CHAPTER ONE
1.1 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. The problem confronting the
research therefore is to determine the impact of internal audit
efficiency on the financial performance of companies A case study of
Julius Berger PLC
1.2 STATEMENT OF THE PROBLEM
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 and of enhancing the financial performance of the
organisation
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 and of
the firm financial performance. The problem confronting the research
therefore is to determine the impact of internal audit efficiency on the
financial performance of companies A case study of Julius Berger PLC
1.3 RESEARCH QUESTION
What is the impact of internal audit efficiency on the financial performance of companies?
What is the impact of internal audit efficiency on the financial performance of Julius Berger Plc.?
1.4 OBJECTIVE OF THE STUDY
To determine the impact of internal audit efficiency on the financial performance of companies
To determine the impact of internal audit efficiency on the financial performance of Julius Berger Plc.
1.5 SIGNIFICANCE OF THE STUDY
The study intends to provide an appraisal of the impact of internal
audit efficiency on the financial performance of companies A case study
of Julius Berger Plc.
It shall also serve as a veritable source of information on the fundamental issues of auditing
1.5 STATEMENT OF THE HYPOTHESIS
Ho The impact of internal audit efficiency on the financial performance of Julius Berger Plc is low
Hi The impact of internal audit efficiency on the financial performance of Julius Berger Plc is high.
1.7 SCOPE OF THE STUDY
The study focuses on the appraisal of the impact of internal audit
efficiency on the financial performance of companies. A case study of
Julius Berger Plc.
It shall serve also serve as a veritable source of information to managers and other professionals.
1.8 LIMITATION OF THE STUDY
The research was confronted by some constraints which include geographical factor and logistics.
1.8 DEFINITION OF TERMS
AUDITING DEFINED
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.
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.