CHAPTER ONE
1.0 INTRODUCTION
1.01BACKGROUND OF RESEARCH
The method of examining the evidence of financial transactions could be traced back to the time when there was need to transact business beyond one’s immediate needs. But such method of examining or checking the evidence of such transaction-known as Audit did not start immediately until after the trade by barter era. It came at a time when individuals noticed that no one is self sufficient thus, the need for individuals to pool resources together to form what is known today as business.
Management as the central directing and controlling elements in a business organization came as a result of individuals pooling their resources together to strengthen their co-ordinate and integration of specific activities in the organization to ensure effectiveness and efficiency of human cooperation in recent times, business organization are increasing due to scientific breakthrough and economic development. As a result, the need for decentralization, which means authority is systematically delegated or pushed down the line in an organization arises. This makes corporate management becomes so complex and the increasing volume of trade among business organization have made the art of management so complex and challenging. The only managers with mastered skills in modern scientific method of management can cope with the increasing demand required by their position.
In addition to this complexity of corporate management, is the increasing wave to fraud and misappropriation of funds in the private and public sectors of the economy at large. In an attempt to cope with this situation and keep their business profitable, management have to look inwardly to increase control system, by which all the policies and activities are put to check to conform with the set objectives. This involves the subdivision of duties by means of which no one person is entirely responsible for one transaction but a some stage of its performance, each person work come to the notice of at least one other person.
Internal audit also forms a integral part of this internal control system, which is a management function, which appraise the problems, and performance of every department in the organization.
1.2STATEMENT OF PROBLEM
Corporate managers may delegate their authority but the responsibility to get the assignment done cannot be delegated, but rather rest on the managers. In this understanding managers manage conceptual system which will ensure that physical assets represented by conceptual assets are protected and managed properly. Since management can only manage through delegation of authority, it is only through a good internal auditing system that the top managers can check the level of compliance to delegated authority. Internal audit is needed to ensure that all delegated duties are carried out effectively and also that the policies and procedures of the company are adhered to strictly, this include the following:
1. Internal audit are not independent.
2. they are employed by management and therefore are responsible to the management.
3. Some of them are responsible to the director of financing accounts.
4. They are not professionally qualified.
5. They are not well paid.
1.3OBJECTIVES OF THE STUDY
An audit is not primarily aimed at detecting Fraud and errors, or dinging fault with accounting staff of an organization. Naturally, in the process of examining the documents which from the basis of a financial statement, the auditor, may detect fraud or errors and weaknesses in the accounting system.
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