CHAPTER ONE
INTRODUCTION
Background of the Study
The term audit is derived from the words audited, which means to hear. The origin of audit can be traced to the ancient days in Britain where landowners allowed tenant – farmers to farm on their lands.
The landowners did not involve themselves in the cultivation of the land or in the supervision of these tenants’ farmers rather the cultivation of the land was done by the overseers appointed by the land owners.
According to Agbawe (2005) defines audit as an examination and in require into a statement to accounts, the underlying records, document assets and liabilities by an independent person with a view to express an opinion as to accuracy and correctness of the financial statement.
The definition as can observe is restricted to the examination of an expression of an opinion on the financial statement of a organization by an independent person.
The above definition does not include internal audit which involves the examination of the financial statement which can be traced backs to the period of the industrial revolution in Europe with the expansion of business, ownership is separated from control. Accordingly, board of directors are charged with the responsibilities to manage the business or an organization on behalf of the shareholders who in burn appoint the external auditors agrees by the directors as give opinion about the financial reports where there they show a true and fair view.
The American accounting association commitment on basic auditing concept (1971) defined auditing as a systematic process of objectively and evaluating evidence regarding assertion about economic actions and in order to ascertain the degree of correspondence between the result to the interested users. This definition is broad and general because it encompasses both the internal and external auditors. External auditing involves the appointment of the external auditors by the board of directors while the internal auditing involves employment of internal auditors and creation of audit department in the organization. The internal audit department should relate very well other functional unit in the organization.
Osita, (1998) defined internal audit as the independent appraisal of the function and quality of performance of an organization by a specially assigned staff as part of the internal control system. This definition emphasizes more on the function and the quality of the performance required in the internal audit department.
Section 33a subsection one (1) of income tax management act (ITMA) as amended in (1993) states as follows: there shall be a board to be known as the state of board of internal revenue (here) after in this act referred to as the state board, whose operations shall be known and call state internal revenue service’s (here-in-after in this act referred to as the state services). The authority of the state, in the federation to administer income tax management act (ITMA) and the body vested with this authority in each states is the board of internal revenue. The internal audit department can effectively achieve the above responsibilities when there is an efficient internal control system.
This study will be focused on the various problems faced. By the internal audit department in the board of internal revenue of Delta State and also highlight the roles played by the internal audit department.
Most of their roles are delegated by the members of the board of directors appointed by the government who in turn appoint the internal auditors. The project will focus its attention on the legal framework of governmental accounting procedures starting from the Nigeria constitution audit act of 1956 and also the 1999 constitution of federal republic of Nigeria.
Basically, this project will be laying more emphasis on the board of internal audit department of the board of internal revenue Ozoro.
Statement of Research Problem
The system for control as alleged have not been found to be compatible, the lack of understanding of the objectives by the internal auditors have led to unnecessary confusion. Other possible problems involved are improper segregation and assignment of duties to accounting staff.
Lack of assignment and duties to accounting staff, lack of knowledge about proper auditing procedures. The internal auditing techniques and therefore duplication of work of accounting and external auditors.
The duty of the work of internal audit development is so wide of internal audit department is so wide and their operations is so shallow that no effect have been seen in the effort of accountants of the board of internal revenue. Misappropriate of funds, functions names of the payment list, under assessment foregoing of each receipt and imposing of tax arbitrary are some perceived problems.
These issues have been a great concern of the board and government because of the heavy losses sustained as a result of these practices. There is dire need to go into research to find out what need to be done to make internal audit to b more than over effective.
Therefore, the research project will seek to provide ready answer to the under listed burning question;
What form of accounting system and internal control system should be adopted by the auditors?
What are the audit techniques and procedures employed by the internal auditors while carrying out their duties?
What are the qualifications of auditors?
Are the accounting system and internal control measures sufficient and adequate?
