THE IMPACT OF INTERNAL AUDIT IN NIGERIA MANUFACTURING INDUSTRIES (A CASE STUDY OF HERITAGE PURE WATER INDUSTRIES LTD ILORIN KWARA STATE)

TABLE OF CONTENT

TITLE PAGE                                                                             PAGES

CERTIFICATION                                                                                 I

DEDICATION                                                                                II

ACKNOWLEGMENT                                                                  III

ABSTRACT                                                                                  IV

TABLE OF CONTENT                                                                  V

CHAPTER ONE

INTRODUCTION

• BACKGROUND OF THE STUDY 1
  • STATEMENT OF THE STUDY            3
  • JUSTIFICATION OF THE STUDY 4
  • OBJECTIVE OF THE STUDY 5
  • STATEMENT OF HYPOTHESIS 5
  • SCOPE OF THE STUDY                                 6
  • SIGNIFICANCE OF THE STUDY 6
  • PLAN OF THE STUDY 6
  • DEFINITION OF THE STUDY 7

CHAPTER TWO

LITERATURE REVIEW

• INTRODUCTION 10
  • CONCEPT OF AUDITING 11
  • TYPES OF AUDITING 12
  • SCOPE OF AUDIT IN MANUFACTURING

COMPANIES                                                                       15

• INTERNAL AUDIT IN MANUFACTURING       COMPANIES                                                                       16
• IMPACT OF AUDIT ON THE MANAGEMENT OF MANUFACTURING COMPANY                                      17

CHAPTER THREE

RESEARCH METHODOLOGY

• HISTORICAL BACKGROUND OF HERITAGE PURE 20 WATER
  • INTRODUCTION 21
  • RESEARCH DESIGN 21
  • POPULATION AND SAMPLE SIZE 21
  • TYPES OF DATA AND METHOD OF DATA 22   COLLECTION
  • RESEARCH INSTRUCTIONS 22
  • METHOD OF DATA ANALYSIS 23

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

• INTRODUCTION 26
  • ANALYSIS OF DATA 26
  • HYPOTHESIS TESTING 36
  • INTERPRETAION RESULT 40

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

• SUMMARY 42
• CONCLUSION                                43
• RECOMMENDATION 43

BIBLIOGRAPHY                                                                          45

CHAPTER ONE

INTRODUCTION

• BACKGROUND OF THE STUDY

Companies or organization take a unque position in an economic setting by virtue of their position in terms of goods and services. The growing complexities in the organizations have necessitated the need for a functional and effective internal audit before the ultimate statutory audit. This is because of the incessant reports of frauds and misappropriation of fund in manufacturing companies.

The origin of auditing emanate from the separation ownership from control; inspite of this is became necessary for the manager entrusted with the financial and economic resources of business to present their financial report to the employers.

Auditing is viewed from one of the primary means by which accountability can be ensured to the financial statement.

Auditing, according to Walter(1970), is therefore said to be such an examination of books and accounts and vouchers of a business, as it will enable the auditor to express his opinion as to whether the balance sheet is properly drawn up, so as to give a true and fair view of the state of affairs of the business and that the profit and loss account give a true and fair view as the profit and loss for the financial period according to the best of information and explation given to him and as shown by the books to report otherwise if not satisfied.

Professional auditing grow and develop in England, whose first organized accounting body was formed in Nigeria, the institute of chartered Accountants of Nigeria {ICAN}was established by the act of parliament number 15 of 1995. Then, the idea was sold by Mr. Herbert keeling a qualified accountant who was visiting Nigeria as a delegate sent by British council on a specific assignment. The vision comes into reality whom an association known as accountants of Nigeria was formed. The association was incorporated on November 17, 1960. There is the need for auditing in manufacturing companies so that financial control can be carried out.

Internal auditing therefore, can be define

ed as an independent appraisal of activity within an organization, for the review of operation as service to management. It is a management control which function by measuring and evaluating the effectiveness of other controls.

Hence, internal auditing as a process can thus, be seen as a review of the accounting and internal  control system of an enterprise in order to highlight their weakness to management so that correction can be effected appropriately and promptly.

This research work is to contribute to the understanding that to ascertain whether internal auditing is appropriate as a management tool and to also promote the understanding that the primary objective of the internal auditor is not to detect frauds ao error, but if in the process of audit the auditor detects any error or frauds he/she is to report to the appropriate authority usually the management {as bond by the professionals

1.1    STATEMENMT OF RESEARCH PROBLEM

In any organization, private or public the impact of internal auditing are desired, important as it can positively or negatively effect the effectiveness in any organization of company is the check and control issue so that fraud and irregularities can be at lost minimized.

