CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY
Annual budgets by the federal state and local government are generally incorporated into government accounting system and financial reports. These budget estimates are central to the process of making and executing public sectors polices among which is the proper allocation of available resources and reduction in inequality of incomes of individuals. In order to achieve these public sector policies goals mentioned above, there is the need for an internal audit operations within our ministries. The growing recognition by management of the benefits of a good internal control and the complexities in a large organization led to the development of internal auditing as an important component of the internal control system. The emergency of the internal auditor as a specialist in internal control is the result of an evolutionary process that is similar in some ways to the evolution of the independent audit (Howard 1976). The principal factor in its emergency was the extended span of control faced by management as concerns employing thousands of people and conducting operation from widespread locations. Defalcations and improperly maintained. Accounting records were obvious problem under these circumstances. The growth in the volume of transactions meant a substantial bill for public accounting service for the business that endeavored to solve the problem by containing the traditional form of audit by public accountants. This solution according to Howard (1976) was to provide the needed auditing services on an internal basic particularly as the genitures of the problem made it possible their one or more persons to specializes in such auditing services and devote their full time to the needs of the enterprise.
Other advantage that resulted from this internal approach to the problem was that the internal auditor tended to be problems of the company and the auditing activity could be carried on costively, rather than, once year when outside auditing of government ministries departments and extra ministerial department entrusted with public resources and the authority for applying them have a responsibly to render a full accounting of their activities. This accountability is inherent in the management process and which the public resources have been devoted nut also the manner and effort on their application. Auditing is an important part of the accounting process since it provides independent judgment of the credibility of public oicial’s statements about the manner in which they have carried out the responsibilities. The auditing function assures the objectivity of and adds credibility of fair presentation of performance information (Edwards and Black 1976). There has been an unprecedented increase in the importance of internal auditing due to the importance of internal auditing due to the widespread recognition of the invaluable role performed by this branch of auditing profession. Many government enterprises have therefore found reason to maintain an internal audit department as a necessary component of their internal control system. Owing to the priceless valve from internal audit of the institute of character accountants of England and Wales (ICAEXW) defined it as “ a review of operations and records, sometimes continuous undertaken within a business by specially assigned staff. It encompasses such examinations conducted on the affair of the organization as a tool of management control. Miuichamp (1987) described internal audit as an independent appraisal function within an organization for the review of system of control and the quantity or performance as a service to the organization. It objective examines, evaluates and reports on the adequacy of internal control as a contribution to the proper economic, efficient and effective use of resources a substantial part of the internal audit function performance some people working as employees of the organization
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