A Proposal on Role of Internal Audit in Business Growth
- INTRODUCTION
Business growth is very important if such a business wants to achieve the purpose of its establishment without positive impact of any organization, it means that the way of achieving the objectives when the business has commenced will be a difficult situation for the organization.
It is obvious that the performance of companies is not up to expectations which leads the researcher to know the impacts of the internal auditing as a tool in business growth.
Since companies have been encountering some problems like fraud, misappropriation of funds and properties, lack of effective management and others that made people to be asking whether auditing plays any significant roles towards ensuring efficiency and judicious use of funds set aside for various purpose.
Therefore, for the proper efficient accountability, it is obvious that the auditor and accountant will manifest their principles to be able to arrive at what is expected of them in order to be convinced that the financial position of the organization as presented, show a clear and fair view of the organization.
Consequently, because of biased nature of the organization as a result of poor investigation of the organization position, past rulers have pledged to introduce a more responsible system of government with accountability but their subsequent conduct has shown that they have little or no understanding definition and application of efficiency in the improvement of company’s performances.
Auditing which is regarded as one of the recently established professions turn out of the complexity of modern business world. It became relevant so as to discourage people from erring and to expose those that gave wrong account of how they managed the funds and properties under their custody. The account or report is usually done by means of financial statement. In order to verify the time and fair view of this report, an independent person is needed to audit the account such as the internal auditor and the service of a qualified accountant for proper accountability and efficiency in the organization financial position and performances.
In a related development it has been believed that efficiency in discovering the management inefficiency has been the root cause of many businesses poor performance both companies in private and public limited sector in Nigeria. Improvement can only follow when what is honestly followed in been recognized and how such wrong could be remedied. In view of this point effort will be made to painstakingly highlight the improvement however taking auditing and the service of a qualified accountant in respect of private companies and public enterprises to improve the company’s performance. The question that is normally asked is that in spite of all those provision and safeguard, why is it that one still experience the alarming rate of fraud and misappropriation of funds, company crisis, excess expenditure that are usually not compatible with the real budget by those entrusted to safeguard. This is why a great emphasis has to be laid on the role of internal audit in business growth, using Emene Flour Mill Limited Lagos as a case study.
- STATEMENT OF PROBLEM
A business may be classified under small medium or large depending on the size, feature of number share authorized calls issue and fully paid etc.
Chepkorir (2010) established that internal audit helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. The internal audit activity evaluates risk exposures relating to the organization’s governance, operations and information systems. The internal auditors are expected to provide recommendations for improvement in those areas where opportunities or deficiencies are identified.
Musili (2012) researched on factors affecting performance of Businesses in Nigeria, Agung (2011) studied about Benchmarking and performance the financial sectors.
Many companies face the problem of internal auditing such as non-compliance with the accounting standard and non- disclosure of some fact which will guide the auditor either the external or internal to form an opinion on the true and fair free of the organization record. Other cooperate crime may pose a problem in the auditing and this cooperate crime may be a serious issue. There is many more looting in all the state in government offices, companies etc. the research work will attempt to highlight on these problem areas that basically undermine auditing in a company and give possible solution.
- PURPOSE OF STUDY
the research focused on the analyzing the role of internal audit in the growth of businesses. a case study of Emenite limited, Lagos state.
- OBJECTIVES OF THE STUDY
- To ascertain if internal auditing improves business growth
- To ascertain if there exist co-operation between internal auditors and external auditors.
- To find out if internal auditing assists in the detection and prevention of fraud in the company.
- RESEARCH QUESTIONS
- Does internal auditing improve business growth?
- Does co-operation exist between the internal auditor and external auditors?
- Does internal auditing assist in the detection and prevention of pilferage and fraud?
- SIGNIFICANCE OF THE STUDY
I am highly optimistic that the completion of this research work would benefit most people or group of people, among them are:
- Students and staff in the tertiary institution: This research work would assist both the student in the future and even the staff in the tertiary institution would find this research work more rewarding and educative.
- The Public: The general public who can cross check this research work, after proper checking would find this research work more valuable.
- Professional Accountant: The technology gamed from this research work would assist the professional accountant whose works are so valuable.
- Companies: Efficiency in auditing serves as a life wire in any company. Therefore, most businesses that have problem pertaining to their poor performance would find this research work more efficient and valuable.
- SCOPE OF STUDY
The scope of this study “Internal auditing as a tool for improving the company’s performance” will be using the Emenite Limited in Lagos state, as the case study.
This research work will be limited to two variables, internal audit and business growth.
- LITERATURE REVIEW
Conceptual framework
Internal Audit
MILLICHAMP (1996) defined internal auditing as “an independent appraisal of an organization for the view of an internal auditing control system as a service to the organization. It objectively examines, evaluates and reports on the adequacy of internal auditing control as a contribution to the proper economic efficient and effective use of resource”.
Also NWEKE AND UMEZURIKE (1998) said: “Audit as the name implies is a review of operation and records, sometimes continuous undertaking within a business by special staff employed and directed by the management, internal auditing is carried out by independent personnel, internal auditor are employees of the firm and this independence is not always easy to achieve, however, it is assisted by:
- Having the scope to arrange its own priorities and activities
- Having unrestricted access to records, assets and personnel.
- Freedom to report to higher management and where it exists, to an audit committee.
- internal auditing personnel with an objective frame of mind.
- internal auditing personnel who have no conflict of interest or any restrictions place upon their works by management.
- internal auditing personal having no responsibility for the work or for new system. A person cannot be objected about something he/she has taken responsibilities for. On the other hand, internal auditor should be conducted on new or revised system.
- internal auditing personnel who have no non-audit work since internal auditing are employees; it is difficult to ensure that they are truly independent in mind and attitude.
Element of business growth
Which factors separate the best from the rest when it comes to Business Growth? This is a well debated topic but we have found there are five factors that successful companies have in common:
- A strong leadership team
Strong leadership has the ability to define a clear vision for the company. To be effective, the vision needs to be well-defined and explained in a way so people connect with it and are motivated by it.
The second major factor is appropriate involvement of leadership in leading and supporting projects that are strategic to the organization. Strategy statements are simply ineffective without a leadership team that is capable of driving the strategy home.
- Hire and retain quality people
Get the right people in the right spots with a clear and defined understanding of their priorities. If a company has the right people, they will move faster and accomplish more in the same amount of time.
- Disciplined approach to their business
They learn how to work on their business, not just in it. This involves planning and, more importantly, aligning their people to execute the business’s Growth Plan.
- Ability to strategically use tools
High-performing organizations looking for Business growth give more emphasis than lower performing companies to use technology to tools to impact the business in strategic ways. Organizations that have developed a culture that figures out ways to deploy tools or technology, not for technology’s sake, but to better serve their strategy will always succeed.
- The wise use of trusted outside providers
To have a growth orientated business they need a systematic way of gathering and periodically analyzing vital information about the business. Outside providers whom they trust can be invaluable to performing this kind of review of their business. High-performing businesses have learned to supplement their internal expertise by building trusted relationships with the outsourced personnel, this allows them to cost-effectively buy the amount of expertise they need when they need it.
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