THE RELEVANCE OF AUDITING IN THE ENHANCING OF ACCOUNTABILITY IN PRACTICE COMPANIES
(A CASE STUDY OF PHINOMAR NIGERIA LIMITED)
As regard to the relevance of auditing in the enhancement of accountability in private companies. In the past, it was only the accountability fund of the public companies that were given a little public notice or concern. Private companies did not pay much attention to external and internal audit. But this has increased the rate of mismanagement fraud and embezzlement.
Based on these, the research needs to ascertain the relevance of audit in the enhancement of accountability. It is also at same time aimed at correcting the misconception which public has about audit.
In chapter two which is an overview of related literature, effort were made in the definition of audit, essential features of an audit. All definition have one thing in common that audit is the independent examination of an expression of opinion on the financial statement of our enterprises by an appointed audition.
Chapter three states that design and methodology which include the source of data, interviews, question and sample size.
Chapter four is the data analysis collected questionnaire are analysis with number percentage and degree of respondent affirmed to a particular answer. Chapter five contains the findings, recommendation and conclusion. In conclusion it is believed that co-operative and compliance on the part of audit management and employee will be of great importance for proper attainment of accountability.
In the past, private companies did not pay much attention to external and internal audits. It was only the accountability of public funds, which was given a little public notice or concern. But the increasing rate of mismanagement fraud and embezzlement in every business concern has brought the awareness of the indispensability of an audit. The definition of a private company is pertinent for a proper understanding of the topic. A private company been has defined by Websters dictionary as “any company founded and operated for the purpose of making money for the shareholders of the company. It can also be definite as a company which is restricted to a membership of fifity shareholder (excluding employees and ex employed and it is prohibited from issuing any invitation to the general publc for subscription of shares. Private companies have become very popular and have virtually replaced partnership in commerce and industry thus, there are law guiding the operations of the private companies. These laws are included in the companies and allied matters act 1948, CAMA 1967 and currently the companies of allied matters act decree (Ams 1970).
At audit on the other hand has received a lot of definitions both from authors and accounting bodies. There is little or no need to say that it has suffered at lot of misinterpretation. Most of the is given interpretation as audit as aimed at fraud and error detection. Some business concerns have misconception than an auditor should be employed only when fraud is suspected to have been committed and some employees auditors see them as fraud detectors but auditing involves much more than that. One of the most involved and acceptable definition of an audit so far is that issued by the consultative council of accounting bodies (CCAB) which sees an audit as the independent examination of an expression of opinion on the financial statement of an enterprise by an appointed auditor in compliance with relevant statutory obligation. This topic, relevance of audit in the enhancement of accountability will dwell on how invaluable an audit is to a private company in order to attain it’s desire objective. This while up have been divided into five chapter to ensure an intensive research work and for better understanding of the work.
1.1 HISTORICAL BACKGROUND OF STUDY
The company Nigeria limited is fully owned by the Agulofu family with his royal Highness Igwe I. O. U. Ayalog as the chairman and managing director. The company was fully incorporate in 1979. The company has its headquarters at Ngwo in Udi local government area of Enugu State. The company was started by the Igwe with a small mud oven and twelve birds a hobby in 1963. Through the advice of a British salesman and a friend, the Igwe increased his take in both business but become more interested in the poultry area. The company has since developed tremendously and has grown into a group namely.
a. Goodwill Poultry farm
b. New Nigeria Backery
c. Multi purpose Crop farm
d. Precision machine tools and fabrication plant
The organization and functional structure of the company has the Board of Director at the apex, ten Managing Directors, General managing and the Deputy General Manager, below two Deputy manager are the office of the company on the same horizontal lien in change of their varies department namely: the accountant who is in-charge of the accounting department, the internal auditor takes cares of the Department. Their Human Resource manager heads the Human Resources Department and the General secretary of the company is the head of the public relation department. Further down the line but on the same horizontal line are production manager, sales manager and purchase managers in charge or the production department, sales department and purchase department respectively. The last on the chart are the manual labourers who make up majority of the staff strength and their services are the paramount importance of the company
Organizational and Functional Chart of phinomor Nigeria Limited
1.2 STATEMENT OF THE PROBLEM
The increasing wave of the fraud and embezzlement in every business concern including private companies has brought to highlight the problems associated with accountability in private companies.
In this write up it is proposed that auditing will help enhance the accountability in private companies. The researcher has used the following questions.
a. To what extent has phinomar Nigeria Limited engaged in the practice of auditing.
b. What factors inhibit or facilities the practice of auditing.
c. Are auditors recommendations ever applied after appraisal of the auditors report.
d. Is the present degree of accountability in the company attributed to auditors.
1.3 OBJECTIVE OF STUDY
Having stated the problem the purpose/ objective of the study are:
a. To ascertain the role of auditing in the enhancement of accountability.
b. To enable the employee of auditors have a good knowledge of what an auditor is all about and what to expect from an auditor.
c. To ascertain the problems that independent auditors encounter in the discharged of their duties.
d. To play the loopholes those have denied private company accountability.
A hypothesis is tentative state which is the subject to further proof. Based on this, the researcher has generated the following tentative statements for the purpose of this study.
H01: Audit does not influence accountability in private companies.
H02: Audit does not influence accountability in private companies.
H02: Audit is not necessary for accountability in the private companies.
H1.2¬: Audit is necessary for accountability in private Companies:
H1.3¬: Accountability is a function of audit in private companies.
H0.4: Audit does not make any positive contribution towards the improvement of accountability in private companies.
H1.$: Audit makes positive contribution towards the improvement of accountability in private companies
1.5 RESEARCH QUESTIONS
S/N Valuables Yes % 100 % Other valuables %
1 Do you work with phinomur Nigeria Limited 20 100 - -
2. If “Yes” are you in the top management cadre? 6 30 14 70
3. Have you been with the company for at least 2years?
4. Are you married
5. What sex are your male or female
60 & 10
6. Will you line to be with the company
8. Do you think that the accounts department has to the required qualified account
9. Do you think that the company is periodically audited
10. Was the company audited last year?
1.6 SIGNIFICANCE OF THE STUDY
1. Shareholders are rest assured that auditors scrutinize objectively the accounts they have given to others (Director).
2. Audit acts as a check upon the officers of a company the knowledge of the books of accounts will be surely audited restrains them know hatching any conceived fraudulent acts and to be much more careful with their duties.
3. Audit has made it possible for an auditor to render to the management on some valuable assistance on matters of accounts and finance generally from his wealth of knowledge and experience in the profession.
4. The applications to bank and other outside parties for the purpose of raising finance. If supported by auditors accounts when generally enhanced.
5. The board of inland revenue also was a look at audited accounts of a company.
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