INTERNAL AUDIT AS INSTRUMENT FOR MANAGEMENT CONTROL (A CASE STUDY OF NIGERIA COAL CORPORATION ENUGU)

ABSTRACT

As a result of the tendency of business organization to increase in size, scope and complexity, it is difficult for managers of such organization to directly supervise all the units and hence direct activities towards achievement of the organizational goals.

The management, therefore establish procedures, rule and regulations, know as management control or internal control for the purpose of safeguarding assets and maintenance of accruable and reliable records in the organizations, internal control is designed to assist management and monitor the activities to ensure that other control are adequate in design and effective in operations.

The incidence of poor performance by government owned establishment attributable to various irregularities has been on increase in spite of internal control established by management the Nigeria coal corporation is a Federal government owned establishment institute to help to increase the in- economic status of the country. The researcher investigated how internal audit function as an instrument for effective control in Nigeria coal corporation, Enugu.

The sets of hypothesis were formulated as guide for researcher work. Literature review was then undertaken to discover the opinion of others on the subject of research.

The primary data gathered were analyzed and interpreted while the chi-square (x2) was used to test the validity of the hypothesis is which confirmed that internal and it is useful instrument for effective management control.

 The researcher discovered that internal audit is actively functional in Nigeria Coal Corporation. However exists some internal control lapses for which the researcher has made some necessary recommendation for improvement so that internal audit will always live up to its reputation as watch dog in the organization.

CHAPTER ONE

INTRODUCTION

The word internal audit comes into existence as entity within an establishment or organization because management cannot do without it in the past year’s organization or establishment were small in size and could for, the fact that management or establishment once getting more advanced, there are immense expansion of these establishment together with the increase in the scope or management functions required to cope with the situation, management could not control all the activities alone. For this purpose there was a great need for an assistant to be attached to the management of the organization.

As an integral part, being internal audit controls internal system, was then established as a district limit within the organization to help management in advisory capacity and also to ensure effective and operational control of internal system in the organization also according to Agudlu (1988) in his own view sees internal audit as independent appraisal of the functions and quality of performance of an organization by a special assigned staff as part of the internal control system. In addition to the performance of the statutory still need the services of an internal auditor in order to enhance the efficiency of the operations.

However, in line with terms audit is to ensure an effective performance, a suitable arrangement is made to ensure the in dependence of the internal auditor.

BACKGROUND OF THE STUDY 

The word audit was derived from a lat in word Audire, meaning to hear or Audit us meaning hearing. The practice of auditing in the primitive form can be traced back to ancient times where the receipts and payments of an estate or main or were read to the head or proprietor or the lord of a manor with industrial revolution.

This was an increase in business transactions and there emerge partnership and joint stock companies. The evolution of mechanized industries involved the provision of financed far in excess of what is used to be business become more complex and required more formal and improved accountability.

In the opinion of Ubesie (2000) in the light of the general misconception of the word audit, there is every need to state that audit is not fault finding, out aimed at black mailing or discrediting of a public servant but rather the word audit means to hear it is because of this that an auditor can be likened to a referee in a football match. He can be also being referred to a mediator such as a case and render an objective opinion.

 In the years back, when establishment were small in size and could be controlled by the management alone, the objective of auditing was limited on ascertaining correctness of the sum of money collected and used. The idea of audit then being to check accuracy of each entry and record and to verify the balance of every individual account. There was no defined of internal audit function as we have it today.