INTERNAL AUDIT A TOOL FOR PROPER MANAGEMENT CONTROL

By

ODOEZE BLESSING. N

Presented To

Department of Accountancy

TABLE OF CONTENT

Title page

Approval page

Dedication

Acknowledgment

Table of content

CHAPTER ONE

Introduction

1.1 Background of study

1.2 Definiton of audit

1.3 Objective of auditing

1.4 Types of auditing

CHAPTER TWO

Literature review

2.1 Internal audit

2.2 Function and role of internal audit

2.3 Relationship between internal and external audit

2.4 Internal audit as a tool for proper management control

CHAPTER THREE

Summary, conclusion and recommendation

3.1 Summary of findings

3.2 Conclusion

3.3 Recommendation

Bibliography

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF STUDY

Internal control means the who system of control, financial and otherwise, established by the management in order to carry on the business of the enterprises in an orderly and efficient manner, ensure adherence to management policies, safe guard its assets and secure as fare as possible the accuracy and reliability as its records internal audit and internal check are part of the internal control.

Formerly, industries or establishment were small and could be controlled by the management alone. As a result of tremendous expansion of these industries or establishment coupled with increase in the scope of management function required to cope with the situation, management could not coordinate all the activities alone.

There was therefore a great need for an assistant to be attached to the management for this purpose. Internal audit being an internal part of internal control system was also established to assist management in advisory capacity.

1.2 DEFINITION OF AUDIT

An audit may be described as an examination by an auditor of the evidence from which the final revenue accounts and balance sheet of an organization have been prepared. In order to ascertain that they present a true and fair view of the summarized transaction for the period.

Under view and of financial state of the organization at the end data thus cutting the auditor to report there on.

Examining the definition as little more closely it will be observed that the auditor examines the evidence i.e. mainly the books accounts and vouchers of the establishment. But, in certain circumstances may be necessary for the auditor to give go even further in his examination e.g. to examine actual assets held.

Such definition often refers to the ascertainment of the true and fair view of the profit or loss for the period, but it is felt that the form going wording is more inclusive since many organization, such as those of men trending bodies, do not use the term profit or loss but rather an excess of income over expenditure ( or vice - versa).

Further, not only are the end figure of a revenue account important in the but the constituent part of the revenue account must also gives a true and fair view of the transaction, the represent. It is important to remember that examination must be such as to enable the auditor to report thereon.

1.3 OBJECTIVE OF AUDITING

The main object of an audit is the verification that the account on which the auditor is reporting gives a true and fair view of the affairs, of business with its operation result devoid of any misleading fact as spelt out in the companies and Allied matters decree (1990).

The decree required the auditors to give his opinion as to:

v Whether proper accounting records have been kept

v Whether the financial statement prepared there from are in agreement with the accounting records. There after the can express his final opinion as to whether it is true and fair or not in his audit report.

1.4 TYPES OF AUDITING

There are four types of audit:

Statutory audit

These are audits carried out because the law required them statute which requires audits to be done include the companies Act 1998, the building society Act 194 and 1992 and others of no examination importance.

Private audit

The private audit is conducted into firm's affairs by independent audits because the law requires it. E.g. are audits of the account of sole traders and partnerships.

Internal audit

An internal audit is conditioned by an employee of a business into any aspect of its affairs.

Management audit

A management audit is an enquiry into the effectiveness of management.