The Effect Of Internal Auditing In The Management Of Organization Resources (A Case Study Of Imo Concord Hotel Owerri, Imo State)

Project and Seminar Material for Accountancy / Accounting

The Effect Of Internal Auditing In The Management Of Organization Resources (A Case Study Of Imo Concord Hotel Owerri, Imo State)


This is devoted to ascertaining the effect of internal auditing in the management of organizational resources: a study of Imo Concorde Hotel, Owerri. A major problem which is the inefficiency and ineffectiveness of staff in the internal audit unit and the lack of independence of the unit has posed a great impact in the employed includes personal interview, written questionnaire, and library research while data are analyzed using tables and percentages. Various recommendations were made in a bid to improve the efficiency of internal audit in the management of the organizational sources. The economy today is characterized by incessant frauds, forgeries, and mismanagement of corporate assets. This though a global phenomenon has recorded an outstanding growth in the university segment of the country which becomes a threat that calls for prompt appraising of the internal control system in the institution. Internal audit as an integral part of the internal control system is however weighted down by a lot of factors. The inability to reconcile the accounting system regularly is more or less a haven for fraudulent and scrupulous staff. The point, therefore, is that internal audit should be hastily equipped with competent and qualified staff and modern facilities so as to make it effective in the management of organizational resources.

Chapter One

1.0 Introduction

1.1 Background Of The Study

The development of modern auditing should be credited to the great expansion in industries and institutions which have took place during the industrial revolution. At that time when there were small business transactions and proprietors took active part in the management of their business, Hold/Hospitality segment were not developed and they fully were not utilized by most Nigerian citizens because they have not discovered the values, hereby limiting the financial reasonability of such organization. It was perhaps fact that there was little or no need for auditing.
However as business transactions increased in Hotel/Hospitality segment, government channels few percentage of their budget towards the segment, where shareholders are not the managers to account for their capitals, the need for the managers to account to the government and shareholders became necessary. In order words the origin of auditing is as a result of the separation of ownership from control. It was instituted to protect the interest of ownership by ensuring that financial statements are justified. Since ownership has been separated from control, the need for those managers entrusted with the owners financial economic resources to present their financial reports to their employers. The result or reports might contain errors, non-disclosure of relevant information frauds, and other regulations. For his reasons, the owners may hold some reservation is about the creditability of the managers reports. For the satisfaction of the owners and justification of the managers reports it becomes necessary to invite on independent person, who did not partake in the preparation of the reports, for the purpose of examining and expressing an opinion as to the truth and fairness of the reports.

The independent party’s duly is not just mere examination of the account from which the financial statement were prepared, rather includes collection of all relevant information necessary to satisfy section(s) of (CAMA). Many professional bodies in accountancy, auditing and various scholars have offered definition and explanation as to what audit actually means.

Kwame Gyasi (2010:16) an internal guide to auditing, defines auditing as “the independent examination and investigation of the evidence from which a financial statement has been prepared with a view to enabling the independent examiner to report whether in his opinion and according to the best of information and explanation obtained by him. The statement of property drawn up and gives a true and fair view from this definition it can be deduced that auditing is the processes of assessing the financial statement of an organization or association which the person undertaking the task is not a member of the organization, with the aim of ensuring that these financial statement were truly prepared from the actual records of financial events and the statement truly represent the financial position of the organization.

1.2 Statement Of The Problem

The primary and goal of establishing any business is for profit making, whereby the track is missed, the business will face downright collapse”. One of the major factors affecting management of resources is terms of government establishment is lack of effective internal control system which is as a result of internal audit. Many organizations have collapse due to the ineffectiveness of their internal control system which leads to ineffective administration incompetence in accuracy of those holding position of authority on trust. Many corporate organizations that do not establish internal audit department for the purpose of internal checks and balances have encountered high rate of fraud, inaccurate and incomplete records. Some organizations have internal audit department but due to the fact that the technical man power is defective they have encountered the above mentioned problems or loopholes in their internal control system. All these problems mentioned above pose a lot of difficulties to the organization in achieving their organizational goals. In the high of the above, thus is the matter of great concern to the research by finding and showing the effective of internal audit in the management of the organizational resources.

1.3 Objective Of The Study

  1. This study will enlighten the reader or the general public about the effect and needs to establish internal audit unit in an organization.
  2. Managers and investors will also through this work know the value of internal audit reports present to them.
  3. It also helps investors to tackle mishandling of funds, fraudulent act and inappropriate use of their capital and assets.
  4. Finally, this study assists researchers an related topics, business students and readers in widening their knowledge

1.4 Research Questions

This study is designed to proffer answers to the following questions.

  1. What are the effects of internal audit in an organization
  2. What are the duties of internal audit department
  3. What are the problems encountered by internal auditors in the course of their work functions affect the organization
  4. To what extent does internal audit influence decision making process in an organization

1.5 Statement Of The Hypothesis

This is the consideration of problems stated above and the objective of the study shows that the researcher performed the following hypothesis.

