INTERNAL AUDITING AS AN AID TO MANAGEMENT (A STUDY OF HOUSEHOLD PRODUCTS COMPANY, ORLU, IMO STATE)

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY.

At the beginning of the century, most businesses are small and sole-operated. The owners/managers are overly involved with most of the decision making. As business grows in size and complexity, professional managers take position of the owners and the operators.

Consequently, they rely heavily upon streams of accounting and statistical report which summarizes current happenings and conditions in the enterprise. The information carried by these streams of report enables management to control and direct the enterprise in order to assure management that the information received are both reliable and accurate. A system of internal audit is developed to monitor the activities of the company. The need for maintaining the adequate efficient and effective internal audit, therefore cannot be overemphasized especially in days when Nigeria’s economy still is witnessing depression and every company is making effort in ensuring that wastage, pilferage, misappropriation are checked or avoided, and to ensure that assets are being secured.

Some problems were noticed during the cause of this research; problems within the company, these problems necessitate this work. The researcher noticed that there was ineffective co-operation between the internal audit and management, audit reports were sometimes ignored by the management. The relationship between the internal auditor and external auditor was strained making work harder for the external auditor. The lack of internal audit to prevent pilferage and fraud within the company thereby preventing an error free working condition.

1.2 STATEMENT OF PROBLEM

Often, management and internal audit department function were seen as contradictory rather than complementary. Internal audit department is setup to ensure adherence to management policy but this objective cannot be achieved because of interference and undue influence by the top management.

More so, monthly or quarterly internal audit report as the case may be in an organization is expected to provide information required by management to determine how effective their policies and implementation are. It is on this realization that this study will attempt to determine how effective are those information to aid management in solving day to day problems. It signifies defects or problems; the research will examine number of them namely:

a) There exists no relationship between the internal audit and management.

b) Co-operation does not exist between the internal auditor and external auditor.

c) Internal audit does not assist in detection and prevention of fraud.

1.3 OBJECTIVES OF THE STUDY.

Objectives of the study include:

 To ascertain if the duties of the internal auditor assist management in taking informed decision.

 To ascertain if there exist co-operation between the internal auditor and external auditor.

 To find out if internal audit assists in the detection and prevention of fraud.