Internal Auditing As An Instrument Of Effective Management Of Organization (A Case Study Of Nigerian Brewery Aba)

Project and Seminar material for Accountancy

Project and Seminar material for Accountancy


Internal Auditing are considered to be an instrument of effective management of an organization. It is therefore the essential aim of this projects research work to find out through the research hypothesis and questionnaire whether effective use of internal auditing enables managements to achieve their organization objectives or not. Hypothesis was formulated and tested using percentage and statistical techniques.

The percentage table tables were used to analyze the key questions and statement in the questionnaire and also for easy comparison. The major findings of the research were that adequate internal auditing system helps management make second decision.

Table Of Contents

Preliminary Page(s)

  • Approval page
  • Dedication
  • Acknowledgement
  • Abstract
  • List of tables

Chapter One

1.0 Introduction

  • 1.1 Background of the study
  • 1.2 Statement of the problem
  • 1.3 Purpose of the study
  • 1.4 Research questions
  • 1.5 Significance of the study
  • 1.6 Scope of the study
  • 1.7 Limitation of the study
  • 1.8 Definition of terms

Chapter Two

2.0 Literature Review

  • 2.1 Review of related literature
  • 2.2 Brief history of Nigeria brewery plc, Aba
  • 2.3 The Roles And Importance Of Internal Audit Departments
  • 2.4 Area Of Internal Audit

Chapter Three

3.0 Research Methodology

  • 3.1 Research design
  • 3.2 Area of study
  • 3.3 Population of study
  • 3.4 Method and data collection
  • 3.5 Sampling method
  • 3.6 Validity of the instrument
  • 3.7 Method of data analysis

Chapter Four

4.0 Presentation, Analysis and Interpretation of Data

  • 4.1 Presentation of data
  • 4.2 Analysis of data

Chapter Five

5.0 Summary, Conclusion and Recommendation

  • 5.1 Summary of finding
  • 5.2 Conclusion
  • 5.3 Recommendation
  • Reference.

Chapter One

1.0 Introduction

1.1 Background Of The Study

Internal auditing can be defined as an independent appraisal of activities within an organization for the review of operation as a service to management. It is a managerial control function which functions by measuring and evaluating the effectiveness of other controls. The internal auditor objectively examines, evaluates and reports on the adequacy of internal control as a contribution to the proper, economics, efficient and effective use of resources.

Internal audit is the function of records appraising the procedures and organization of a business and reviewing effectiveness of the system of internal check. It is widely accepted that virtually nothing in the society should be spared on independent review. The object is to promote the utmost efficiency and security conducting a business. Attempts have been to trace internal auditing back to ancient times.

Perhaps the greatest stimulus to the development in the U.K was the establishment in the court of the principle that a local authority treasurer is personally accounting funds this led to the appointment of an internal auditor to the treasurer’s staff whose initial task was to perform a pre-audit for the treasurer before the district audit arrived.

However, efficient an organization is set out to be, procedural deadwoods is certain to accumulate unless conscious and regular steps are taken to discard what is out modeled. Once this is appreciated, the internal auditor can work amicably and advantageously as an instrument of management control.

Contemporary internal audit provides a constructive service to all branches of management. It is now concerned to appraise the effectiveness of internal control in operational areas such as production or marketing as well as in the traditional area of accounting and finance.

Internal auditor seeks for effectiveness, economy and efficiency. This is because internal auditors intended to become a better acquainted with the procedures and auditing activities could be carried on, continuously, once a year when outsider auditing services were utilized.

As a further inducement to the development of internal auditing, public accountant were about the same time finding to the expression of an opinion that they could seldom perform the other types of detailed verification as efficiently as could the company own specialist.

1.2 Statement Of The Problem

The problems identified in this area of study include the following:

  1. The funds and properties of the organization entrusted to certain individual employees of the organization in most cubes, these individuals works are not brought under thorough surveillance.
  2. The result is that much of these funds and properties are diverted to personal use.
  3. Measures that could be taken to address the problem arising from these internal auditing, so that it can be effectiveness and reliable tools to management in the performance of its functions.

1.3 Purposes Of The Study

The purposes of this study are the following

  1. To identify the functions of the internal audit department.
  2. To ascertain whether or not adequate and efficient internal control system exists in Nigeria breweries.
  3. To identify problems that hinders the efficient performance in the system.
  4. To suggest solution to these problem.
  5. To find out whether internal auditing is an instrument for effective management of companies.

