ABSTRACT
The research provides an appraisal of the
role of the auditor in the achievement of organization objective.It analyses
the auditing function in the organization aligned towards the realization of
the objective of the organization.The
research stresses the significance of internal control through auditing and
providing a fair state of the financial records of the organization towards
attaining organizational objectives.
INTRODUCTION
Internal audit is an independent appraisal
function established by the management of an organisation for the review of the
internal control system as a service to the organisation. It objectively
examines, evaluates and reports on the adequacy of internal control as a
contribution to the proper, economic and effective use of resourcesThe essentials for effective internal auditing are:independence;The
internal auditor should have the independence in terms of organisational status
and personal objectivity which permits the proper performance of his duties staffing
and trainingThe internal audit unit should be appropriately staffed in
terms of numbers, grades, qualifications and experience, having regard to its
responsibilities and objectives. The internal auditor should be properly
trained to fulfil all his responsibilities .relationships;The internal auditor should seek to foster
constructive working relationship and mutual understanding with management,
with external auditors, with any other review agencies and, where one exist,
the audit committee ;due care;The internal auditor should exercise due care in
fulfilling his responsibilities .planning, controlling and recordingThe internal auditor should adequately plan, control
and rec;ord his work .evaluation of the internal control system;The internal
auditor should identify and evaluate the organisation's internal control system
as a basis for reporting upon its adequacy and effectiveness .evidence;The internal
auditor should obtain sufficient, relevant and reliable evidence on which to
base reasonable conclusions and recommendations.reporting and follow-up;The internal
auditor should ensure that findings, conclusions and recommendations arising
from each internal audit assignment are communicated promptly to the
appropriate level of management and he should actively seek a response. He
should ensure that arrangements are made to follow up audit recommendations to
monitor what action has been taken on them .The terms of reference for the internal audit function
should be formally confirmed by the organisation and should have proper regard
to the contents of this guideline; demonstrable independence of the function is
crucial to its effectiveness. For certain public sector organisations the need
for an internal auditing function is prescribed by statute and this provides a
basis for defining specific standards and guidance for the practice of internal
auditing in these organisations.To achieve full effectiveness the scope of the
internal audit function should provide an unrestricted range of coverage of the
organisation's operations, and the internal auditor should have sufficient
authority to allow him access to such records, assets and personnel as are
necessary for proper fulfilment of his responsibilities. It is a management
responsibility to determine the extent of internal control in the
organisation's systems which should not depend on internal audit as a
substitute for effective controls. Internal audit, as a service to the
organisation, contributes to internal control by examining, evaluating and
reporting to management on its adequacy and effectiveness. Internal audit
activity may lead to the strengthening of internal control as a result of
management response.One of the objectives of internal auditing is to assist
management in the pursuit of value for money. This is achieved through
economic, efficient and effective use of resources.It is a management
responsibility to maintain the internal control system and to ensure that the
organisation's resources are properly applied in the manner and on the
activities intended. This includes responsibility for the prevention and
detection of fraud and other illegal acts. The internal auditor should have
regard to the possibility of such malpractice and should seek to identify
serious defects in internal control which might permit the occurrence of such
an event. An internal auditor who discovers evidence of, or suspects
malpractice should report firm evidence, or reasonable suspicions to the
appropriate level of management. It is a management responsibility to determine
what further action to take.Independence;Independence is
achieved through the organisational status of internal audit and the
objectivity of internal auditors.Organisational status The status
of internal audit should enable it to function effectively. The support of
management is essential. Internal audit should be involved in the determination
of its own priorities, in consultation with management. Accordingly the head of
internal audit should have direct access to, and freedom to report to all
senior management including the chief executive, board of directors and, where
one exists, the audit committee.Objectivity of the internal auditor
Each internal auditor should have an objective attitude of mind and be in a
sufficiently independent position to be able to exercise judgement, express
opinions and present recommendations with impartiality. The internal auditor,
notwithstanding his employment by the organisation, should be free from any
conflict of interest arising either from professional or personal relationships
or from pecuniary or other interests in an organisation or activity which is
subject to audit. The internal auditor should be free from undue influences
which either restrict or modify the scope or conduct of his work or over-rule
or significantly affect judgement as to the content of the internal audit
report. The internal auditor should not allow his objectivity to be impaired
when auditing an activity for which he has had authority or responsibility. An
internal auditor should be consulted about significant proposed changes in the
internal control system and the implementation of new systems and make
recommendations on the standards of control to be applied. This need not
prejudice the auditor's objectivity in reviewing those systems subsequently. An
internal auditor should not normally undertake non-audit duties but where he
does so, exceptionally, he should ensure that management understands that he is
not then functioning as an internal auditor.
