The notion of the auditor being
bound or a watchdog is gradually changing for the better as internal auditing
has undergone tremendous changes in recent past.
The actual functions of the auditor is
often surrounded in secrecy or held in some kind of awe.
Major notes of internal auditing have
not been clear to the majority of people in the society. In view of numerous
corrupt practice, frauds and embezzlement often uncovered by probe tool has
often been questioned.
It is the realization of this that I have
set out to look critically into internal audit department of Afribank with a
view to finding whether effective internal auditing practices ensure effective
control. The mode of appointment, independence and duties of the internal
Auditor was looked into an determining whether the internal audit department is
being operated as a management or efficiency audit.
The finding shows
that internal auditor is not completely independent and mode of operation has a
combination of characteristics of various types of auditing especially the
operation type of audit.
high degree of internal control exists in the bank. In consideration of
improvement in some area, recommendations are proposed.
TABLE OF CONTENTS PAGES
Title page……………………………………………. I
Approval page……………………………………… ii
Table of content……………………………………. Vi
Statement of problem
Purpose of study
Significant of study
Scope of the study
Limitation of the
Definition of terms
Review of related
Definition of internal
Function of internal
The basic of internal
Use of internal
Effective area of
Limitation of internal
The nature of
accounting policy and computation
Role of audit
in-banking nig plc.
Research design and
Selection of study
Forms of collecting
Data presentation and
Data presentation and
Test of hypothesis
Summery of findings,
system of controls adopted in any economy greatly determines the development
and growth of that economy. To ensure optimization in money, materials machine,
time, resource and management of men, controls are essentials.
controls are installed by many organizations including banks to check how
effective and efficient they maximize their resource. One of such controls
commonly used to minimize wastage and guide plans to their eventual
accomplishment is internal auditing. Auditing has been in existence for many
years, it was in ancient Egypt and the great mercantile establishment of the
middle ages. This shows that internal auditing can neither be neglected nor under
rated in our modern economy for it was borne out of the complexities of modern
business climate and transaction involved. In that other management of various
large business organizations and government concern recognized internal
auditing as a valuable machinery in achieving and objective deemed accurate at
a given point in time.
term “Audit” is from a Latin word “Audire” which means hr hears. This is
because the account of an estate domain were checked by having them called out
of those who complied them to those in authority. With the growth of trade and
commerce the need for more accurate method of recording business activities
arose. This, auditing is more a question of he hears but a whole process where
by the books of account and vouchers of business entities (including charities,
trusts) are subjected to critical examinations by professionally qualified and
independent account (Auditors) on such a detail as will enable them from an
option as to their truth and fairness. The Auditing is the bridge across the
creditability gap created by the separation of management from ownership.
complexity of the art of management extents to increasing aware of business
fraud, embezzlement and the cash squeeze which often cripple many companies.
The management has to look inward in order to uphold the space of activities
and keep abreast with the changes in their immediate and external environment,
and this can only be achieved a good and effective internal control system of
which internal auditing is a major section. A writer maintained that the
existence of an efficient and effective system of internal control both in
design and operation which is the responsibility of management with best to
prevent fraud or at worst help to detect such fraud at the earliest
It is a
function carried out by an independent staff in audit department with the sole
aim of reporting on the fairness and truly of financial statements. However
since the internal auditors are employee of the firm or the establishment
concern, independence is not always achieved.
comprehensive coverage of an internal audit upon several factors. A general
rule is that department should of course have as much freedom as possible
without interference from the management. In such circumstances the internal
auditor will have a greatly enhanced share in recommending a new and conducting
investigations where appropriate. The terms of references should be defined as
lack of this may lead the department and those in another.
avert this ugly incident and ensure greater coverage during investigations,
management issues guidelines to heads of division to always make necessary
documents/records/files available to audit staff as may be demanded by them
while performing their duties.
audit work should be able to:
Review the accounting
systems as related to internal control.
Examine financial and
operating information for management.
Review the economy
efficiency and effectiveness of operation.
implementation of corporate policy plans and procedures.
implementation of new accounting system.
Providing a training
ground for both financial and general management personnel.
Internal Audit functions can
help to spot out deficiencies in the systems so as to evolve corrective measure
at the earliest opportunity. Internal auditor appraise, analyses and report
upon the policies and methods employed in the bank.
of internal Auditor to the general performance of the whole organizations can
not qualified which makes it very importance for all organization to maintain a
good internal control system maintained by qualified chartered accountants.
system may be insufficient based on some predicaments. These may include lack
of segregation and assignment of duties to accounting staff. Also the scope of
duties of internal audit unit are so wide and their scales of operations so low
as well as the shortage of qualified staff to carry out internal auditing and
of Accounting officer can easily be maneuvered by management which can affect
the internal audit system of an organization clearly defined as a result of two
or more dishonest staff can collide to override the efficiency of the internal
control system. The criticisms of the internal control system have been
extended to the banking industry hence this study of internal audit as a tool
for effective management.
aims at assessing the internal audit as a subsystem of internal control being
operated in the bank.
i. The purposes are
ii. To aid good
iii. To eliminate wastage and losses
iv. To survey the internal audit unit of Afribank Plc, Head
at Victoria Island so as to review the
predominant audit practice
in the bank.
v. To point out deficiencies in the internal
control system used by
vi. To appoint out
the implications of the system and suggest
that will bring improvement.
vii. To evaluate the expenditure procedure of the bank.
