Internal Audit As Tool For Efficient Management Of Resources (A Study Of Selected MDAs In Plateau State)
Internal Audit As Tool For Efficient Management Of Resources (A Study Of Selected MDAs In Plateau State)
Abstract
This study was carried out to examine internal audit as tool for efficient management of resources using selected MDAs in Plateau State as a study. The study was carried out to determine whether internal audit enhances financial controls in MDAS in Plateau State, determine whether internal audit facilitates effective management resources in MDAS in Plateau State, find out whether internal audit contributes to the effective of utilization of resources in MDAS in Plateau State, and determine the effectiveness of the internal audit unit in MDAS in Plateau State. The survey design was adopted and the simple random sampling techniques were employed in this study. The population size comprise of auditors of MDAs in Plateau State. In determining the sample size, the researcher conveniently selected 65 respondents and 50 were validated. Self-constructed and validated questionnaire was used for data collection. The collected and validated questionnaires were analyzed using frequency tables. While the hypotheses were tested using Chi-square statistical tool. The result of the findings reveals that internal audit enhances financial controls in MDAS in Plateau State. Furthermore,the study also revealed that internal audit facilitates effective management resources in MDAS in Plateau State. Therefore, it is recommended that since internal audit can assist management in meeting its desired goals, there is need for proper empowerment of internal auditors to acquire the requisite skills and technique in order to be able to face the changing complex operation in public sector organizations. To mention but a few.
Table of Content
- Title Page
- Certification
- Dedication
- Acknowledgement
- Table of Content
- List of Tables
- Abstract
Chapter One:
Introduction
- 1.1 Background of the Study
- 1.2 Statement of the Problem
- 1.3 Objective of the Study
- 1.4 Research Questions
- 1.5 Research Hypothesis
- 1.6 Significance of the Study
- 1.7 Scope of the Study
- 1.8 Limitation of the Study
- 1.9 Definition of Terms
- 1.10 Organisations of the Study
Chapter Two:
Review of Literature
- 2.1 Conceptual Framework
- 2.2 Theoretical Framework
- 2.3 Empirical Review
Chapter Three:
Research Methodology
- 3.1 Research Design
- 3.2 Population of the Study
- 3.3 Sample Size Determination
- 3.4 Sample Size Selection Technique and Procedure
- 3.5 Research Instrument and Administration
- 3.6 Method of Data Collection
- 3.7 Method of Data Analysis
- 3.8 Validity of the Study
- 3.9 Reliability of the Study
- 3.10 Ethical Consideration
Chapter Four:
Data Presentation and Analysis
- 4.1 Data Presentation
- 4.2 Analysis of Data
- 4.3 Answering Research Questions
- 4.4 Test of Hypotheses
Chapter Five:
Summary, Conclusion and Recommendation
- 5.1 Summary
- 5.2 Conclusion
- 5.3 Recommendation
- References
- APPENDIX
- QUESTIONNAIRE
Chapter One
Introduction
1.1 Background to the Study
The role of the internal audit function has evolved in reaction to shifts in international corporate practices. Consultation to management and assisting boards of directors to mitigate risk has been emerged as opportunities for Internal Auditors (Mihretet al., 2010; Lenz et al., 2015) Internal auditing improves organization‟s operations as it is an independent activity helping a firm achieve its goals by using a well-organized approach to manage their risk, control and governance efficient and effective (Stewart &Subramaniam, 2010) as the ultimate goal of internal audit is achieve better returns for the organization in shape of improved firm performance (Saud, 2012) . Many of the internal auditors claim that there is a correlation between internal audit function and firm‟s performance. Identification of ways to improve firm‟s efficacy and help in reducing overhead can be possible by effective internal audit. The effective internal audit can also safeguard the firm by potential losses which can impact the performance of the firm. Effective and efficient Internal audit function helps to achieve increased level of shareholders value (Awdat, 2015) An effective internal audit function has relationship with improve financial performance of the firm (Feizizadeh, 2012) . The operations of an organization are developed by efficient internal auditing as financial reports of a firm reflect the attributes of internal audit committee. Furthermore, internal audit plays a vital role in the good governance of an organization. The internal audit function includes monitoring activities taken by the board and audit committee to ensure the credibility of financial reporting (Matarneh, 2011). Authentic and unbiased service provision is the performed by the internal audit for the management, board of directors and audit committee as the stakeholders are concerned about reliable financial reporting and good governance practices of the corporate (Ljubisavljević & Jovanovi, 2011). Multiple studies are indifferent about the effectiveness of the internal audit (Al-Twaijryet al., 2003; Mihretet al., 2010; Mihret and Yismaw, 2007). It probably is the case in underdeveloped economies such as Libya, where firms may not be aware of internal audit‟s concepts as Western societies are (AlTwaijryet al., 2003; Mihret, 2009). In economies like Libya, studying internal audit‟s role in firm performance could provide concrete understanding of internal audit function hence providing support to the country‟s economy, as developing nations have a strong need to perform similar studies to assist in increased general perspective about the significance of internal audit. The need financial compliance service has created the demand for internal audit function in developed economies for the purpose of providing a number of value added services. It is suggested that there is the need to explore the role of internal audit in Nigeria; most previous studies in Nigeria have focused on external audit. Hence, the goal of this study is to investigate internal audit as tool for efficient management of resources (a study of selected MDAS in Plateau State).