Hypothesis One
  • Ho: Internal audit has a negative effect on the organization
  • Hi: Internal audit has a positive effect on the organization
Hypothesis Two
  • Ho: An internal auditor does not play major duty in the organization
  • Hi: An internal auditor plays major duty in the organization
Hypothesis Three
  • Ho: Lack of internal audit function does not affect the organization
  • Hi: Lack of internal audit function affects the organization a great deal.
Hypothesis Four
  • Ho: Internal audit does not influence decision making process in the organization
  • Hi: Internal audit influence decision making process in the organization to a great extent.

1.6 Significance Of The Study

Internal audit is very important in every organization because it leads to effective internal control system and as well enables external auditors in carrying out their work with ease.

Therefore, this study is designed to:

  1. Reviewing the existing literature on auditing with emphasis on internal audit
  2. Outline the useful of internal audit in an organization
  3. Find out problems which internal auditors may encounter in their course of their audit
  4. Ascertain the duties of internal audit department in an organization

1.7 Scope Of The Study

This study covers the effect of internal auditing on the management of an organizational resource. It uses Imo Concord Hotel Owerri as a case study and focus on the Accounting Department especially the audit unit.

1.8 Limitations Of The Study

Some problems were in encountered during the study preparation. This limitation are natural because it does not go easily in this life expect through the intervention of the almighty.

The researcher encountered financial problems in transportation to source for information. Some relevant information was not disclosed due to the fear of insecurity of these facts. Information should be released by organizations in other to help the researcher and also on time.

Government should through school management assist researcher either by providing materials needed for the research or provide financial support.

1.9 Definition Of Terms

The following terms are deferred for the sake of interested readers who are not familiar with them.


This is an independent examination of and the expression of opinion on the financial statement of an enterprise, by an appointed auditor in pursuance of that appointment and in compliance with any relevant statutory obligation


These are the business owners in those whose capital or resources are being managed by the managers whom they employed.

True and fair view:

True and fair view in auditing means that the financial statements are free from material misstatement and faithfully represent the financial performance and position of the entity.


A fraud is an act of deception or lacking trust and originality which is aimed at or arrogant to oneself what does not belong to him or others, falsification, defalcation, embezzlement and misappropriation of funds etc.


Digging into the source and cause of an issue


It means not depending or relying on someone ie not being controlled or influences by another person or thing in the course of carrying out your duty.


It means not being influenced by personal feelings or opinion while carrying out an assignment.

Chapter Five

5.0 Summary, Conclusion and Recommendation

5.1 Summary of Findings

This is an investigation study on the effect of internal auditing in the management of organizational resources. While the work was going on, research questions were formulated and used to prepare the questionnaires and copies of the questionnaires were distributed to the account department, which consist of the account audit and administrative staff.

The data collected from (30) thirty staff were analyzed and presented in a tabular form using percentage. Through the analysis of data, the researcher was able to discover the usefulness of internal audit function in the organization and following findings were made on the activities of internal audit unit, it was discovered that the unit was engaged in the following operations.

  • Stock verification
  • Checking of accounting records
  • Evaluation of various department
  • Detection of errors and fraud
  • Provision of management function
  • Ensuring implementation of management policies in relation to the use of resources

5.2 Conclusion

Based on findings and the above discussion, the following conclusions were made;

  1. Imo Concorde hotel, Owerri, sees internal audit very vital in operations
  2. The organization under study perceived some element of ineffectiveness in the internal audit department ie in their internal audit programs
  3. There are various forms of problem bindering the full effectiveness of the internal audit program
  4. The effectiveness of the internal auditor can be boost by increasing the independence in the operation of the internal audit unit
  5. The employment of proper staff training programs would make the internal audit more effective
  6. Though internal audit is recommendable, important and necessary, it requires carefulness and honesty
  7. The practice of internal auditing has continued to gain wider-spread recognition on in many organization
  8. Though internal auditing is widely practiced in many organizations, it is relatively new and seems associated with the large and medium organization

Based on the aformented point, we can draw a conclusion that the establishment of internal audit department be put into consideration in every organization if the organization must achieve its target.

5.3 Recommendation

The following recommendations are made on the basics of the findings in the study.

  1. The organization under study should review property their staff, recruitment, development and training programs for their internal audit unit capable and experienced staff
  2. The internal audit unit of the organization should be more independent in their operations. This requires more authority of the internal audit unit to enable them discharge their duties without fear.
  3. Internal audit programs should installed in every business organization irrespective of the sector and size. This is to improve the effective internal control on the organization especially in stock taking and cash defalcation which have characterized our businesses today.
  4. Finally in large companies and organizations, it is advisable that the activities of the internal audit be expanded to cover the whole operation of the business that is, making internal auditing more comprehensive.

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