IMPACT OF AUDITING AND INTERNAL CONTROL ON THE EFFICIENT PERFORMANCE OF PUBLIC ENTERPRISES
ABSTRACT
Trade credit is one of the most important determinants of success and failure associated in the modern business. It has been observed as an essential marketing tools which boast sales of many companies. The book debt which trade credit creates is an investment in debtors and represents the firms claim an assets. Debtors constitute a light percentage of firms current Assets.
Consequently, an attempt to grant credit to customers means a reduction in the firms cash liquidity. It therefore needs careful analysis and proper management in order to keep the firms afloat and solvents. This work examined the contribution of credit management in relation to the profitability of a company. It expresses some efficient means of making timely collection from credit sales and debtors and also ways in which receivables may be managed efficiently.
CHAPTER ONE
GENERAL INTRODUCTION
1.0 INTRODUCTION
It is generally agreed that the oil boom of the 1970’s encouraged the public sector to play on increasing dominant role in the Nigerian economy. By the beginning of 1890’s the public sector accounted for about 50 percent of the gross domestic product (G.D.P) two third (2/3) of employment in the production sector and maintained about 70 non commercial parastatals and 110 federal commercials, many of which needed financial support to cover operating losses. Furthermore, Nigeria like many other developing countries since independence in 1960 and particularly during the oil boom of 1970’s witnessed a growing involvement of the state in economic activities as a means of fostering rapid economic growth and development.
Public enterprise are organized enterprise set up by the state for certain specific purposes such as employment generation for citizens, revenue generation to the state for provision of essential services to the citizens, economic growth and development, breaking of monopoly etc. Some of which are designed to be profit mating, public enterprise are centered in some cases because their business c an not be efficiently carried out by the government departments and are also unsuitable or unattractive to private enterprise. In Nigeria and other West African countries, the railways supervision of its performance and adherence to guidelines and company corporate policy. In the period of economic crises, the need for accountability becomes more pronounced. The question of effective audit, consequently, is worth examined. How can the management of these public enterprises ensure that the organization resources are efficiently used and as well understand what happen at all level of operation: The most pertinent answer is the installation of internal control system which is an aspect of auditing. Internal control, according to ROBERT,W,U(2001:139) the process by which necessary resources are provided and employed efficiently and effectively towards the achievement of the set goals. According to B N Okezie (2002:74) classified internal control can be likened to the heart which regulates the business blood. Nobusiness can success without effective internal control system. According to MORALITY (1991:4) effectiveness and efficiency of an organization is measure so as to determine the manner its management has control the firms resources.
The attainment of any organizations dreams depends largely on how effective its management is controlling actions of undertaken. If there is proper application of internal control and auditing in public enterprise, assets will be completely safe guarded from waste, fraud and efficient use, error and irregularities will be detected and prevented as well as controlling large sales financial malpractice. On the other hand, a weak and inefficient auditing and internal control system would hardly lead to the achievement of an organization goals. There would be collusion of duties as a result of inadequate segregation of duties the organization could face large scale of fraud either by fraud stars, or by the employees, intentional forgeries, stealing due to unsafe guarded assets. Some enterprises may have to falsify their financial statement in order their deceit by enterprise, an audited financial report may contain among other things the following terms.
1) The financial statements (Balance sheet, income statement and note on accounting conventions and policies)
2) The directors report
3) The auditors Reports
According to Taylor G (1979L430) the fundamental objective of a financial report is to communicate economic measurement of information about the resource and performances of a reporting entity. The auditors opinion on the financial report established and published by the enterprise gives credence to the public and/or investors. On the final note, this research work or study is being conducted in order to find out whether public enterprise produce account and financial accounts fro audit, whether auditing and internal control has a positive impact on the efficient performance of public enterprises, whether audit report comes out yearly in arrears which makes it possible for the use of financial data in management decisions etc giving recommendations where necessary
