THE NEED FOR AUDITING AND INVESTIGATION IN SMALL SCALE INDUSTRIES

By

UWHE ROSELINE

Presented To

Department of Accountancy

TABLE OF CONTENTS

Title page ii

Approval page iii

Dedication iv

Acknowledgement v

Table of contents vi

CHAPTER ONE

Introduction 1

CHAPTER TWO

2.1 The need for auditing and investigation 5

2.2 Sole trader and purpose of auditing investigation 7

2.3 Investigation 8

CHAPTER THREE

Recommendation and conclusion 14

3.1 Recommendations 14

3.2 Conclusion 14

Bibliography 15

CHAPTER ONE

INTRODUCTION

Auditing is the process of investigating into the financial records prepared in an organization to ascertain the correctness of the financial statement. Investigation can be described as an inquiry commissioned by a client for some of his purposes. The preparation of the accounts of small scale industries involves the bringing together of the control system.

The idea of auditing came into being when a series of company acts. Announcing in 1844 gradually developed and incorporated as a result of the need of examining the stewardship accounts by independent report annually the result of their findings.

This term paper is described to find out the need for auditing and investigation in small scale industries hence the following problems are stated.

v Lack of adequate knowledge of accounting principles.

v Lack of adequate auditing and investigation

v Lack of professional personnel in the management.

v Inadequate professional independence

Small scale industry are industries that manufactures on small scale basis.

Therefore, the successful operations of this system is a function of the operational efficiency which in itself depends on effective auditing and investigation.

It is the light of the above that this term paper work sought to find the following:

a. Whether the availability of adequate internal control system will affect the audit investigation operations.

b. The role of an effective auditing and investigation system in the survival of small scale industries.

c. How the activities of small scale industries can be improved through auditing and investigation.

The relevance of this study cannot be overemphasized as a successful completion of this study. The need for auditing and investigation in small scale industries is of great help to the proprietors of firms for the survival and substantial growth of the firm.

For a term paper work to be meaningful and for a proper generalization, it should cover a wide ground, unfortunately, lack of resources such finance, time, book, etc militated against the production thereby bring it to a manageable proportion.

Under the companies and allied matters decree of 1990 section 360, the auditor is the report whether in his opinion the balance sheet and profit and loss account gives a true and fair view by finding out whether proper books of account have been kept by the company and proper returns adequate for audit have been received from branches not visited by them and whether the comppany's balance sheet and profit and loss account are in agreement with the banks of account and returns.

Investigation on the other hand can be said to be a proper inquiry. This inquiry is commissioned by the client for the purpose of this. It is one of the non-auditing works. Performed by accountants.

Audit is a Latin word meaning he hears. Nowadays, audit is seen as a process carried out by qualified auditors whereby the accounts of entities includes limited companies, small scale industries, firms, charities are subject to scruting in such details as will enable the auditors to form an opinion as to the accuracy, trust and fairness. This opinion is then embodied in an audit report addressed to those interested parties who commissioned the audit, or to whom the auditors are responsible under statute. Tersely defined, audit is an independent examination of expression of opinion on the financial statements of an enterprise by an appointed auditor in pursuance of that appointment and in compliance with any other statutory obligations.

It shall be the duty of the company's auditors, in preparing their report to carry out such investigations as may enable them to form an opinion as to the following matter whether

a. Proper accounting records have been kept by the company and proper returns adequate for their audit have been received from branches not visited by them.

b. The company balance sheet and (if not consolidated) its profit and loss account are in agreement with the accounting records and returns.

If the auditor are of the opinion that proper accounting records have not ben received from branches not visited by them, if the balances sheet and (if not consolidated) the profit and loss account are in agreement with the accounting records and returns, the auditors shall state the fact in their report.

Every audit of a company shall have right of access at all times to the company's accounts and vouchers, an entitled to required from the company's office such information and explanations as he thinks necessary for the performance of his duties.