CHAPTER ONE
1.0 INTRODUCTION
Auditing is an independent checking,
investigation, examination and expression of the books of accounts and vouchers
of a business enterprise with a view to enable the appointed auditor to report
whether the trading, prodit and loss accounts and balance sheet are properly
drawn up so as to show a true and fair view of the state of affairs and the
profit or loss of the business according to the best information and
explanation obtained by the auditor and that they comply with the laid down
rules and regulations of the statement of standard acccounting product (SSAP)
and other statutory regulations.
Internal control system: This can be
described acording to auditing guideline (AG 204) as “the whole system of
controls, financial and otherwise, established by the management in order to
carry on the business enterprise in an orderly and efficient manner, ensure
adherence of maangement policies, safeguard its assets and secure as this as
possible the completeness and acccuracy of records” therefore this involves
both internal check and audit.
Internal
Check: This briefly
refers to the method (techniques) of organizing and arraning the entire
operation of office, factory and enhousing and the duties of respective staff
so that risk of fraud, errors, irregularities and mismanagment will almost be
impossible without conclusion. That is day-to-day transactions, segregation of
duties and job performance in an organization.
Internal
Audit: This is refers
to an independent appraisal of activities within the organization of the check
of certain operations as a service to the maangement, therefore, it is the
maangement control to functions by the means of evaluating and measuring
the efficiency and effectiveness of
other controls or checks. Meanwhile, the internal audit will ensure that some
specific routine work are carrryout by the departments and that the laid down
procedures is adequately carry-out by
all applicable areas as well as making recommendations to the management.
1.1 BACKGROUND
OF THE STUDY
Auditing in its daily and primitive
stage can in an existence since 16th Century, start when the first
relationship began between those who provided capital and those who managed the
business.
Moreover, the innovation of joint stock
companies has enormously widened the possiility of raising capital for
industry. As a result of the limited liability of the shareholders, it become
possible to offer shares for subcription to the public and thus, the
availability of capital to both industry and commence. “Stewardship”
Meanwhile, under the company from of
business enterprises, the shareholders as a person, delegate the management of
the enterprise to the board of directors and practically, the board submits to
the shareholders the account of the enterprise so that its members may see a
trur and fair view of the financial position and the profit and loss
undertaking. Thus, in 19th century, the greatly arose aneed by the shareholders as a body to appoint
an auditor that will help in the presentation of statutory financial statement
of the board of directors in order to show true and fair view of the financial
position of the company.
However, in 20th century,
mandatory provision as requirement made for the audit to limited liability
accounts and presentation of audit report to numbers by the company acts in
Nigeria have company or companies and Allied Matters Act (CAMA) 1990.
1.2 STATEMENT
OF THE PROBLEM
This study is basically concerned with
discussing and appraising an assessment of effective internal audit and control
in the public sector. And also how to answers some related questions like;
-
How
has the effective internal audit and
control affected the public sector over some years?
-
How
Does the effective system of internal audit control affect management policies
towards records keeping, risk of fraud and errors, mismanagement, job functions
and proper coordination.
-
How
does the system take care of vouchers, payable, bank reconciliation statement
and prevention of overpayment as well as
1.3.1 OBJECTIVES
OF THE STUDY
1.
To
clearly demonstrate the impact effective internal control and audit in the
public sector.
2.
To
clearly and effectively specify the adequate control and mnaagement mechanisms
to put in place in the public sector.
3.
To
indicate the performance scope of internal control and audit in the public
sector towards quality of financial information, organization’s growth,
improving it efficiency at the costs lower as possible improvement of social
environment.
4.
To
clearly explain the system audit general description as to executive a
continual analysis of a central authority. And organization’s reporting
monitoring team thus the management.
5.
To
make possible contribution to human knowledge as well as reduction or
prevention in management, risk of fraud, irregularities and errors.
1.4 RESEARCH
HYPOTHESIS
The main aim of public sector is for
public utility (satisfaction) while internal cotrol and audit is for
maintennace and keeping of accurate, complete and valid financial records and
transaction daily as well as safeguard of assets in order to prevent and
eliminate errors and fraud. Therefore public sector, particularly corporate
affairs commision (CAMA) meanwhile, the following hypothesis will be tested in
the course of the study.
