CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The system of controls adopted in any economy greatly determines the development and growth of that economy. To ensure optimization in money, materials, machine, time, resources and management of men, controls are essential. These controls are installed by many organisations including banks to check how effective and efficient they maximize their resources. One of such controls commonly used to minimize wastage and guide plan to their eventual accomplishment is “INTERNAL AUDITING”. Auditing has been in existence for many years, it was in ancient Egypt and the great mercantile establishment of the middle ages. This shows that internal auditing can neither be neglected nor under rated in our modern economy for it was borne of the complexities of modern business dominate and transactions involved. In that, other management of various large businesses, organisations and government concern recognised internal auditing as valuable machinery and achieving and objective deemed accurate at a point in time.
The term “Audit” is from a Latin word “Audire” which means “Hears”. This is because the accounts of an estate domain were checked by having them called out of these who completed them to those in authority. With the growth of trade and commerce the need for more accurate methods of recording business activities arose. Auditing is a process whereby the books of account and vouchers of business entities (including charity users/trusts) are subjected to critical examinations by professionally qualified and independent account (Auditors) on such a detail will enable them from an option as to their truth and fairness. The auditing is the bridge across the credibility gap created by the separation of management from ownership. The complexities of the art of management extends to increasing ware of business fraud, embezzlement and the cash squeeze which often cripple many companies. The management has to look inward in order to uphold the space of activities and keep abreast with the changes in their immediate and external environment, and this can only be achieved as good and effective internal control system of which internal auditing is a major section. A writer maintained that the existence of an efficient and effective system of internal control both in design and operation which is the responsibility of management with the best to prevent fraud or at worst help to detect such fraud at the earliest opportunity. It is a function carried out by an independent staff in audit department with the sole aim of reporting on fairness and truly of financial statement. However since the internal auditors are employee of the firm or the establishment concern, independence is not always achieved