THE EFFECT OF INTERNAL AUDITING IN PRIVATE ENTERPRISE (A CASE STUDY OF CHAMPION BREWERIES
1.1 BACKGROUND OF THE STUDY
Auditing can be said to originate alongside trade and accounting as far back the earliest civilization era of the medieval period. Back then, there were no records kept and thus auditing and accounting took place orally and owner of private employed the services of care takers to whom they entrusted their assets and money to. At a certain period of the year, the owner of the private may call open the care taker to make account of what the company or the private has gain and expenses it’s incurred on the course of operation up to the date of enquiry. This was one of the accounting and auditing method use in private transaction back then in the middle era of civilization.
From the medieval era through industrial revolution, audits were made to determine whether persons in position of financial and fiscal responsibilities in government and in government trading were carrying of their tasks of management and financial reporting with integrity and Honesty (Gyasil, 2002). As industrial revolution of private increase in size and diversities, private owners attempt to employ managers to manage their private for them, For proper accountability, the private owners employed the service of a third party who is completely independent in carrying out its own task, thereby, aiding the private owner not to liquidate by carrying out investigations into the managers activities and private transactions of the entity.
However, before the 20th century, the objective of the auditing activities was to check out for fraud and now in the current era, it’s for fraud detection and determining whether financial statement give a true and fair view of financial position of entreprise.
However, internal auditing emerges later in entreprises as a result of extended span of control the management faced in employing thousands of people and maintaining a perfect private operation from widespread location and parastatals with the aim of:
- Detecting fraud, embezzlements among other forms of financial misappropriation there curbing with corruption, bankruptcy and insolvency of government private units.
- To provide the true and fair view of financial position of government ministries, so has to provide share holders & government at all levels the confidence that & money worth vested are properly utilized.
Also, in the current economic situation, entreprise seeks the services of auditor either internal or external to make an independent examination of their books of account. For example, if the management of Breweries looks at the books of account of its entreprise and assigns the internal auditor to conduct investigations, the accountant of the entreprise will be at fear and it’s the general reason why auditors are seen as enemies officers who prepared account & record (Asukwo, 2003).
The discovery of possible fraud and embezzlement in most books of account and records are bye product of a well planned and properly conducted audit, its is therefore the responsibility of the Breweries management to ensure that the operation of the Breweries are constantly check by the internal audit unit to ensure that the whole system of operation are error free.
1.2 STATEMENT OF THE PROBLEM
What gives a way for this research to be carry are the frequent fraudulent activities in several enterprises especially profit making enterprise like, manufacturing companies and other service enterprise in which fraud ,embezzlement and other criminal activities took place. This research work is carryout to find solution to this problems and their cause in which privates are faced daily.
Secondly, one of the factors that aid in carrying out this research work is the poor internal control system put in place by some enterprise, in which its gives way for theft in several enterprise. This research work is to find solution on how to solve some internal control problem faced by many enterprises today.
1.3 OBJECTIVE OF THE STUDY
The objectives of this study are as follows:
- To ascertain the role of internal auditing in enhancing the performance of private entreprise.
- To identify the cause of poor internal auditing in many entreprise
- To determine whether proper internal auditing has good influence on private of entreprises.
- To ascertain the audit practices and techniques employed to check if they have direct bearing on the efficiency of audit.
- To recommend ways that will help private entreprises; champion Breweries PLG, particular on how to improve on its internal audit practices.
1.4 RESEARCH QUESTIONS
- What role does internal auditing plays in enhancing performance of private entreprise?
- What are the cause of poor internal auditing in many entreprise?
- Doses proper internal auditing has good inference on performance of private entreprise?
- What are the various auditing practices and techniques employed to achieve efficiency during an audit exercise?
- What are the recommendations that will help improve internal auditing in the entreprise?
1.5 HYPOTHESIS OF THE STUDY
The hypothesis are therefore formulated to provide answer to the research questions. There are:
Ho: Lack of auditing in private cannot lead to fraud
Hi: Lack of auditing in private can lead to fraud
Ho: Poor internal auditing cannot lead to entreprise’s windup
Hi: Poor internal auditing can lead to entreprise’s windup
Ho: An enterprise cannot experience low profit without the effect of internal auditing.
Hi: An enterprise can experience low profit without the effect of internal auditing.
1.6 SIGNIFICANCE OF THE STUDY
This research would be useful to different enterprise in the implementation of some of the recommendation of this study in improving their internal audit practice.
This study will help management of enterprise in designing what will be effective enough to detect & prevent fraud
This study will no doubt add to the body of existing knowledge on the area of auditing as the basic function & activities of internal audit will be made to be understanding well in providing the basis for setting of standard as for the required kind of skills necessary for an internal audit assignment.
This research will be of immense importance to future researcher, such as students etc. in the area of auditing as this could serve as a reference material.
1.7 SCOPE OF THE STUDY
The research is limited to champion Breweries plc, Uyo, audits focuses on its internal auditing. The finding of this study many not be necessarily generalized, due to the different management strategies reviling in various breweries industries.
The analysis, when made, would involve a review of the exiting system, identification of problems, critical analysis of the system modification of the existing system through recommendation and comments.
They study will not create a theoretical system nor avocation for a non-practical approach to problem solving. However, the researcher would tap on her personal experience when solving practical problem presented by the research.
1.8 LIMITATION OF THE STUDY
The inability of management to divulge certain information which considered sensitive, the publication of which might be determined to their operations proved to the limitation on the study. Distance and its attendant cost of traveling in order to obtain information with which to write this Research was also a major limitation.
THE EFFECT OF INTERNAL AUDITING IN PRIVATE ENTREPRISE (A CASE STUDY OF CHAMPION BREWERIES