Null
Hypothesis (Ho): the accuracy,
completeness and validity of financial records and maintenance, safeguard and
custody of assets of an organization as well as the elimination and prevention
of fraud, errors, irregularities and mismanagement do not tally with the
efficiency and effectivenes of effective internal audit and control in the
public sector.
Positive
Hypothesis (H1): The accuracy,
completeness and validity of financial records and maintenance, safeguard and
custody of assets of an enterprise as well as the elimination and prevention of
fraud, errors, irregularities and mismanagement do not tally with the
efficiency and effectivenes of effective internal audit and control in the
public sector.
1.5 SIGNIFICANCE
OF THE STUDY
The significance of this research study
is to fish out the efficiency and usefulness of strict adherence of the
effective internal control and audit towards public sector in Nigeria as it
affect.
i.
The
effective management policies towards the maintenance, safeguard and custody of
assets in public sector.
ii.
The
strict mnagement policiies towards day to day transactions (activities),
records as the salaries and wages of the commission in order to prevent and
eliminate the risk of fraud errors, irregulaties and mismanagement in the
public sector and otherwise.
iii.
The
need to facilitate government interest towards the getting-up public sector or
corporation (enterprises) wihtout being punicky of fraud, errors,
irregularities and mismanagement in the public enterprises.
1.6 SCOPE
OF THE STUDY
The study is an assessment of effective
internal audit and control using corporate attain commision Kaduna branch as case study. The study restricted
itself to the internal control and audit of the commission. Therefore, it is
based on the examinations and investigation of internal control system and audit procedure in order to ascertain the
efficiency and effectiveness of management policies towards fraud, error,
irregularities and mismanagement prevention throughout the year.
Meanwhile, the control on the assurance
of monitoring the registration fees, daily records and transactions, salaries
and wages that is the emolument of the employees as well as the maintenance,
safeguard and custofy of assets of the comission.
1.7 HISTORICAL
BACKGROUND OF THE CASE-STUDY
The corporate affairs commision (CAC)
was established and incorporated in nigeria by section 1. of CAMA 1990 as a
acrognm of companies and Allied matters
act 19090 to replaced the former company registry. Before this Act, the company
registry was part of theministry of trade and commerce. Experience showed that
this arrangement was not effective since adequate time and funds were not
directed towards an essential area of the nation is economy like company
formation, registration, management and administration.
Moreover, the commission was established
as a corporate body, with perpetual succession and a common seal, capable name
and acquiring, holding and disposal of all moveable and immoveable for the
purpose of its function.
Meanwhile, the commission has its
headquarters in Abuja the federal capital terriroty (FCT) and branches or
subsidaries spread all over the federation according to section 1 (3) of CAMA
1990. The decentralization of power no doubt reduces the handship an expense of
reaching the former company registry under the former framework.
1.8 DEFINITION
OF TERMS
Planning: this is the process of thining before
activating. It is the most basic management function, which involves selection
from among alternative duture worse of action in order to achieve a desirable
goal. Therefore, it is the function t etermine where we are and where we are
intended to be in accomplishing the organizational goal.
Policy: this is the general statement or
understanding as laid down principles, normo, ethics and guidelines and channel
thinking in decision making in an
organization towards its target goal.
Organization: this I sdefined as
the according to henry Foyol as “providing
a business with everything necesssary or useful to its functions e.g. raw
materials, tools, equipment, money and men”.
Management: It can be defined is the efficient and
effective utilitization of human, social, political, economic and material resources
for the acomplanish of the set of goal in the organization.
Responsibility: This is an act of exercising authority
or influence to see that duties are performed.
Control: It is the ability of management to
induce subordinates to work towards group goal with confidence and kindness.
Accounting: is the atc of recording, classifying,
selecting, analyzing, interpreting and communicating the financial transactions
of an organization to induce or enable users to make financial assesment and
decision.
Audit: It is an independent examination and
expression of opinion on the financial statement of organization by an
appointed auditor in accordance to the terms of his engagement and in
compliance with any relevant stutory obligation and profession requirements.
Examination: this means going into study of a
particular idea information and fuel in order to get the real thing in all.
Independency: This means having
five mind or liberty (freedom) in exercising one’s right without interference
from outside. Therefore, according to professional or accounting profession, it
means atitude of mind which is characterized by intergrity and objectivity