To ensure adherence management policies procedures, secure
completeness and accuracy of record and safe guard all assets.
of the public as to efficient contribution of internal audit department to
efficient management makes this study essential. It is the believe of some
people that internal audit is not necessary as it delays jobs, while some think
it is only to detect frauds and misappropriate on, so this project will makes
clear the merits of having a source of internal audit.
inability of workers to efficiently and effectively utilize resources and lack
of proper control mechanisms has led to wastage of human resources, time
financial and materials resources. This study will help management in bringing
about greater efficiency and effective use of resources and this same management
cost. E.H Woo if (1988) (FCA) maintained that a great deal of the work of an
internal auditor is curled with the evaluation of systems of internal cheek,
conservations with officials (the result of when was later conformed by
examination of records) and general seripling of records.
Though many researchers have been
conducted system, one can say that this study will contribute in no small way
to the available interactive.
This study makes more, insight into
the deficiencies in current internal audit practices in the banking section and
suggests useful innovation for making necessary changes in both the
organization and implementation into internal audit function as it obtains in
Afri- bank Nigeria plc.
study will at most expose the benefit of this great department to companies who
do not have such, so that they can establish this control department without
section the hypotheses selected in chapter one is tested. Relevant question
from the question form the questionnaire aroused to test the hypothesis
Ho: - Internal Audit
is not a source of help to efficient management operations
Hi: Internal Audit is
a source of help to efficient management operation.
Ho: The recognition accorded to the internal Auditor in the
organization hierarchy has not enhanced the system of the organization.
Hi: the recognition accorded to the internal Auditor in the
organizational hierarchy has enhanced the system of the organization.
SCOPE OF The
measures of internal control systems are considered in Afri-bank, but more
concentration world be made on internal audit aspect for the purpose of this
systems and related internal control measure, the position, the independence of
the auditor as well as the slope of his works is the areas to be studied.
out this study, it is important to have a set of assumption to base the study
that internal auditing
helps in making efficient management of the company’s resources by evaluating
the other control departments.
That fraud is reduced
to the barest minimum that when it occurs most often then not it is easily
That the responses to
the questionnaires are true and accurate.
That the internal
audit unit in the bank has adequate knowledge of practice of the organization.
That the resporident
co-operated by giving the information demanded from them without reservation.
problems and limitations are expected to face study like this, such problems
are lack of resources or time to study or go ground another divisions of the
staff may not like to reveal information, which they regard as classified,
deputes the fact that the manager of the bank has given the manager of the bank
study approach will be adopted which will be extensively and intensively
carried out by personal calls on the bank. The main method of data and
information collection will include both primary and secondary sources. The
primary sources will be through personal interview with the intense Audit
department’s staffs. Questionnaire will also be designed and distributed.
secondary sources are textbooks and journals.
necessary that clear definition of some technical terms and words are given to
avoid any possible confusion that may arise because of their usage.
AUDITING: It is sometimes referred to as external auditing or simply as
auditing the American Accounting Association committee on basic Accounting
concepts (1972) has defined it as “A systematic process of objectively
obtaining and evaluating evidence regarding assertions about economic action
and events to ascertain the degree of correspondence between those assertion
and established criteria and communicating the result to interest users.
consultative council of Accountant defines Audit as “The independent
examination and expression of opinion on the financial statement of an
enterprise by an appointed auditor in pursuance of that appointment and in
compliance with an relevant statutory obligation.
INTERNAL AUDITING: A.H. milligram defines it as “An independent appraisal
activity within an organization for the review of accounting financial and
other operations as a basic of services to management. It is a managerial
control, which functions by measuring and evaluating the effectiveness of other
It is a
vital part of internal control and forms the eves and ears of the board in the
enterprises. It is also a series of process and techniques through which an
organization own employee ascertain for the management, by means of first hand
on the job observations, whether established management controls are adequate
the effectively maintained, records and reports financial, accounting and other
wise reflect actual operation and results accurately an promptly and each
division in carrying out the plans, policies and procedure for which it is
INTERNAL CONTROL: the institute of chartered accountants of England and
Wales define it as “A whole system of control, financial or other wise
established by the management in order to carry out the business of an
enterprise in an orderly and efficient manner, ensure adherence to management
policies, safeguard the assets and secure as far as possible the completeness
and accuracy of the records”.
definitions given by a special committee report of the American institute of
corporate Accountant (A.I.C.A) is more impressive. It said that “internal
control comprises the plan of organizations and all of the co-ordinate methods
and measures adopted within a business to safeguarded its asset, check the
accuracy and reliability of its accounting data promote operational efficiency
and encourage adherence to prescribed managerial policies.
paragraph, we will consider the definition in detail.
The whole system
internal controls can be seen as single procedures (Example clerk A checks the
calculations performed by clerk B).
Financial and other wise:
the distinction is not impotent perhaps financial include the use of control
accounts and other wise may include physical access restrictions to computer
Established by the
management: internal control system are established by the management, either
directly or by means of external consultants, internal audit, or accounting
“Carry on efficient
manner dearly the converse is unacceptable in any business.