SCOPE OF INTERNAL AUDIT FUNCTIONS; CONTEMPORARY ISSUES AND CHALLENGES
ABSTRACT
This project work title assessed “The Scope of Internal Audit Function: Contemporary Issues and Challenges in Federal Road Maintenance Agency (FERMA)” For the purpose of this research work, a survey research was employed by the researcher. The researcher also used random sampling for its sampling techniques. Data collected were presented in a tabular form and analyzed using simple percentage. Two hypotheses formulated were tested using chi-square statistical tool. The study revealed that the Internal Control System or Measure are not enough to prevent of detect errors or omission. Major recommendations of the research study suggested that a frequent review of the system of Internal Control System be adopted so that lapses detected in the system can be corrected or ameliorated.
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background of the Study
Produce financial management is a desire of every government. For this to be achieved, some internal control measures need to be put in place.
Robertson (1979:189) defines internal accounting control: “the means by which errors in accounting data are detect and corrected”
From the above definition, internal control could be said to comprise of the plant of an organization and all the co-ordinate methods and measures adopted within a business to safeguard assets, check the accuracy and reliability of its accounting data, promote operational efficiency and encourages adherence to prescribed managerial policies.
Adeniyi (2004:165) defines internal control system of control financial and otherwise established by the management company in an orderly and efficient manner, safeguard assets reliability of records. This definition recognize that a “system of internal control extend beyond the matter which relate directly to the function of the accounting and financial department”.
An important aspect of the definition worthy emphasis is financial management.
Obamuyi (1998) defines financial management as that managerial activity which is concerned with the planning and controlling of the firm’s financial resources. Financial management as that of total management which is concerned primarily with financial transaction of action, both past and proposed into meaningful and relevant information, for use in the management process. Account journal (195:3). From the foregoing we can equally say that financial management includes the following planning, programming, budgeting, and budget execution.
The audit unit carries out measure in evaluation of activities and account of the establishment so as to provide information about the effectiveness and efficiency of operation of programme and projects. In federal roads maintenance agency, two types of auditing activities are carried on, these are pre – payment and post – payment auditing. Internal auditing viewed the accounting and operating system of the financial reports to ensure their accuracy and adequacy.
1.2 Statement of the Problems
To ensure sound financial management, internal control measure should be introduced. These control measures comprises the plan of organization and all of the coordinating method and measures adopted within a business (public or private) to safeguard its accounting data, promote operational efficiency and encourage adherence to prescribed management policies.
The civil service reforms of 1988 in many aspects was carried at professionalism and to ensure efficient and smooth operation of government activities, the question then is to what extend has the various internal control measures assist in safeguarding government assets, check the accuracy and adherence to managerial policies in federal roads maintenance agency Abuja; Research into these question will bring into sharp focus the strength and weakness of the Auditing unit of the Agency.
1.3 Purpose of the Study
The purpose of the study is to critically review the scope of internal audit function, its contemporary issues and challenges inhibiting the efficiency of internal auditing in the public sectors and suggested ways of removing these challenges.
The specific objectives are:
i. To evaluate the effectiveness of internal audit unit in the federal roads maintenance agency.
ii. To determine the problems facing the internal auditor unit in the public sector of the federal road maintenance agency.
iii. To examine the relationship between internal and external audit in the public establishment.
1.4 Statement of Hypothesis
The designed hypothesis comprises of both null and alternative hypothesis. When an ideal is brought out and is still under investigation it’s either to be true or false leading to the acceptance or rejection it is called hypothesis. This does not become a reality until a research is carried out, trusted and continued to be true.
The researchers therefore, had the following tentative statement based on the project.
Ho: Most of the internal control measures do not significantly meet the overall control objectives.
Hi: Most of the internal control measures significantly meet the overall control objectives.
Ho: The current internal control system in use is not adequate to federal road maintenance Agency.
Hi: The current internal control structure in use is adequate to federal roads maintenance Agency.
Hi: The controls are enough to prevent or detect particular errors or omission?
Ho: Controls are not enough to prevent or detect particular error or omission.
1.5 Scope of the Study
The study aimed at examining the scope of internal audit function (contemporary issues and challenges) in the public sector and its effect on economic development and how effective audit could be carried out in federal roads maintenance agency.
The range of study covers the period between the years 2009 – 2014, 5 years, for examining the scope of internal audit functions, in which the federal road maintenance agency has reported exclusively on the scope of internal audit, contemporary issues and challenges.
1.6 Significance of the Study
The result of the study will be used not only for the purpose of enlarging the researcher’s knowledge but also for the purpose of arriving at recommendations for efficient and effective management control of the project of federal road maintenance agency.
The study is important to the following:
i. The study executive and legislative organs of government especially with their quest to stamp out corruption in the public services.
ii. It is significant to federal roads maintenance agency in particular as it would provide direction for proper and effective control in the uses of its scares resources.
iii. For the public and future researchers in the federal road maintenance agency.
1.7 Definition of Terms
Audit: the independent examination of evidence and the expression of opinion on the financial statement of an enterprise by an appointed auditor.
Errors: unintentional mistake in financial statement whether of a mathematics or chemical nature, whether it to oversight of relevant facts.
Management Audit: A complete audit is best described as one in which the auditor is given or is entailed to unrestricted scope as to work which he is to perform and in which used his own description as to the extent of the detailed work
Partial Audit: A partial audit is an audit in which the auditor is instructed to carry out a partial work only; or is restricted in any as to his power of injury or examination such limitation is always arranged with the audit work.
Public sector Audit: Public sector can be grouped into financial and performance audit (value – for – money – audited).
REFERENCES
Adebisi, A. (2009). Auditing and Investigations, Lagos: Eltoda Ventures Limited.
Obamuyi, T.M. (1998). Financial Management, Lagos: Consulting Venture limited.
Robertson C.J. (1979): Auditing, USA: Longman IAC.
Williams, A. O. (2002). Financial Control in Government Auditing Lagos: ASCON Venture Limited. VOL. 6No. 4, 0ct/ Dec.
