THE APPLICATION OF AN ASSESSMENT OF EFFECTIVE INTERNAL CONTROL AND AUDIT IN PUBLIC SECTOR
CHAPTER ONE
1.0 INTRODUCTION
Auditing is an independent checking, investigation, examination and expression of the books of accounts and vouchers of a business enterprise with a view to enable the appointed auditor to report whether the trading, prodit and loss accounts and balance sheet are properly drawn up so as to show a true and fair view of the state of affairs and the profit or loss of the business according to the best information and explanation obtained by the auditor and that they comply with the laid down rules and regulations of the statement of standard acccounting product (SSAP) and other statutory regulations.
Internal control system: This can be described acording to auditing guideline (AG 204) as “the whole system of controls, financial and otherwise, established by the management in order to carry on the business enterprise in an orderly and efficient manner, ensure adherence of maangement policies, safeguard its assets and secure as this as possible the completeness and acccuracy of records” therefore this involves both internal check and audit.
Internal Check: This briefly refers to the method (techniques) of organizing and arraning the entire operation of office, factory and enhousing and the duties of respective staff so that risk of fraud, errors, irregularities and mismanagment will almost be impossible without conclusion. That is day-to-day transactions, segregation of duties and job performance in an organization.
Internal Audit: This is refers to an independent appraisal of activities within the organization of the check of certain operations as a service to the maangement, therefore, it is the maangement control to functions by the means of evaluating and measuring the efficiency and effectiveness of other controls or checks. Meanwhile, the internal audit will ensure that some specific routine work are carrryout by the departments and that the laid down procedures is adequately carry-out by all applicable areas as well as making recommendations to the management.
1.1 BACKGROUND OF THE STUDY
Auditing in its daily and primitive stage can in an existence since 16th Century, start when the first relationship began between those who provided capital and those who managed the business.
Moreover, the innovation of joint stock companies has enormously widened the possiility of raising capital for industry. As a result of the limited liability of the shareholders, it become possible to offer shares for subcription to the public and thus, the availability of capital to both industry and commence. “Stewardship”
Meanwhile, under the company from of business enterprises, the shareholders as a person, delegate the management of the enterprise to the board of directors and practically, the board submits to the shareholders the account of the enterprise so that its members may see a trur and fair view of the financial position and the profit and loss undertaking. Thus, in 19th century, the greatly arose aneed by the shareholders as a body to appoint an auditor that will help in the presentation of statutory financial statement of the board of directors in order to show true and fair view of the financial position of the company.
However, in 20th century, mandatory provision as requirement made for the audit to limited liability accounts and presentation of audit report to numbers by the company acts in Nigeria have company or companies and Allied Matters Act (CAMA) 1990.
1.2 STATEMENT OF THE PROBLEM
This study is basically concerned with discussing and appraising an assessment of effective internal audit and control in the public sector. And also how to answers some related questions like;
– How has the effective internal audit and control affected the public sector over some years?
– How Does the effective system of internal audit control affect management policies towards records keeping, risk of fraud and errors, mismanagement, job functions and proper coordination.
– How does the system take care of vouchers, payable, bank reconciliation statement and prevention of overpayment as well as
1.3.1 OBJECTIVES OF THE STUDY
1. To clearly demonstrate the impact effective internal control and audit in the public sector.
2. To clearly and effectively specify the adequate control and mnaagement mechanisms to put in place in the public sector.
3. To indicate the performance scope of internal control and audit in the public sector towards quality of financial information, organization’s growth, improving it efficiency at the costs lower as possible improvement of social environment.
4. To clearly explain the system audit general description as to executive a continual analysis of a central authority. And organization’s reporting monitoring team thus the management.
5. To make possible contribution to human knowledge as well as reduction or prevention in management, risk of fraud, irregularities and errors.
1.4 RESEARCH HYPOTHESIS
The main aim of public sector is for public utility (satisfaction) while internal cotrol and audit is for maintennace and keeping of accurate, complete and valid financial records and transaction daily as well as safeguard of assets in order to prevent and eliminate errors and fraud. Therefore public sector, particularly corporate affairs commision (CAMA) meanwhile, the following hypothesis will be tested in the course of the study.
Null Hypothesis (Ho): the accuracy, completeness and validity of financial records and maintenance, safeguard and custody of assets of an organization as well as the elimination and prevention of fraud, errors, irregularities and mismanagement do not tally with the efficiency and effectivenes of effective internal audit and control in the public sector.
Positive Hypothesis (H1): The accuracy, completeness and validity of financial records and maintenance, safeguard and custody of assets of an enterprise as well as the elimination and prevention of fraud, errors, irregularities and mismanagement do not tally with the efficiency and effectivenes of effective internal audit and control in the public sector.
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