THE ROLE OF AN INTERNAL AUDIT DEPARTMENT IN AN ORGANIZATION A CASE STUDY OF BOARD OF INTERNAL REVENUE, OZORO, DELTA STATE
The basic aim of this research work was to investigate and
as certain the role of internal audit department and then ensure attainment of
set objectives, the topic reveal that certain weakness in the effective of
internal auditing in the public sector is the reason for fraudulence practices
in the board. Both primary and secondary data were uses for this study; the
secondary data were through consultation of textbooks, manual and information,
gathered from past audited accounts. The statistical tools used in analyzing
the data so gathered was through the simple arrange method. The study submits
the following recommendation the auditors should always discuses his findings
with the operations whose activities are revealed so that they will know their
errors and make necessary corrections in the future. The internal auditors
should report to the board so that he will have sufficient authority to promote
independence, policy guidelines and government circulars should be
appropriately communicated to the internal audit.
of the Study
The term audit is derived from the words audited, which
means to hear. The origin of audit can be traced to the ancient days in Britain
where landowners allowed tenant – farmers to farm on their lands.
The landowners did not involve themselves in the cultivation
of the land or in the supervision of these tenants’ farmers rather the
cultivation of the land was done by the overseers appointed by the land owners.
According to Agbawe (2005) defines audit as an examination
and in require into a statement to accounts, the underlying records, document
assets and liabilities by an independent person with a view to express an
opinion as to accuracy and correctness of the financial statement.
The definition as can observe is restricted to the
examination of an expression of an opinion on the financial statement of a
organization by an independent person.
The above definition does not include internal audit which
involves the examination of the financial statement which can be traced backs
to the period of the industrial revolution in Europe with the expansion of
business, ownership is separated from control. Accordingly, board of directors
are charged with the responsibilities to manage the business or an organization
on behalf of the shareholders who in burn appoint the external auditors agrees
by the directors as give opinion about the financial reports where there they
show a true and fair view.
The American accounting association commitment on basic
auditing concept (1971) defined auditing as a systematic process of objectively
and evaluating evidence regarding assertion about economic actions and in order
to ascertain the degree of correspondence between the result to the interested
users. This definition is broad and general because it encompasses both the internal
and external auditors. External auditing involves the appointment of the
external auditors by the board of directors while the internal auditing
involves employment of internal auditors and creation of audit department in
the organization. The internal audit department should relate very well other
functional unit in the organization.
Osita, (1998) defined internal audit as the independent
appraisal of the function and quality of performance of an organization by a
specially assigned staff as part of the internal control system. This
definition emphasizes more on the function and the quality of the performance
required in the internal audit department.
Section 33a subsection one (1) of income tax management act
(ITMA) as amended in (1993) states as follows: there shall be a board to be
known as the state of board of internal revenue (here) after in this act
referred to as the state board, whose operations shall be known and call state
internal revenue service’s (here-in-after in this act referred to as the state
services). The authority of the state, in the federation to administer income
tax management act (ITMA) and the body vested with this authority in each
states is the board of internal revenue. The internal audit department can
effectively achieve the above responsibilities when there is an efficient
internal control system.
This study will be focused on the various problems faced. By
the internal audit department in the board of internal revenue of Delta State
and also highlight the roles played by the internal audit department.
Most of their roles are delegated by the members of the
board of directors appointed by the government who in turn appoint the internal
auditors. The project will focus its attention on the legal framework of
governmental accounting procedures starting from the Nigeria constitution audit
act of 1956 and also the 1999 constitution of federal republic of Nigeria.
Basically, this project will be laying more emphasis on the
board of internal audit department of the board of internal revenue Ozoro.
of Research Problem
The system for control as alleged have not been found to be
compatible, the lack of understanding of the objectives by the internal
auditors have led to unnecessary confusion. Other possible problems involved
are improper segregation and assignment of duties to accounting staff.
Lack of assignment and duties to accounting staff, lack of
knowledge about proper auditing procedures. The internal auditing techniques
and therefore duplication of work of accounting and external auditors.
