Nigeria emerged from colonial rule with little technological know-how. This attributed to the fact that the colonial masters made no attempt at laying foundation for acquisition of the know-how required to build the economy. Despite this, the Nigerian economy has greatly evolved and is now termed the fastest growing economy in Africa. This is due the fact that they have developed skills and procedures so that businesses and organizations can prosper. Inn relation to banks, before the 2005 consolidation exercise so many individual had little or no faith at all in these financial institutions as some kept on folding out. How ever the consolidation process endorsed by the Central Bank of Nigeria was see and considered a savior to the economy. The banks later developed schemes and strategies to grow and face their competitors without crumbling; one of such schemes being the thorough function of the internal auditing department. This research reviews the roles and functions played by the internal audit department in organizations. It is therefore unavoidable to talk of the role of the internal audit department without relating to the views of the staff who work in such a department in any organization. Three firms in the same industry (the banking industry were thus selected) and questionnaires were issued to the members of staff working in this department. This project therefore focused on the importance of the existence of an Internal Auditing Department in any organization. It high lights some problems faced by banks and how the IAD could assist them in combating these problems
Chapter three dwelt on the research methodology employed in the study. I discussed the various sources data used, the sample from which information was sought and the reasonability of using such samples. Chapter four provide presentation and analysis of data collected and testing of research hypothesis. Finally Chapter five summarized the findings of the research and offers recommendations and conclusion.
- Background to the Study
Through out the past decade, Nigeria has witnessed a rise and fall in several businesses. The businesses or organizations which are still in existence and experiencing growth set up structures and practices of boards so as to monitor the performance of the organizations. This is done so as to impress the shareholders of the various businesses and attract new investors.
The companies or establishments which did not make it could have suffered from one problem or another. The most prominent one which can not be ignored is that of fraud. This alone has caused a lot of damage in the financial markets and the entire economy has been plunged into a terrible crises. The fall of a company like Enron in the United States of America caused an up rise and raised so many eyebrows hence leading to a sagging investor’s confidence.
On the other hand, there are some organizations growing in strength. One of the factors that could contribute to the steady growth of companies is the setting up of an Internal Auditing Department. As fraudulent financial reporting and restatements of earnings have become more prevalent, auditing (be it external, internal or governmental audits) has become more important. So to monitor the procedures and adherence to principles to an organization, internal auditing could be looked upon as a key. A typical example is seen in the case of World com, (a financial establishment in United States of America) when Cynthia Cooper (Vice President of the internal auditing team) and her staff unveiled several auditing practices which were not in line with the Generally Accepted Accounting Principles (GAAP). In carrying out this audit, it was discovered that for previous two years, $3.8 billion in cost had been capitalized rather than expensed. This announcement was made in June 2002.
Pinero (2001), in his paper presented at a workshop for internal auditors stated that “the prime objective if the Internal Auditing Department (IAD) in any bank is to evaluate whether the bank’s framework of risk management, internal control and corporate governance processes are adequate and functioning properly and carried out throughout the year. He added that the objective of the internal auditing department (IAD) includes suggesting and recommending the management for improvement in internal control and risk mitigating factors. Internal audit services provided by the IAD therefore exist to add value to the organization, to concentrate on the key risks, to evaluate and assess the Internal Control System (ICS) and contribute to the proper economic, efficient and effective use of resources in banks and other organizations (Miten Keynes Council,2002). As such the IADs of Oceanic bank plc, UBA plc and First bank plc could be looked up to as monitors in their various organizations as they check the risks and ICS of the organizations. Therefore internal auditors in Nigeria, in carrying out their function and roles judiciously could as well save a company or organization from a fall.
From the above, it will be reasonable enough to agree with Frigo (2000) who points out that it is wrong to think of auditing as only “financial” in nature. According to him the scope of internal auditing within an organization is very broad and may involve topics such as:
- The efficiency of operations
- The reliability of financial reporting
- Deterring and investing fraud
- Safeguarding assets and
- Compliance with laws and regulations
As a result of the broad scope of involvement, internal auditors (those who carry out the profession of internal auditing) may have a variety of higher educational and professional backgrounds.
It can be interpreted from the above that audit departments in organization function in a particular way to ensure the growth and development of the organizations.