1.4 Research Questions

Based on the information in the statement of the problem the research question are:

  1. What are the functions of the internal audit department
  2. Does efficient and adequate internal control exist in Nigeria Breweries Plc. Aba?
  3. Are there any problems that hinder the performance of the internal auditing to eliminate these problem departments?
  4. Is internal auditing an instrument for effective management of companies?
  5. What solutions should add to eliminate these problems?

1.5 Significance Of The Study

  1. This research work is expected to be the immense benefit to the management of every organization that has internal auditing department so that the internal auditing can make effective use of the department in their administration.
  2. It also expected to segregate duties this is particularly important in any organization because it prevents both intentional and errors.
  3. This research work is also expected the physical control over assets and records. The most important type of protective measure for safe-guarding assets is the use of physical precaution, such as the use of store rooms and store keepers for inventory to ensure the orderly transfer of material to production processes and to prevent misappropriation.

1.6 Scope Of The Study

The study is restricted to companies in the financial sector. Company performance indices were identified and defined and used to test the effective management of an auditor.

These financial statements were analyzed to examine the influence of this internal auditing as an instrument for effective management of companies.

1.7 Limitations Of The Study

  1. Lack of instrument necessary to carrying out the research work successfully.
  2. Lack of adequate information on the school liberary and magazine
  3. Time constraint; the time set aside for the study is very short.

However, the researcher intends to carryout the study successfully, thereby seeking information from company. It should be public or published when done. It is in most cases not at the appropriate time for a research purposes. It is hoped that both limitation would not affect the relevance of our findings.

1.8 Definition Of Terms

Internal Audit:

Is an element of internal control system set up by management of an enterprise to examine, evaluates and reports on accounting and other control on operations.

Internal Control:

This is the whole system by management in order to carry on the business of the enterprise in an orderly and efficient manner.

Operational Audit:

is an audit that is set for a specific set of operation, for example those that carried out in one department.

Management Audit:

Is an enquiry on the effectiveness and efficiency of management. It is also cackled efficiency or operations audit; it helps to determine whether the objectives of an organization are being achieved under management.

Chapter Five

5.0 Summary, Conclusion And Recommendations

5.1 Introduction

This study was designed to access the role of internal auditing as a tool for ensuring effective management of an enterprise. This chapter shows that the summary, conclusion and recommendations.

5.2 Summary Of Findings

Both internal an external auditing are very vital for effective and efficient management of an organization. Any organization, enterprise, firm etc in as much as the are found enhance cooperate existence and achievement of corporate goals, existence and achievement of corporate goals, internal auditing to take procedure over external auditing in the administrative process. Also it could be noted that adequate internal auditing, facilitates the work of the external auditor.

The following summaries the findings made in he study.

  1. Not all registered firms have internal audit department
  2. Internal auditors report to management on the effectiveness of the system of control
  3. Internal auditor make recommendations to management where necessary
  4. Managaement5 has a high degree of reliability placed on internal audit report
  5. Internal audit helps to implement management polices
  6. An effective internal audit department helps to check fraud and embezzlement of fraud in time.
  7. Resources are effectively utilized that have internal audit department.

5.3 Conclusion

Proper and adequate system of internal audit in the organization is a powerful and dispensable instrument that ensures growth, continuity and survival of the organization.

The following conclusion are drawn from the result of the findings

  1. Internal auditors helps management to fully utilize their resources
  2. Internal auditors enforce management policies and ensure that they are fully implemented.
  3. Internal auditors strictly monitor the system control in other to check fraud and fund embezzlement.

5.4 Recommendations

Based on the findings, the following recommendations are made to firms.

  1. Every firm both private and public should establish an effective and efficient system of control
  2. A monitory team Internal audit department) should be established to monitor the system
  3. Internal auditors should be given the necessary co-operation needed in the exercise of their duties.
  4. Internal auditors should be allowed independence of their own so that they can make report fearlessly. A situation where internal auditors are constantly in fear of utilization for discharging the duties should not exist
  5. This should be a periodic review of system of control to ensure that no loopholes have been developed in the system to accommodate fraud, fund embezzlement and resources wastage.
  6. Internal auditors should receive good remuneration
  7. Internal auditors recommendations should be strictly adhered to
  8. Internal audit staff should be properly trained on their fields of work professional and experiment staff should head to department.
  9. Internal auditors should make their reports more often so as to avoid delay on the part of management on urgent issues.

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