CHAPTER ONE
Background To The Study
The Internal audits constitute an
independent appraisal function which review the internal control system of the
organization established. Auditing ensures the effective, proper, and economic
use of resources in the organisation through the objective examination, evaluation
and reporting on the adequacy of internal control. The
effectiveness of the auditing functions lies on its independence;
The independence in terms of
organisational status and personal objectivity of the internal auditor
facilitates the proper and effective
performance of his duties .It is therefore essential that the internal audit unit be appropriately staffed
with people with the right qualification and given the training
necessary .The internal auditor must constructively align its functions with the management
policy and maintain a good working
relationship and mutual understanding
with management, external auditors, and
other review and exercise due care in
executing its function of planning, controlling and recording of work.
The internal control system must be properly evaluated to ensure its adequacy
and effectiveness .The evidence obtained in the audit function should constitute the
auditor’s report which must be communicated to the management for appropriate
action. It is also the auditors role to ensure that all recommendations and
conclusions are monitored to determine that action has been taken on them .The organisation terms of reference for the internal
audit function should be clearly specified to enhance the auditors independence
in the execution of his legitimate functions. A crucial function of internal
auditing is to facilitate management in the creation of value for money. through economic, efficient and effective use
of resources. Consequently the auditor must be objective in the presentation of
its report to management
So as to exercise judgement,
express opinions and present recommendations with impartiality. MALAYSIAN INSTITUTE OF ACCOUNTANT (2007)
INTERNAL AUDIT GUIDELINES
1.2 Statement of the Problem
The effectiveness of the auditing functions lies on
its independence; The
independence in terms of organisational status and personal objectivity of the
internal auditor facilitates the proper and effective performance of his duties
.It is therefore essential that the internal audit unit be appropriately
staffed with people with the right qualification and given the training necessary. But many instances reveal that
the internal auditor is not given the freedom and independence to exercise his
functions objectively.Unneccessary influences by some senior staff who are part
of management some time digress the
sense of objectivity of the internal auditor in presenting is report and
recommendations to management.
This as a result affects
the objective of audit and that off the organisation in ensuring effective and
economic use of the firm’s resources. Therefore the problem confronting the
research is to determine Auditors independence; Enhancing Accountability and
transparency in corporate organisations.
1.3 Objectives of the Study
To
determine the role of Auditors in corporate organization.
To determine the impact of the Auditors independence in
enhancing Accountability and transparency in corporate organisations.
The internal auditor must constructively align its
functions with the management policy and maintain a good working relationship
and mutual understanding with management, external auditors, and other review
and exercise due care in executing its function of planning, controlling and recording of work. The internal
control system must be properly evaluated to ensure its adequacy and
effectiveness .The evidence obtained in the audit function should constitute the auditor’s
report which must be communicated to the management for appropriate action. It
is also the auditors role to ensure that all recommendations and conclusions
are monitored to determine that action has been taken on them .The organisation terms of reference for the internal
audit function should be clearly specified to enhance the auditors independence
in the execution of his legitimate functions.
1.4 Research Questions
What is the role of Auditors
What
is the impact of the Auditors independence in enhancing
Accountability and transparency in corporate organisations?
1.5 Significance of the Study
The study
proffers the important role of the Auditor in the organization and the need for
the independence of the auditor in facilitating accountability and transparency
in the organization.
1.6 Research Hypotheses
Ho: The impact of auditor’s independence in enhancing
accountability and transparency in corporate organizations is not significant.
Ho: The impact of auditor’s independence in enhancing
accountability and transparency in corporate organizations is significant.
1.7 Scope of the Study
The study
focuses on the appraisal of the Auditors independence in Enhancing
Accountability and transparency in corporate organisations.
1.8
Limitations of the Study
The
research was confronted by some constraints as geographical factor and
logistics
1.9 Definition of Terms
|
Organisation
|
The organisation consists of a group of people in the conduct of
business activities of providing goods and services with the common purpose
of achieving corporate aims and objective.
|
|
Audit Committee
|
A committee Instituted to carry out the external and internal audit
plans, programs and reviews internal control arrangements.
|
|
|
|
|
Internal Auditor
|
A person whose function is the conduct of internal audit in the
organisation.
|
|
|
|
Internal Control
INTERNAL
AUDIT
|
The regulation of work activities through systems designed in the
organisation and implemented for the purpose of achieving management
objectives.
The Internal audits constitute an
independent appraisal function which review the internal control system of
the organization established. Auditing ensures the effective, proper, and
economic use of resources in the organisation through the objective
examination, evaluation and reporting on the adequacy of internal control.
|