This research study has examined all
possible areas of the study was conducted on Auditing procedure and internal
control system with reference to Union Bank of Nigeria Plc. However, the areas
where the research revolves around are not limited to the scope of the
study. Audition procedure and internal
control system is very important in every organization to identify the
loopholes and lapses to proffer lasting solution. Data was analyzed using
descriptive and chi-square statistics for test of hypotheses. The five point likert scale will be used
analyze the data for the study. The
research questions will be analyzed using the percentage analysis. For hypotheses testing, chi-square statistics
will be used to test the individual hypothesis formulated. Its also important to posit that internal
audit ensure detention of financial fraud and irregularities. In the course of
the research work, its discovered that organization with effective internal
audit system are more likely to affect fraud than organizations with no such
system and function. Adequate internal audit system must be established in the
organization to ensure that activities of the organization are carried out
effectively and should be provision of adequate training programme to the staff
of Lagos State University. Also, qualified and competent staff should be
employed in other to ensure efficient operation.
TITLE PAGE I
TABLE OF CONTENT VI-VII
CHAPTER ONE: INTRODUCTION
TO THE STUDY 1
OF PROBLEMS 3
OF STUDY 5
OF THE STUDY 6
AND LIMITATION OF THE STUDY 8
OF TERMS 8
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 INTRODUCTION 11
DEVELOPMENT OF AUDITING 11
DEVELOPMENT OF INTERNAL AUDITING 13
OF AUDITING AND INTERNAL CONTROL SYSTEM 15
CONTROL SYSTEM 17
OF INTERNAL CONTROL SYSTEM 19
AND SCOPE OF INTERNAL CONTROL
OVERVIEW OF UNION BANK OF NIGERIA 22
2.10 COMPLIANCE 28
2.11 PROFESSIONAL QUALIFICATION AND
AND AUDITOR 29
2.12 THE POSITION OF THE INTERNAL COMPANY
2.13 AUTHORITY 31
2.14 RESPONSIBILITY 32
2.15 INDEPENDENCE 33
2.16 MEASURING THE IMPORTANT OF AN
2.17 INTERNAL AUDIT REPORTS 34
CHAPTER THREE: RESEARCH METHODOLOGY
RE-STATEMENT OF RESEARCH QUESTIONS 38
OF THE STUDY 39
AND SAMPLING TECHNIQUES 39
3.6 RESEARCH INSTRUMENTS 40
VALIDATION OF THE INSTRUMENT 40
RELIBILITY OF THE INSTRUMENT 40
METHOD OF DATA ANALYSIS 41
CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND
4.1 INTRODUCTION 43
4.2 SUMMARY OF
4.3 SECTION B; INTERNAL CONTROL EFFECTIVENESS 60
4.4 TESTING AND ANALYSIS
OF HYPOTHESIS 61
CHAPTER FIVE: SUMMARY, CONCLUSIONS AND
OF FINDINGS 65
5.4 SUGGESTION FOR
FURTHER STUDIES 68
1.2 BACKGROUND TO THE STUDY
audit involves the independent examination of an expression person in
accordance with the terms of engagement and the observance of statutory
regulations and professional requirement (Okolie, 2008). According to Milichamp (2003) the primary
objective of an audit is to produce a report by the auditor of his opinion of
the truth and fairness of financial statement, so that any person reading and
using them can have belief in them.
management is a genetic term used to describe the way by which big and
established companies with large networks are controlled of the purpose of
achieving set goals. Management is a
universally acceptable and necessary concept irrespective of whether or not an
organization exists to make profit. It
takes place at all levels in an organization and easy manager performs
essentially the same function whether he belongs to top or middle or first line
management. The difference lies in
magnitude of the task and the scope and degree of the authority. American Institute of Certified Public Accountant,
clearing House (1982) defined management as a process by which scarce resources
are combined to achieve given objective.
It refers to the people that carry out the activities that are the
Put different by
Alter (1996), management may be described as the achievement of organization
goals through people and after resources.
The Manager’s job is to combined and co-ordinate human, material and
technical resources in the best way to achieve these goals. Managers may not be directly involved in
production; they produce to achieve the organization’s set goals. Management indeed is a critical ingredient in
the five MS. Management, manpower,
machinery, money and materials; which are the basic resources of any
management has become complex in recent times.
The emphasis on decentralization, increasing use of delegation of
authority and even in volume of trade has made the art of management so complex
and intriguing that only managers who master the modern scientific method of
management can cope with the increasing demands scientific method of management
can cope with the increasing demand required by the poison. To asses the complexity of the art of
management, in the current increasing wake of business fraud, embezzlement and
the cash squeezes which has crippled many companies because of the Structural
Adjustment Programmes (SAP) and its attended foreign exchange and raw materials
In order to cope
with the current situation and keep their business profitable, management has
to look more inwardly, to increase the profitability of the company and to keep
the overall activity of the company under control. This can only be achieve through good
effective internal control system of which internal auditing is a major
problems and performance of every department in the company.
representative of top management, the internal auditor is interested in
determining whether each branch or department has a clear understanding of its
assignment whether it is adequately stated, maintains good records, protects
cash and inventories and other assets properly, co-operates with other
departments and in general carries out effectively the functions provided for it
in the overall plan and organization of the business.
is disturbed by various problems faced by an internal control system in an
organization. Some of the problems include:
Suppression of information of middle management
Delegation of authority
Non compliance with laid down accounting
considered the needs for a system to ensure the physical assets of a proper management.
