THE IMPACT OF INTERNAL AUDITING IN IMPROVING PRODUCTIVITY IN AN ORGANIZATION
(A CASE STUDY OF ZENTUS NIGERIA LTD AFIKPO, EBONYI STATE)
ABSTRACT
Most profitable private sector organization does not have an internal audit department, they believe that internal auditors offer their services to the highest bidder and they cannot afford to pay them. It is important to establish and run an internal audit department in spite of the factor that the organization makes profit.  The project is carried out of investigate the role and extent of responsibility of internal auditing in improving productivity in the organization, a study of Zentus Nigeria Ltd. Afikpo, Ebonyi State. the work highlighted the need for internal control system in private organization.   Internal auditing is used to discover fraud and error in the various book of account of the organization. The researcher used descriptive method and longitudinal survey design trend. data were gathered from both primary and secondary sources. Management should always meet up with their responsibility of installing, maintaining effective and efficient internal control system hence it will enhance the orderliness of operations. The project will be of great value to all those who may desire to fight weakness in their control system and will offer assistance to people who may decide to research more on this topic.
TABLE OF CONTENTS
Chapter One
      Introduction                
       Background of the Study      
      Statement of Problem                 
      Purpose of study                        
      Research Questions                    
      Relevance of Hypothesis       
      Delimitation of the study             
      Assumptions                       
      Significance of the Study             
      Definition of Terms                     
CHAPTER TWO
Literature Review                       
  Historical Background of Internal Auditing
  Historical Development of Internal Auditing
  Definition of Internal Auditing                    
  Independence of Internal Auditors.                    
  Problems of Internal Auditors                    
  Scope and objectives of Internal Auditing    
  Internal Audit in Commercial Enterprise      
  The contribution of internal auditing in improving productivity                                                   
  The role of Internal Audit in big Organization      
  Summary                    
CHAPTER THREE
      Research Design and Methodology
      Brief Outline of the Chapter           
      Research Design                        
      Population of the study               
      Sample Design and Procedure             
      Data Collection Instrument          
      Validity and Reliability of the Instrument     
      Administration of the Data Collection Instrument
      Procedure for Processing Collected Data             
      Limitation of the study                
CHAPTER FOUR
      Presentation and Analysis of Data
      Restatement of the Research Questions and
Hypothesis     
      Hypothesis Testing       
      Summary of Findings    
CHAPTER FIVE
      Summary, Conclusion and Recommendation
5.1  Summary of Findings           
5.2  Conclusion                   
5.3  Recommendation   
5.4  Suggestion For Further Studies
Reference
Appendix
LIST OF TABLES
              Distribution of Respondents by Analysis of Data Collection According to Research Question and Personnel Data                                         
               Distribution of Respondents by Sex              
               Distribution of Respondent of Age                
               Distribution of Respondent of Marital Status  
               Distribution of Respondents by Educational Qualification                                          
               Distribution of Respondent by Working Experience
               Presentation of Table  Showing the International Audit Department in your Organization       
               Presentation of Table  Showing how often the Internal Auditor carry out its works                 
               Presentation of Table  showing the weak internal control system a major cause of fraud and low productivity in the organization                      
               Presentation of Table  showing how a weak internal control system be discovered         
           Presentation of table showing who is responsible for establishing and maintaining effective internal control system.                                     
           The table explaining what role internal auditor plays in maintaining an effective internal control system                                           
           The table showing internal auditors responsibility in fraud detection and prevention in the private sector.                                                 
           The table showing the responsibility of internal auditors in performing their function              
           The presentation of table showing whether the internal auditors independence are maintained in the organization                                
           The table showing whether the effective and efficient internal auditing an lead to an increase in the level of production                            
           The table explaining on how the internal auditors full access to all the book of account in your organization                                           
           The table Showing the internal audit has contribution to the over all management performance and improves the level of productivity in your organization                  
           Table Showing the great need for internal audit unit in your organization                                
           The table explaining the level of in the management hierarchy is the internal audit unit occupy in your organization                           
           The table Showing the internal auditors conducive working environment in your organization.  
           The table showing if the management adhere to internal audit recommendation                          
           The table showing on how the internal auditor read his report to management                 
           The table showing the causes of fraud in the private sector.                                     
           The table showing the negative effect on the economy                                            
           The table showing if the internal audit is useful in the effort to eliminate corporate fraud.      
