EFFECT OF INTERNAL AUDITING TO THE PROFITABILITY OF CORPORATE ORGANISATIONS

CHAPTER ONE

1.00 INTRODUCTION

1.01 GENERAL DESCRIPTION OF THE STUDY

Owing to the recent changes in operating system of some organisation, internal auditing have been discovered as a system that can give profitability to co-opereate organization. To ensure appropriate approval in the management accountability and performance in a financial year and the annual statement of account provided by the management must be used as the most important documents to convey or source of some information.

It is the responsibility of the management to prepare the financial statement to make all the disclosure needed for the benefit of the shareholders and other third parties who it might be of interest to know the affairs of the organisation.

For information written in the financial statement to be accepted as free anf fair by its users, there is need for such statement to undergo some examinations, securitization and certification of an expert who is vast in auditing in accounting to determine the true and fairness of such financial statement.

C-operate organization gains so many benefits from engaging the services of internal auditors, this is aim at ensuring that in practices system is actually carried out its investigative work as demanded. the internal auditors gives advice to management which then leads to higher degree of profitability in the management decision making, whether or not investment opportunities are attractive in views of various alternative opportunities for capital spending. Whether or not business risk involved was commensurate with anticipated level of return.

Co-operate organization is a total productive system that all part of it must operate correctly, if it must achieve all parts of its objectives. Management must work in adherence to the advice of internal auditor to attend efficiency and effectiveness of its purpose.

1.02 BRIEF HISTORY OF CASE STUDY

Fidelity bank PLC, began operation in the year 1988 as Fidelity union Merchant bank Ltd. In 1990, it had distinguished itself as the fastest growing merchant bank in the country. However, to leverage the merging opportunities in the commercial and consumer end of financial services, in 1999, it was converted to commercial bank and change its name to fidelity bank plc.

It became a licenses to offer the entire spectrum of commercial, consumer, co-operate and investment banking services.

Fidelity bank is today ranked amongst the first ten in Nigeria banking system with presence in measure cities and commercial centers in Nigeria. Over the continue the bank has been reputed for integrity and professionalism. It was highly respected for its quality and stability of its management. The staffs of fidelity bank are respected in Nigerian banking for their quality training on job together with good business schools both in Nigeria and Overseas.

For one to qualify a member, he must possess vital statistical knowledge. Fidelity has been a merchant bank for about 18years. Their vision is to the number one in every market they served and to be the best in evry branded product they offer. Also, their mission is to make the financial services easy and accessible to their customer through; respect for customers, serving customers first, delivering their financial service excellently, sharing ambition, tenacity, etc.

1.03 PROBLEM ANALYSIS

Organisation suffers a lot of setbacks be it big or small that make the realization of their dream abortive in spite their prudence and resourceful management.

Recently, some organisation in Nigeria today runs liquidity problems, thereby causing the business that was started shortly to cease. Although some causes of these economics problems can be administrative inefficiency where executives and business administrators are not able to promote the organization entrusted to them in quest of making profit.

Below are the problems that are associated with administrative inefficiencies; viz

1. The inability of management to establish an efficient and effective internal control system.

2. Not appreciating that good accounting system and regular independent auditing ensure greater degree of accountability and financial discipline in all levels of management and was a vital tool for greater productivity and profitability.

3. Other problems which may include; carelessness, ignorance, negligence, gross misappropriation of fund in sometime defraudment by the employees etc.

1.04 PURPOSE OF THE STUDY

Every research work has a purpose and objectives which the researcher intend to achieve at the end of the work. The following are the purpose or objective of the study;

1. To evaluate the internal auditing services to the increase in productivity and profitability of co-operate organisation.

2. To ascertain the effectiveness of internal auditing services to business organisation.

3. To assess the relevance of auditors report to the management in business organisation

4. To determine the extent of adherence the auditor’s report can yield to better management.

1.05 RELEVANT RESEARCH QUESTIONS

1. Could your company maintain an efficient accounting system?

2. Do you think that proper books of account are been kept in all department of your company?

3. Do your company engage the services of internal auditors?

4. Do you think that by strict compliance to the advice of internal auditor productivity status of your company has been enhanced?

1.06 DELIMITATION (SCOPE) OF THE STUDY

For the purpose of this research work, the researcher effort will be limited to the enhancement of the profitability and efficiency of achievement of the organisational objective in terms of effectiveness, legal compliance, organisational growths through evaluation of the effect of internal auditing to the profitability of co-operate organisation using fidelity bank plc. as a case study.

1.07 ASSUMPTIONS

It is assuming that;

1. The respondents would corporate with the researcher

2. The supervisor would give the researcher the necessary guide lines needed to complete this work.

1.08 SIGNIFICANCE OF THE STUDY

This study was undertaken to evaluate the effectiveness of the internal auditing to the profitability of corporateorganization. This study will be of primary importance and benefit to fidelity bank plcUnwanaAfikpo.

Other importance of the study is its contribution to knowledge. The secondary beneficiaries are other researchers and anyone who is interested in writing on the topic “Effect of internal Auditing on the profitability of Corporate organisation”.

1.09 DEFINITION OF UNFAMILIAR TERMS

The researcher intends to give some working definition to some terms which was considered to have unique use in this study. They includes;

AUDIT: According to (Okafor; 2005:9), this is an independent examination of opinion on the financial statement of an enterprise by an appointed auditor in pursuance of that appointment in compliance with relevant statutory obligation.

Audit evidence: According to (Okafor; 2005, 82), this is all the relevant and reliable data or information obtained and recorded by the auditorium carrying at conclusion which he based his independent opinion on the financial statement.

AUDITING: According to (Okafor; 2005; 1), a systematic process of objectivity obtaining andevaluation evidence regarding assertions about economic action and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the result to the interested users.

PROFITABILITY: According to (UDEH; 2000: 157), The measured of advantage, money or good obtained from something, in other return on Capital employed.

CORPORATE ORGANISATION: According to “New Webster Dictionary of Business” This is the association of people in a formal business with common interest of achieving specified objectives....

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