The duty of the work of internal audit development is so
wide of internal audit department is so wide and their operations is so shallow
that no effect have been seen in the effort of accountants of the board of
internal revenue. Misappropriate of funds, functions names of the payment list,
under assessment foregoing of each receipt and imposing of tax arbitrary are
some perceived problems.
These issues have been a great concern of the board and
government because of the heavy losses sustained as a result of these
practices. There is dire need to go into research to find out what need to be
done to make internal audit to b more than over effective.
Therefore, the research project will seek to provide ready
answer to the under listed burning question;
What form of accounting system and internal control system
should be adopted by the auditors?
What are the audit techniques and procedures employed by the
internal auditors while carrying out their duties?
What are the qualifications of auditors?
Are the accounting system and internal control measures
sufficient and adequate?
The following hypothesis has been drawn to aid the work
system designed to provide selected quantitative data out an entity engage in
Auditor: An auditor is an independent person who has the
sufficient professional qualification to express and opinion as to the true and
fairness of financial statement.
Internal control: Internal controls is the whole system by
control financial or otherwise established by management to save the
organization as soon as possible in the accuracy and reliability of the
records, run the business in an orderly manner and safeguard the company’s
Internal auditing: Internal audit is an independent review
and appraisal of the organization as a basic of protective and contracture
service to management. Internal audit is carried out by a staff of the
organization charged with the responsibility to do so internal audit and
internal check are part of internal control.
Independent audit: Independent audit is an audit.
Ho: There is no significant influence or roles of internal
audit in the board of internal revenue.
Hi: There is a significant influence on the role of internal
audit in the board of internal revenue.
Purpose of the Study
The purpose of the study is a find out the following;
To assess the function of internal audit department in the
board of the internal revenue unit.
To know whether internal auditing practices and techniques
are effectively employed by the board.
To find out the benefit of internal auditing to the
management of the revenue board.
To find out the relationship between internal and external
To recommend ways which will help the board of internal
revenue to improve on their internal audit practices?
Significance of the Study
This study is important in a number of ways so as to enable
the board know how effective the internal audit department has been functioning
for control purpose.
The research provides useful insight into internal audit
practices in the board of internal revenue and provides useful information for
effective management in both organizations to give should implementation of
To make recommendation that would help the management of the
board of internal revenue to make necessary measures and make their internal
more efficient by achieving the required objectives one of which is the
provision of necessary and heeded information to the board of internal revenue
for effective control. To provide references materials for those that might
which to conduct entries in the subject matter. To the researcher the study
would widen their knowledge on the subject matter. Recommendation would be a
ready tool for policy making by government.
1.6 Scope of
This work has been purposely limited to the board of
internal revenue, Ozoro. The essences being to enable the researcher have
enough time to carry out an in dept study on the subject matter.
Apart from this, it was further limited to the internal unit
of the board especially as it affects the activities of management control.
1.7 Limitation of
The study was designed to discuss the role of the internal
audit department in the board of the internal revenue, Ozoro to ensure the
reliability and accuracy in data collection.
As part of the limitation to the study, the prominent and
outstanding limitation to the study in one’s ability to lay hands on textbooks.
Also connected to the limitation of the study is the issue of finance. So much
is needed to gather materials, analyze and type combined the project. Also,
limited time usually meant for research study like this is another constraint
against the study, despite the catalogue of the above constraints; we are
convinced that the data available for his research would be sufficient to
achieve the stole objectives.
1.8 Definition of
The researcher has made it necessary to define operational
terms in this project work to make it easier for the entire of the auditors to
satisfy accounting standards.
Accounting: The internal encyclopedia of social science page
14 put it more presale that accounting is the measurement, methodology and
communication, performed by public accountant in order to express an opinion on
the financial statement.
Auditing: This is the systematic process of objectives
obtaining and evaluating evidence regarding assertion about economic action and
events to assertion and established criteria and communicating the result to
the interested users.
Board of Internal Revenue: This is the body/board appointed
by the government under degree 33 (1) 1993 for the purpose of assessment and
collection of revenue for the government.