THE EFFECTIVENESS OF INTERNAL CONTROL SYSTEM IN THE BANKING INDUSTRY
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
It is interesting to note that “Audit” originated from the Latin word “Audire” which means “To Hear” because in ancient time, the owner of a business used to hear a report made by the Auditor about the book keeping and financial records of hours business. This was because the primitive ways of keeping financial records which inducted making marks on ward, keeping figures off hand without any documentation and back of mechanical aids for calculation, had a lot of problems associated with it. The rudimentary form of checking records of financial transaction could be traced back to the 17th century when civilization came to stage where people began to come on formal business transactions. But such checking was configured mainly to the public account because private audit in the early stages of civilization are rare.
Auditing, as it exists today, developed quite late because the development of accounting was slow as compared to economic theory. The eventual development of auditing was based on a strong determination to conquer problems associated with early beginning of business transactions and to provide an independent and competent report on the state of affairs of the business to their owners. In modern times, audits have been affected the needed to encourage public investment by providing an environment for ensuring that investor found are put into proper use.
Philosophy of auditing put more input on it that the thinking behind auditing principally arose from the management and the consequential need to safeguard the interests of the owners who in all but the smallest of business were not involved in the day-today decisions made by the management. Owing to the enlargement of size and complexity of business enterprise today, the concept and scope of auditing have changed. A comprehensive definition of auditing system given by Robert .E. Schlessor as quoted by Jadish Dakash in his book “Auditing principles, practice and problems” (1990:8) say Auditing is a system examination of financial statements, records and related operations to determine and herences to generally accepted accounting principles management policies stated requirement.