Above all, internal
audit department should be created and charges with the responsibility for
monitoring, evaluating and reviewing the system of internal control. This
department, however, is faced with the problem of awareness and growth. It is
only very few staff that know essence and usefulness of this. Department to the
organization in which it operates. Some workers hold it behind them.
institute good control measures that act across the area of business would make
it impossible for the company to detect immediately any abnormality. Fraud and
errors committed in the course also encourage collusion of few staffs in
perpetrating frauds and side tracking normal work procedure.
internal audit improve employee skills, morale and knowledge while otherwise
could resist in laziness and irresponsibility of staff. Also improper
accounting information and reports could lead to poor financial position of an
enterprise if there is no adequate financial data.
can only be ensured through delegation of authority, it is only through a good
internal audit system that the top management can determine the degree of
compliance to delegation authority.
This system of
appraisal and reviews needs to make sure that all delegation duties are being
carried out effective and also that the policies and procedures of the company
are being adhered to. Recession has led to the laying off of workers and this
led to job combination. Too much workload by individual workers leads to
various forms of errors and mistakes. It is the internal control that will
check on errors of recording whether the errors were internal or not.
study therefore investigate internal audit: An aid to management decision with
a case study of Union Bank of Nigeria (UBN).
purpose of this study is to:
To ensure efficient assets and liabilities
To under score the importance of internal
control as a way of encouraging efficient performance through adherents to lay
down organization procedure and accuracy of record.
responsibilities of management are to safeguard assets, to be efficient in
operation and also to produce reliable financial records. Management delegates
some of these supervisors’ responsibility to the internal audit department and
the major function of this department is to help management in performing its
It helps the management of an organization to
achieve some organization goals which include sound and adequate internal
system and efficiency in other system of the organization among others.
Management is responsible for the establishment
of adequate accounting and internal control system.
Internal control system is assigned specific
responsibility for reviewing the design of the system, monitoring their
operation and recommending improvement.
It’ helps to identify the problems and prospect
of internal system.
In the light of
the problems under investigation, the flowering research questions were raised
to facilitate empirical enquiry.
Will internal control system give confidence to
management on its activities?
Does auditing procedure point out material
errors and frauds?
Does internal control system help management to
keep proper control of its activities and responsibility?
Will internal procedure make fraud and
embezzlement less possible?
Is internal system keeping records of
transaction and safeguards assets and liabilities?
OF THE STUDY
work will serve as an individual document for students, business executives,
middle level management staff and other people. The result of the study will
also be very essential to all government offices that are presently witnessing
large-scale misappropriation of funds, fraud and poor accountability.
studies have been conducted on internal audit as an aid to management decision,
it is disappointing after a review of literature to report that very little has
been achieved in checking fraud in most organizations.
This may be as a
result of some of the earlier identified problems. Therefore, the present study
serve as an eye opener to some of the top management authorities to correct all
the identified problems areas.
with the research questions the following hypotheses were postulated and
1. H0: Internal control system does not help
management keep proper control of its activities and responsibilities.
H1: Internal control system helps management keep
proper control of its activities and responsibilities.
2. H0: Internal procedure does not make fraud and
embezzlement less possible.
H1: Internal procedure makes fraud and
embezzlement less possible
3. H0: Internal control system does not give
confidence to management on its activities.
H1: Internal control system gives confidence to
management on its activities.
4. H0: Internal system does not keep records of
transactions and safeguard assets and liabilities.
H1: Internal system keeps records of transactions
and safeguard assets and liabilities
Internal procedure does not point out material errors and frauds.
H1: Internal procedure does not point out
material errors and frauds.
AND LIMITATION OF THE STUDY
This study only
tries to point out the benefits of internal audit to management.
is a component of internal control system; but as already stated this study is
not going to review the internal control system in general, the study will not
concern itself with procedure programmes and the general audit functions, since
it does not intend to audit the organization. This scope of this study will not
extend to the part of internal control system that involved internal audit.
The study was
limited to Union Bank of Nigeria (UBN) within Lagos metropolis and could be generalized to
all the Union Bank of Nigeria
all over the country.
constraint witnessed/encountered in the study is solely on the official
releases of Union Bank of Nigeria Annual report of CBN and NDIC deposit
insurance corporation journals.
terms which have been adopted for this study are operationally defined below:
Aid: to help or something that help
Audit: the process of verifying accounting
records by an accountant (to a third party) to ensure that the accountants,
truly represent the state of affairs a financial audit can be described as a
systematic examination of the financial statements, records and related
operations to determine adherence to generally accepted accounting principles
management policies and statement.
Auditing: Auditing in the broads form may be defined
as a critical investigation to arrive at sound conclusions about accounting for
the financial and operating aspect of an economic organization.
Report; A report replaced by an
accountant which specially must be attached to every income statement and
balance sheet prepared by members of a registered company.
Control: the exercise in the present to achieve a plan
previously drawn up for the future.
imposture, a share.
Audit: The ICAN defined it as a review of operations and records sometimes
continuously undertaken with a business by specifically assign staff it involves
encouragement and monitoring of compliances.
Control: It is defined as
comprising of all plan of organization and all the coordinated methods and
measures. Adopted within a business to safeguard its assets, check the accuracy
of its accounting data promoted operational efficiency and encourage adherence
to prescribed management policies.
Management: the act of managing, directing or of using
anything, skillful treatment of a body of managers.
is people utilization of available resources within the framework of
appropriate legal and moral standards for the maximum achievement of goals and