The Role Of Internal Auditors In Fraud Control In A Business Organization (A Case Study Of Champion Breweries Plc Uyo)

Project and Seminar Material for Accountancy / Accounting

The Role Of Internal Auditors In Fraud Control In A Business Organization (A Case Study Of Champion Breweries Plc Uyo)


This research study was conducted to investigate the role of auditors in fraud control in business organization with particular interest and attention on Champion Breweries Plc, Uyo. Staff of Champion Brewery constitutes the population of the study from which a sample size of forty (40) respondents was selected. Three hypotheses were formulated and tested, Chi-square and percentage distribution was the statistical tool used in testing the hypothesis, while questionnaires were the method used for collection of data for the study. The result reveals that internal auditors play a significant role in keeping the organization accounting records in order. They also help in checking fraud. The problem affecting internal auditor in the champion brewery plc Uyo are enumerated.

Table of Content

Preliminary Page(s)

  • Cover page
  • Title page
  • Certification
  • Declaration
  • Dedication
  • Acknowledgement
  • Abstract
  • Table of contents

Chapter One:


  • 1.0 Introduction
  • 1.1 Background of the Study
  • 1.2 Statement of the Problem
  • 1.3 Scope of the Study
  • 1.4 Purpose/objectives of the Study
  • 1.5 Significance of the study
  • 1.6 Research Hypothesis
  • 1.7 Limitation of the Study
  • 1.8 Definition of terms and Acronym

Chapter Two:

Review of Related Literature

  • 2.0 Introduction
  • 2.1 Review of Related Literature
  • 2.2 History of Auditing
  • 2.3 Types of Audit
  • 2.4 Duties /Roles of Auditors
  • 2.5 Who is an Auditor
  • 2.6 Qualities of an Auditor
  • 2.7 Auditors Roles in Fraud Prevention in Business Organization
  • 2.8 Why Fraud Exist in a Business Organization
  • 2.9 The Current Development of the Study

Chapter Three:

Research Methodology

  • 3.0 Introduction
  • 3.1 Design of the Study
  • 3.2 Area of the Study
  • 3.3 Population of the Study
  • 3.4 Sample and Sampling Techniques
  • 3.5 Instrument for Data Collection
  • 3.6 Development of Instrument used for Data Collection
  • 3.7 Administration of the Instrument
  • 3.8 Method of Data Analysis

Chapter Four:

Presentation and Data Analysis

  • 4.0 Introduction
  • 4.1 Presentation and Analysis of Data

Chapter Five:

Summary, Conclusion and Recommendation

  • 5.0 Introduction
  • 5.1 Summary
  • 5.2 Conclusion
  • 5.3 Recommendation
  • References
  • Appendix A
  • Appendix B

Chapter One


1.1 Background of the Study

It is pertinent at this introductory part to note the term auditing I its primitive and rudimentary form can well be traced back to the ancient firms but the term auditing is seen today in its formed state and was established in the later part of 19th century. Originally an auditor was one whom the receipt and payments of an establishment were read.

The definition of auditing came as independent examination and investigation of the evidence from which a financial statement has been prepared with a view of enabling the independent examiner to report whether in his opinion and according to the best of his knowledge, the information and the explanations obtained by him is properly drawn up and gives a fair view of what it report to show if not in what respect he is not the independent examiner who does the investigation and report there upon is referred to as the auditor.

The auditor being an independent examiner who should be professionally qualified examine the book of account and vouchers of the company as will enable him to report whether he satisfied or not that balance sheet is properly drawn upon so as to show a true and fair view of the profit and loss for the financial period.

The role of auditor is rigorous and from the above description of an auditor positions in this dynamic business do represent a true and fair view of financial position and earning and that the accuracy of the account is not distorted by any fraud and error which the auditor came across in the course of auditing. (Normond 2009).

The detection of fraud and error is not the primary responsibility of the auditor in a business organization, is therefore important to note with great concern that the auditors is not absorbed from the responsibility of fraud or error committed by directors or managers of a company.

The auditor must therefore satisfy himself that the accounts are incorrect in the consequent of fraud or error committed in director managers’ consequent upon the paradox position in which the auditors has found himself as regards the detection and prevention of fraud and errors the mechanism need to be instituted the efficiency by which the auditor can rely upon in carrying out his work. This brings us to internal check and control as the system of control, financing and otherwise, established by the government in order to carry on the enterprise business in an orderly and efficient manner. It is design to ensure adherence to management policies, safeguard the assets and secure as fair as possible. The completeness and the accuracy of the records. It brings into play both internal check and internal audit (auditing guidelines 2004).