1.1 BACKGROUND OF THE STUDY
Delathe (2012) stated that auditing in the past, have been considered
as a simple administrative procedure comprised mainly of checking accuracy of
transactions pre-payment verification and control, counting assets and
reporting in past event, a combination of forces, has, in recent time, let to a
quiet revolution in the accounting profession, Government, private and public
companies are moving towards a higher level of transparency and as such
demonstrate accountability and stewardship in the use of resources
entrusted to them.
Reason for Auditing includes,Evaluation and risk management ,Control and
Government processes, Investigative and Advisory services .Clement (2012)
note that audit system is important for a company because its enables it to
pursue and attain its various corporate objectives. Business processes need
various forms of interval control to facilitate supervision and monitoring,
prevent and detect irregular transaction, measure ongoing performance,
maintaining adequate business records and to promote operations productivity,
interval Auditors, review the design of the interval control and informally
propose improvement and document any materials irregularities to enable further
investigation by management if it is warranted under the circumstances.Manguis
(2011) observed that auditing helps top management manage corporate affairs,
providing guidance on various issues ranging from financial accuracy to
interval control to regulatory compliance. They also help department heads
indentify tools and methodologies to improve operational activities, putting companies
on a more sustainable path. The need for Auditing stems from.Internalcontrol ,FinancialReview,Regulatory
monitoring
1.2 STATEMENT OF THE PROBLEM
The auditing function is often
regarded to be an independent process of ensuring an accurate and fair
reporting of the financial records of the organization and of the effective use
of resources,this however does not exclude it from the corperate objective of
the organization.it is therefore
pertinent that the objectivity function of auditing be aligned with the
corperate objective of the organization.The
problem confronting this research is to determine the role of the auditor in
the achievement of organizational objectives with a case appraisal of Nestle
Nig plc.
1.3 RESEARCH QUESTION
1 What is the nature of the auditing
function
1
What
constitute the nature of organizational
objective
2
What
is the role of auditor in the achievement of organizational objective
3
What
constitute the role of the auditor in the achievement of organizational
objective in nestle plc.
1.4
OBJECTIVE OF THE STUDY
1 To determine the nature of the
auditing function
2 To appraise the nature of
organizational objective
3 To determine the role of the
auditor in the achievement of organizational objective
4
To
determine the role of the auditor in the achievement of organizational
objective in nestles plc
1.5 SIGNIFICANCE OF THE STUDY
The study intends to provide project
the importance of the role of auditors in the achievement of organizational
objective.
It shall also serve as a veritable
source of information on the fundamental
issues of auditing
1.6
STATEMENT OF THE HYPOTHESIS
1 Ho
Audit is not given significant attention in nestle plc
Hi
Audit is given significant attention in nestle plc
2
Ho Organisational objectives in nestle plc is low
Hi Organisational Objectives in nestlcplc is high
3
Ho The role of auditor in the
achievement of organisational objective in nestle plc is low
Hi
The role of auditor in the achievement of organisational objective in
nestle plc is high.
1.7
SCOPE OF THE STUDY
The study shall appraise the nature of the role of auditing in the
achievement of organisational objective with a case study of nestle plc
1.8
DEFINITION OF TERMS
AUDITING DEFINED
Internal audit is an
independent appraisal function established by the management of an organisation
for the review of the internal control system as a service to the organisation.
It objectively examines, evaluates and reports on the adequacy of internal control
as a contribution to the proper, economic and effective use of resources
ORGANISATIONAL OBJECTIVE
DEFINED
Organisational objective
are the ends which the organisation
intends to achieve usually defined quarterly, half yearly, or annually and expressed quantitatively or qualitatively
interms of profit,quotas,budgets etc.