           The table explaining the effective and efficient internal auditing can lead to an increase in the level of production                               
CHAPTER ONE
INTRODUCTION
1.1  BACKGROUND OF THE STUDY
       This research is meant to view the effective management performance and productivity improvement of any organization. Most firms have deemed it fit to introduce an internal audit in addition to an external audit, they need the services of an internal auditor in order to enhance the efficiency of their operation.
       Internal auditing has proof of an indispensable tool in improving productivity in most organization including profit oriented institutions. Internal auditing is an independent appraisal of the function and qualify of performance of an organization for the review of the financial accounting and its operation as a basis for protective and constructive service to management.
       According to Woolf (1985), internal audit is an element of the internal control system set up by the management of an enterprise to examine, evaluate and report on accounting and other controls on operation. It exist either voluntarily or in certain circumstance because of statutory requirements.
       There are no precise functions for an internal auditors since he does not have any statutory responsibilities.
Aguolu (2002) states that the functions of an internal auditor are specified by the management who appointed him or by an audit committee where this exist. Specific responsibilities of the internal auditors depends on the entity’s size, structure and management requirements. They includes the following.
        To review the data and information made available to management for decision making.
        A continuous review of the system of internal control within the organization for adequate report and recommendation to the management any required amendments.
        Carrying out a review of the transaction of the organization for compliance with the established procedure.
        Carrying out special investigation on the specific aspect of the business as may be directed by the management.
        Providing technical support to management for the establishment, implementation and improvement in the systems of internal control.
It is not the duty of the internal auditor to establish the system of internal control. This remains the duty of management however, being skilled in accounting and being part of the management team, internal auditor is expected to make substantial contributions in setting up a good system of internal control, once set up, it becomes his responsibility to ensure its efficiency and effectiveness.
Historical Background Study Of ZENTUS Nigeria Limited Afikpo
       According to the managing Director of Zentus Nigeria Limited Afikpo, the company started business properly in 1977 as a sole proprietorship business. The company started with the sales of timber (plank) and later extended into block industry business in 1989 at his residence Zentus Lodge-Ndibe road Afikpo. In 1990 given the need to have a good office to transact business  and the increasing rate of sales, the block industry was moved to No. 1 $ 2 E timber market road where  it presently has its head office. as a result of extensive research Zentus Nigeria Limited has maintained five (5) strategic branches in Nigeria, They are Located at Lagos, Onitsha, Abakiliki, Aba and Ndibe beach. They trade on items such as Palm oil, roofing sheets, building materials, timber and beach sand respectively. Presently, the company is an authorized distributor of Emenite roofing sheets, super quality roofing and ceiling sheets.
       Consequently, the company was given certificate of incorporation on 29th May 1989 as a limited liability company under the company and allied matters decree (CAMA) 1990) of Nigeria, which confers a legal status on all its business. The administration department of Zentus Nig. Ltd could be described as the life wire of the organization. According to the managing director, the department comprises of all the sections connected with the administration set up of the company. The company has thirty seven (37) workers employed and they are usually transferred from one branch to another every two years for control purposes and eliminated conspiracy but the general manager is exempted in this exercise.
       The company is a strong player in all its line of business and has secured not just a firm assurance of future financial health but also the goodwill of all the main thrust to customers are;
         Supplying and selling of building materials.
        Conveying of goods to the doorstep of customers.
        Making their product readily available at all time.
        Advising customers on the best product for building.
        Advertising customers on the best product for building.
        Creating development in its business environment as their customer build.
General Description of the area of Study
Internal audit is a basis and indispensable tool for effective business control that production companies and government department have found the need to introduce internal audit units to review their operations and records periodically with a view to ensure the updating of their financial records. Internal auditing appeared on the business scene much later than auditing by public accountants. The principal factor in its emergence was the extended span of control faced by management in employing thousands of people and conducting operations form wide spread locations.
       For internal auditing to be worthy of the name it is essential that personnel who are independent in all respect perform the functions of the internal auditor. In order to ensure the independence of the internal auditor he should not perform any routing functions which is part of the implementation of the system of internal control but to carry out a review of the system, for example, checking the accuracy of sales invoice after they have been prepared forms part of the system of internal control. Internal auditors appears to be better acquainted with procedures and problems of the institution and  the auditing activity could be carried on continuously rather than the annual statutory auditing as compulsorily entrenched in the company and allied matters Decree (CAMA) 1990.
1.2  STATEMENT OF PROBLEM
       Productivity level is very low in most private organizations in Nigeria. Low productivity can be traced to frauds and errors in the accounts and financial statement of these firms that often lead to the collapse of such organization.