Historical Background of Champion Breweries Company Plc. Uyo

Champion breweries plc, was incorporated as a private limited liability company on 31st of July 1974 with the name south east breweries limited. Because of political imperative in Nigeria, the company’s name was change from south east breweries to cross river breweries and thereafter to champion breweries limited. The later name, champion breweries plc, on the 1st of September 1992.

On the 20th of November 1974, the government of the south eastern state of Nigeria signed an agreement with Messers Haable Barerie GMBH of Hambling (Technical partner) for the supply and construction of a Turkey Brewery in Uyo with a capacity of 150.00 hectoliters. The foundation stone of breweries was laid on the 19th of March 1975. On 11th December, 1976, the brewery was officially commissioned and its products champion larger beer lunched into the market with success.

On the 22nd of July 1977, a second contract was signed with the technical partners to increase the capacity of brewery from 150,000 10 500,000 hectoliters. The foundation stone for the expansion was laid on the 24th December 1977. The expansion which uncorrupted more sophisticated machinery was completed and put on the trial run in September 1979. The second production line was officially commissioned on the 11thof December 1979, the same year the company’s product “champion ledger beer” and “Champ Malta” won silver medal at an international contest in Paris, France. Champion lager beer had previously won the election for beer and non-alcoholic beverage in Luxemburg.

The champion breweries located at Aka Offot along Nung Udoe Road about 3km from Ibom Plaza, are mainly engaged in production and distribution of champion beer and champion Malta (soft drink).

Consequently upon pressure of demand for its products, the company took a decision to double its capacity to one million hectoliters. This third expansion which gulped substantial resources could not be realized. The non-completion of the expansion programme coupled with lack of working capital, and inadequate maintenance of the plants forced the company to close its doors for business between 1990 and 1991. All subsequent reactivation attempts did not yield desired result.

With the advent of democracy in Nigeria in May 1999 the government of Akwa Ibom State made reaction of the brewery a cardinal activity.

Consequently, Akwa Ibom investment and industrial promotion council (AKIIPOC) was charged with responsibility to reactivate the company pursuance to this mandate, AKIIPOC, in conjunction with the board of directors of the company went to the market to solicit for core investor technical managers. In process, Messrs, Montgomery ventures incorporated of Paroma (with offices in Geneva, Switzerland was identified and brought into the company as core investors/technical managers after a memorandum of understanding was signed.

Based on a memorandum, reactivation committee was set up by the board of the company to work with the core investors and technical managers for revamping of the company.

The reactivation process, which commenced in February, 2000, lasted about nineteen months. Now the plants has been revamped and restricted to use one hundred percent locally sourced raw material. The brewery is now fully operational and the capacity is 500,000 hectoliters per annum.

The reactive brewery was officially commissioned on 23rd October, 2001. Champion larger beers is now in the market and doing well, other products of the company including Champ Malta will follow soon. Already the company has successfully held an extra-ordinary general meeting of the shareholders during which approval was given for authorized share capital of company to be increased from N26 million to N 45 million. The second phase of the reactivation programme has begun already. The aim is to diversify the company’s product and bring the capacity to 1,000,000 hectoliters per annum.

Moreover, the company has been able to create employment opportunities for both the people in the locality and Akwa Ibom State at large.

The staff strength is three hundred (300) which is made up of administrative, personnel, finance, marketing and operations.

1.2 Statement of the Problem

The research attempts to investigate the problem of the role of internal auditor in a business organization such as lack of independence, confidence among others. How the combine effect of these problem hinder the organizational progress. The negligence of auditor’s reports by management also constitutes a problem.

1.3 Scope of the Study

The study was Concentrated on the structure of auditors’ role in a business organization. The study will also go further to deal with the role of internal auditor’s fraud control, type of an auditor, who is an auditor, duties/responsibilities of internal auditors and so on.

1.4 Purpose / Objective of the Study

The purpose and objective of the study are:-

  1. To know the role of internal auditors in a business organization
  2. To evaluate whether auditors’ role is important in a business organization.
  3. To know the contributions of internal auditors to the progress of an organizations. To identify the possible causes of fraud in champion brewery plc. Uyo of which auditors try to prevent.
  4. To evaluate the procedures of auditing by internal auditors of champion brewery plc. Uyo and finally to know the reason auditors role has failed to prevent fraud in champion brewery Plc Uyo.

