENT OF PROBLEM
Productivity level is very low in most private organizations in Nigeria. Low productivity can be traced to frauds and errors in the accounts and financial statement of these firms that often lead to the collapse of such organization.
Most organizations do not have functional audit unit and they often have problems associated with the report of the financial statement.
1.3 PURPOSE OF THE STUDY
The objectives of this project is to examine the contribution of internal auditing in improving productivity in Zentus Nig. Ltd, Afikpo. For this study to be successfully achieved, the following objectives will be noted
1.4 RESEARCH QUESTIONS
Given the challenges associated in the technicalities of internal audit and company’s productivity which makes it almost impossible for non-accountants to understand the need to present the findings of this study for the understanding and benefits of all. The following questions are considered very relevant at the attainment of the research objectives.
1.5 STATEMENT OF HYPOTHESIS
Ha: Internal audit has improved the productivity of the organization.
Ha; Internal audit is useful in the effort to eliminate corporate fraud.
Ha; weak internal control is a major cause of low productivity in the organization.
It was assumed that the supervisor would guide the researcher in the process of conducting the research. it was also assumed that the internal audit department and the staff of Zentus Nig. Ltd Afikpo would corporate with the researcher by completng and returning the questionnaire.
1.8 SIGNIFICANCE OF THE STUDY
The economy of any nation grows and develops when most of the factors of production i.e Land, Capital and entrepreneur are fully employed in the most effective sector of the economy. This implies that the major difference between a poor and rich nation is seen on the productivity level of each of the country. It follows therefore, that any research study on the role of internal auditing in improving productivity of any organization will be of benefit to the entire country. This study would be of immense value as it would act as a secondary aid to students of other higher institutions who may want to research into internal audit. It would also help to expose the contribution of internal auditing in improving productivity in the profit oriented industry.
1.9 DEFINITION OF TERMS
Attempts were made to avoid technical or complex words but those that could bot be avoided are defined as follows.
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