1.2 Statement of the Problem
Internal audit is an integral part of internal control system of any organization with financial institutions included; this is evidence by the fact that all other departments are linked with internal audit department. The importance of internal audit system cannot be overemphasized, since organizations have internal audit function as a tool for ensuring effective working of the internal control system. Plateau State Property and Development Company Limited establish and maintain staff of internal audit who are charged with the responsibilities of evaluating the efficiency of operations and determining whether organizational policies are being followed consistently in all decisions of the organization and also their duties as internal auditors if properly carried out shall expose fraud, corruption, financial mismanagement, irregularities and non adherence to organizational policies where they exist. Internal audit will have impact on financial management of the company. From the literatures reviewed, no any research was conducted on internal audit and financial management of Plateau State Investment and Properties Development Company Limited. This research seeks to fill the gap and to know to what extend is the internal audit carrying its functions as a means of control over financial management, and what is the level of professional competence of the audit personnel in discharging its duties.
1.3 Objectives of the Study
The major of this study is to critically examine internal audit as tool for efficient management of resources (a study of selected MDAS in Plateau State). By extension, this study will specifically;
- Determine whether internal audit enhances financial controls in MDAS in Plateau State
- Determine whether internal audit facilitates effective management resources in MDAS in Plateau State.
- Find out whether internal audit contributes to the effective of utilization of resources in MDAS in Plateau State.
- Determine the effectiveness of the internal audit unit in MDAS in Plateau State.
1.4 Research Questions
- Does internal audit enhances financial controls in MDAS in Plateau State?
- Does internal audit facilitates effective management resources in MDAS in Plateau State?
- Does internal audit contributes to the effective of utilization of resources in MDAS in Plateau State?
- What is the effectiveness of the internal audit unit in MDAS in Plateau State?
1.5 Research Hypothesis
- Ho: Internal audit does not contribute to the effective of utilization of resources in MDAS in Plateau State.
- Ha: Internal audit contributes to the effective of utilization of resources in MDAS in Plateau State.
1.6 Significance of the Study
The findings of this research study are significant in a number of ways. First, the study has revealed a number of weaknesses in the Internal Audit Units in the municipals and district management thus the study point out critical areas that require immediate interventions to rectify the anomalies. Second, the study uncovers new knowledge in the area of Internal Audit service within the public institution thus providing a case study for other public institution to learn from. Third, the findings of the study will facilitate informed decision making concern resource allocation in public institution. Lastly, the findings of the current study are crucial in devising monitoring and evaluation mechanisms not only in the studied case but also in other public institution. The researcher wishes to conduct a research on the internal audit and effective financial management of public institutions especially in RRA because the researcher believes that, the research will add knowledge about the internal audit function.
1.7 Scope of the Study
This study is structured to generally analysis internal audit as tool for efficient management of resources (a study of selected MDAS in Plateau State).
1.8. Limitation of the Study
Like in every human endeavour, the researcher encountered slight constraints while carrying out the study. Insufficient funds tend to impede the efficiency of the researcher in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size. More so, the researcher simultaneously engaged in this study with other academic work. As a result, the amount of time spent on research will be reduced.
1.9 Definition of Terms
Internal Auditing:
H. Millichamp (1979) defines it as “independent appraised activity within an organisation foe the review of accounting financially and other operations as a basic of services to management. It is a managerial control, which functions by measuring and evaluating the effectiveness of other control.
1.10 Organization of the Studies
The study is categorized into five chapters. The first chapter presents the background of the study, statement of the problem, objective of the study, research questions and hypothesis, the significance of the study, scope/limitations of the study, and definition of terms. The chapter two covers the review of literature with emphasis on conceptual framework, theoretical framework, and empirical review. Likewise, the chapter three which is the research methodology, specifically covers the research design, population of the study, sample size determination, sample size, and selection technique and procedure, research instrument and administration, method of data collection, method of data analysis, validity and reliability of the study, and ethical consideration. The second to last chapter being the chapter four presents the data presentation and analysis, while the last chapter(chapter five) contains the summary, conclusion and recommendation.
Chapter Five
Summary, Conclusions and Recommendations:
5.1 Introduction
This chapter summarizes the findings on internal audit as tool for efficient management of resources using selected MDAs in Plateau State as a study. The chapter consists of summary of the study, conclusions, and recommendations.
5.2 Summary of the Study
In this study, our focus was to examine internal audit as tool for efficient management of resources using selected MDAs in Plateau State as a study. The study was specifically focus to determine whether internal audit enhances financial controls in MDAS in Plateau State, determine whether internal audit facilitates effective management resources in MDAS in Plateau State, find out whether internal audit contributes to the effective of utilization of resources in MDAS in Plateau State, and determine the effectiveness of the internal audit unit in MDAS in Plateau State.
The study adopted the survey research design and randomly enrolled participants in the study. A total of 50 responses were validated from the enrolled participants where all respondent are auditors of MDAs in Plateau State.
5.3 Conclusions
In the light of the analysis carried out, the following conclusions were drawn.
- Internal audit enhances financial controls in MDAS in Plateau State.
- Internal audit facilitates effective management resources in MDAS in Plateau State.
- Internal audit contributes to the effective of utilization of resources in MDAS in Plateau State.
- Internal audit unit in MDAS in Plateau State is somewhat effective.
5.4 Recommendation
Based on the findings the researcher recommends that;
- Since internal audit can assist management in meeting its desired goals, there is need for proper empowerment of internal auditors to acquire the requisite skills and technique in order to be able to face the changing complex operation in public sector organizations.
- The internal auditors at all level should be adequately independent of members of various departments within the organization so that they can carry out their duties effectively.
- There should be regular evaluation of internal control system in order to determine their effectiveness in operation and identify and report to the appropriate authority the weakness, so that corrective action can be taken. Prompt implementation of internal auditors report will encourage them to improve in their functions.
- The internal control system should be documented and properly communication to all staff of the organization.
- Management should establish and implement periodic review of internal audit unit to ensure that its role and value to the hospital is maximized.
- Continuous professional training and development of internal auditors is necessary. This is because the quality of internal control system is only as effective as the quality of the personnel who performs and implements the controls.
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