In manufacturing industries case of fraud and mismanagement of frauds by the serving public official managers, e.t..c soon to have gone unnoticed despite the fact that periodic audit exercise is being carried out. So, to stop or minimize found or mismanagement of fund in any manufacturing company, the service of an auditor is greatly needed. This will increase the strength of the company and also their level of productivity will increase.

Can audit be relied on as a check against fraudulent act? And if so, is the environment conducive for the performance of their duties? i.e the auditor.

These questions are what brought about the issue of how effectively and efficiency is the internal auditor evaluating the internal control of the organization to ensure the efficient management of manufacturing companies.

• JUSTIFICATION FOR THE STUDY

This research work is justified as it provide answer for the evaluation of the role of national audit in the company, to see and test its ability of compliance with policies, laws, procedures and regulation.

To evaluate its effectiveness in checking the security and extent to which assist of the company is safeguarded.

In addition, this study will be useful to the following group: students, companies and educational setting would benefit from this study; in such a way that it serves as a basis in their related research topic, giving recommendation to companies especially manufacturing companies. It will also enable the audit department of an organization to detect the position lapses that must have existed in the system and for corrective actio0ns to taken when and where necessary

• OBJECTIVE OF THE STUDY

The main objective of this study is to access and evaluate the impact of internal auditing in the Nigeria manufacturing industries in achieving organization goals. The following sub objectives will also be pursued.

• To evaluate whether proper records are kept by the various department and serves as source data for auditing.
• To evaluate the role played by the internal auditor or department in achieving organization goal.
  • STATEMENT OF HYPOTHESIS

In order to provide solutions to the research problems identified above, the following hypothesis would be tested.

Ho: effective internal control is not a yardstick for measuring

HYPOTHESIS (2)

Hi: internal audit does not load to efficient management of manufacturing companies (Heritage pure water)

• SCOPE OF THE STUDY

The study will cover all manufacturing companies in Ilorin metropolis in determining the impact of auditing in manufacturing companies with particular reference to the internal audit department of heritage pure water, ilorin kwara state. These are so that this research will cover, it will be control on the auditing study so as to properly look into the day to day running of the organization.

• SIGNIFICANCE OF THE STUDY

This study will help to reduce malpractice which have been the banner of private owned institution thereby, bringing an improvement in their financial strength.

• PLAN OF THE STUDY

This research work is organized into (5) five chapters:-

Chapter one covers the background to the study which include, introduction of the study, statement of the study, justification for the study, scope of the study significance of the study, statement of hypothesis and definition of the terms.

Chapter two covers the review and related literature with the aim of highlighting some of the major area of the subject matter.

Chapter three is the research methodology with the exposition of some theoretical frame work.

Finally, chapter four is used to illustrated data presentation and analysis while chapter five covers the summary conclusion and recommendation based on the findings of the study.

• DEFINITION OF TERMINOLOGIES

The term audit is derived from a latin word “Audit meaning to hear” Audit as defined by Audits practical committee (APC) as the independent examination and expression of opinion of the financial statement of an enterprise by an appointed auditor in pursuance of that appointment and in compliance with statutory obligation.

AUDITOR

An auditor is a person who audit the accounting record of a company or organization. he is also refers to as an independent third party who audit the financial statement of an organization reports to show the truth and fairness of the account.

INTERNAL AUDIT

This is an independent appraisal of activity within an organization for the review of accounting financial and other operating as a basis of service to management.

AUDIT REPORT

This is an end product of every audit exercise. It is a short statement expressing the view of the auditors that the accounts show a true and fair view and company with statutory role and regulation.

INTERNAL CONTROL

It is the whole system of control, both financial and otherwise which are established by management to safeguard the asset and in adhence to policies and directions

AUDIT EVIDENCE

These are all the information obtained by the auditor durng the course of this audit assignment and on which he base his opinion on the financial statement (Adams, 2002)

INTERNAL CHECK

          this is a method of organizing the entire operation of office factory and warehouse and the duties of the respective staff so that fraud and irregularities are almost impossible without conclusion.

INVESTIGATION

An examination of the affairs of a company or any organization for some special purpose.

ERROR

Error are generally agreed in audit as un international misstates. It makes clients accounts unreliable and if it predominately occurs, it can affect the truth and fairness of the accounts.

FRAUD

          It is one irregularity involving the use of criminal description to obtain an unjust advantage such as stating store value higher than normal.

IRREGULARITIES

          These are practice contrary to the professional or ethical standards (Longman, 2002)

EFFICIENCY

To ensure that mismanagement, misappropriate is reduced to their dearest minimum.

EFFECTIVENESS

To confirm that policy expenses on is popular (safe Associates limited; 1999)

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