       Most organizations do not have functional audit unit and they often have problems associated with the report of the financial statement.
 1.3 PURPOSE OF THE STUDY
       The objectives of this project is to examine the contribution of internal auditing in improving productivity in Zentus Nig. Ltd, Afikpo. For this study to be successfully achieved, the following objectives will be noted
  To examine whether internal audit has really helped to discover frauds and errors in the various books of accounts presented in the organization.
  To identify the problems faced by internal auditors in their investigation / assignment.
   To ascertain how far its application has improved the efficiency of Zentus Nig. Ltd.
  To examine the possible areas of friction between the institution and its internal audit which hinder or impede the operation.
1.4  RESEARCH QUESTIONS
       Given the challenges associated in the technicalities of internal audit and company’s productivity which makes it almost impossible for non-accountants to understand the need to present the findings of this study for the understanding and benefits of all. The following questions are considered very relevant at the attainment of the research objectives.
  Has internal audit improve the productivity of the organization?
  Is internal audit useful in the effort to eliminate corporate fraud?
   Is weak internal control a major cause of law productivity in the organization?
1.5  STATEMENT OF HYPOTHESIS
  Ho: Internal audit has not improved the productivity of the organization
Ha: Internal audit has improved the productivity of the organization.
  Ho; Internal audit is not useful in the effort to eliminate corporate fraud
Ha; Internal audit is useful in the effort to eliminate corporate fraud.
  Ho; Weak internal control is not a major cause of low productivity in the organization
Ha; weak internal control is a major cause of low productivity in the organization.
1.7  ASSUMPTIONS
It was assumed that the supervisor would guide the researcher in the process of conducting the research. it was also assumed that the internal audit department and the staff of Zentus Nig. Ltd Afikpo would corporate with the researcher by completng and returning the questionnaire.
1.8  SIGNIFICANCE OF THE STUDY
The economy of any nation grows and develops when most of the factors of production i.e Land, Capital and entrepreneur are fully employed in the most effective sector of the economy. This implies that the major difference between a poor and rich nation is seen on the productivity level of each of the country. It follows therefore, that any research study on the role of internal auditing in improving productivity of any organization will be of benefit to the entire country. This study would be of immense value  as it would act as a secondary aid to students of other higher institutions who may want to research into internal audit. It would also help to expose the contribution of internal auditing in improving productivity in the profit oriented industry.
1.9 DEFINITION OF TERMS
Attempts were made to avoid technical or complex words but those that could bot be avoided are defined as follows.
  Internal Control: It is the whole system of controlling financial or otherwise established by management in order to ensure as far as possible the accuracy and reliability of the records, run the business in an orderly manner and safeguard the company’s assets, its objectives being the prevention or early detection of fraud and errors, it may include internal auditing.
  Internal Check: It is defined as the statement of auditing as the allocation of authority and work such as a manner as to day work by means of the work at one person being proved independently by another or the work of a person being complementary to that of another.
   Internal Auditing: it is the independent appraisal of the functions and quality of performance of an organization by a specially assigned staff as part of the internal control system. It objectively examines events and reports on the adequacy of internal control as a contribution to the efficient and effective use of resources.
  Audit Program: It is an outline of the work that an audit intends to carry out. It is a set of instructions as to the specific steps of actions to be taken, the procedures to be adopted the questions to be asked, the examinations to carry out, the specific places to be visited and the documents to be obtained. The main objective of keeping an audit program is ton offer definite guidance to the audit check as to the work to be done.
  Appraisal: the document, assessing the value, quality of nature of the activity within the organization.
    Vouching Audit: It is an audit approach which involves an in dept examination of the transaction of the business together with the documentary evidence of sufficient validity to satisfy the auditor that the transactions are in order, properly authorized and accurately recorded.
  Tracing: This means firstly inspecting the sources documents and then determine whether the transactions or the amount has been recorded. It is generally used to test the completeness assertion.
  Fraud: It is defined as the international distortion of the financial statements to secure particular advantage such as the misappropriation of assets.
    Independence: It is defined as an attitude of mind much deeper than the surface display of visible standard. It is essential for the auditor to be able to express an objective pinion in his report.
    Audit: according to Taylor (1982), an audit is the independence examination of the financial statement of an organization with a view to expressing an opinion as to whether these statements give a true and faire view and comply with the relevant statutes for the period under review and of the financial state of the organization at the end date so enabling the auditor to report thereon.