1.5 Significance of the Study

  1. It will increase and expand the knowledge of prospective students of accountancy on the role of internal auditors in a business organization.
  2. Proffer solution thereby trying to solve problem arising from the role of internal auditors in business organization.
  3. It will definitely serve as a reference point of criticism for further research.
  4. It will suggest and also proffer solutions which will help moderate and regulate the role of internal auditors in a business organization.

1.6 Research Hypothesis

  1. HO: Internal auditors do not play any important role in an organization.
    HI: Internal auditors play very important role in an organization.
  2. HO: internal auditors do not help in keeping proper and efficient financial record in an organization.
    HI: internal auditors do help in keeping proper and efficient financial record in an organization.
  3. HO: internal auditors do not help in checking fraud and error in an organization
    HI: internal auditors do help in checking fraud and error in an organization

1.7 Limitation of the Study

The lack of time and finances, the unavailability of reliable and authority’s texts by authorities in the field of auditing were some of the limitation of the study. Again most people are skeptical when it comes to giving out information especially such that is required for a research work like this.

1.8 Definition of Terms and Acronym

a) Audit:

Audit is interpreted to mean an independent examination of an expression of an opinion on those financial statements so examined by external audit regarding a firm’s financial position at a particular period and to ensure that all applicable laws, regulations and policies and complied with Akpakpan 2002.

b) Audit Report:

This is a communicated statement of opinion (judgment) based upon convincing evidence by an independent, word potent and authoritative person concerning the degree of correspondence, in all materials respects of accounting and information communicated by the entity (individual) companies government unit) established (American committee of auditor concept, Okezie 1991)

c) Business Organization:

This is a business unit or an enterprise that undergoes business transaction with the aim of making profit.

d) Fraud:

The crime of deceiving somebody in order to get money or goods illegally, a person who pretends to have qualities, abilities etc. that they don’t really have in order to deceive other (Advance Learners Oxford Dictionary 6th Edition 472)

e) Error:

A mistake especially one that causes problems affects the result of something.

f) Accountability:

This mean keeping proper records of revenue or income and making remittance to the account (Anyanwu, 1997:27).

Chapter Five

Summary, Conclusion and Recommendation

5.0 Introduction

This chapter which is the last and 5th chapter will look at the summary of the study, the conclusion and the recommendation of the study.

5.1 Summary

This study was an investigation in the role of internal auditors in fraud control in a business organization using Champion Breweries Plc, Uyo, Akwa Ibom State as a case study.

In this study hypothesis were used, formulated to guide and determined the validity of the study with the help of a well designed questionnaire, which was used for data collection and administration to 40 members of staff of the company who formed the population of the study. Data collected was analyzed using Chi-Square X2 analysis.

5.2 Conclusion

A culture must be developed in Champion Breweries Plc, Uyo, Akwa Ibom State, where fraud will not be tolerated. Senior management staff should set the example for other employees to follow.

Conclusively, from the study, the objective of this research work can readily attain where the possible causes of fraud is checked through employee attitudes of stealing in the company, prompt/regular audit checks will also limit the rate of fraud. Employment of trained professional accountants as internal auditors will help prevent fraud.

Assessing the reasons why auditors role has failed management should completely and clearly defined administrative procedure for internal and external auditors to enhance fraud prevention as well as removing defrauded staff from the employment of the company is hoped will make the role of internal fraud control in Champion Breweries Plc, Uyo, Akwa Ibom State an acceptable effort.

5.3 Recommendation

Adequate and internal control system that provides check and balance sufficient to prevent or detect fraud and irregularities is required in an organization.

Internal auditors should carryout fraud auditing as this pro-active way of detecting and determining fraud. Professional as well as academic qualification to ensure that internal auditors posses a constructive and analytical ability, a mastering of modern auditing procedure and practices with excellent knowledge of accounting language of communication prompt auditing is recommended, the system that an audit will start when accounting work is completed and involvement of non-qualified accounting personnel in audit work should be reviewed.

The opportunity to commit fraud is psychological more acceptable when employees believes that fraud will normally undetected, new employee should be advised on the danger of fraud at the time of orientation programme.
The consequences of employment termination should be clearly stated out during such briefing.

Finally, fair practices in personnel matters including screening compensation and performance reviews, handling of grievance rotation of duties where feasible should encourage and practiced.

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