Impact Of Auditing On Organizational Performance

This study was carried out to examine the impact of auditing on organizational performance using Nigeria Bottling Company Lagos State as a case study. The study was carried out to determine whether internal audit enhances financial controls in Nigeria Bottling Company Lagos State, determine whether internal audit facilitates effective financial planning, regulation and monitoring in Nigeria Bottling Company Lagos State, find out whether internal audit contributes to the effective of utilization of resources in Nigeria Bottling Company Lagos State, and determine the effect of auditing on organizational performance of Nigeria Bottling Company Lagos State. The study adopted the survey research design and randomly enrolled participants in the study. A total of 50 responses were validated from the enrolled participants where all respondent are auditors of Nigeria Bottling Company Lagos State. The survey design was adopted and the simple random sampling techniques were employed in this study. The population size comprise of auditors of Nigeria Bottling Company Lagos State. In determining the sample size, the researcher conveniently selected 65 respondents and 50 were validated. Self-constructed and validated questionnaire was used for data collection. The collected and validated questionnaires were analyzed using frequency tables. While the hypotheses were tested using Chi-square statistical tool. The result of the findings reveals that internal audit enhance financial controls in Nigeria Bottling Company Lagos State. Furthermore, the study also revealed that internal audit facilitates effective financial planning, regulation and monitoring in Nigeria Bottling Company Lagos State. Therefore, it is recommended that since internal audit can assist management in meeting its desired goals, there is need for proper empowerment of internal auditors to acquire the requisite skills and technique in order to be able to face the changing complex operation in public sector organizations. To mention but a few.

Introduction

1.1 Background to the Study

The dynamic nature of business environment growth and increasing complexity of business has made it imperative for management to seek for more avenues of control, which has resulted internal audit which serves as a control measure in both public and private sector.

It is now rare indeed to find an enterprise of any size which does not have an internal auditing function. In many cases internal has eclipse other management services to become efficiency, effectiveness and economy. The need for internal auditing in business organization cannot be ruled out.

As business organizations expands and the level of transaction increases, and there had been cases of frauds, misappropriation of cash and other irregularities, which if not checked will obviously not be interested of the organization, that is why internal auditing must be introduced in every form of business organization be it large or small to check such irregularities. Internal audit functions are performed by employees of organizations functioning in a staff capacity and reporting to a high level officer in the organization.

Internal audit is essentially an appraisal activity within organization for the review of accounting, financial and other operation as a basis for services to management.

Auditing is the examination of certain statement covering the company"s business transactions over a period of time and the financial position of an organization on a certain date in order that true auditor may issue a report on them. They also make sure that the final statement is true and fairly viewed. There are more involved definition, such as that issued by the consultative council of the accountancy bodies (CCAB). This body defined auditing as "The independent examination of an expression of opinion on the financial statement of an enterprise by an appointed auditor in pursuance of that appointment and in compliance with any relevant statutory obligation". The statement adds that the responsibility for the preparation of the financial statement and the presentation of the information included in rests with the management of the enterprise (in the case of a company the director).

The auditor responsibility is to report on the financial statement as presented by the management. The auditor"s duties do not require him specifically to search for fraud unless require by the statute or on the specific terms of his engagement. However, the auditor should recognize the possibility of material irregularities or fraud which could unless adequately be disclosed or state of affairs shown by the financial statement.

Auditor therefore examines the financial transaction to test they are in compliance with the generally acceptable accounting principles and that of the financial statement are true and fair. Setting up an internal audit department to a large extent help in ensuring that operational activities comply with management policies and other related standards. These will give no room for any form of irregularities. Setting up an internal audit department to a large extent help in ensuring that operational activities comply with management policies and other related standards. These will give no room for any form of irregularities. The basis of this study is to inform organizations on the necessity of internal auditing and how it can be properly implemented.

1.2 Statement of the Problems

Inspite of the existence of internal audit department/section in business organizations, it is often argued that the rate of fraud in the organization of the economy is still on the increase.

By delaying payment vouchers, some people argue that the internal auditors are creating more problems than they are solving. Others even see internal auditors as mere tools to witch-hunt and therefore see them as unnecessary evils. An attempt would be made in this study to properly educate other operational managers (who see internal auditors as constituting a nuisance to them) on the proper functioning of internal audit department. The wrong impression held by non audit staff will be eliminate, that internal auditors are merely to detect fraud and therefore must not be concerned with their normal operations.

The research questions therefore are in the problem of this research work which is restricted to the following: does internal auditing play a role in accomplishing true and fair presentation of statement of profit and loss account and balance sheet? Does internal auditing enhance internal control leading to efficient running of enterprise?

1.3 Objectives of the Study

The major of this study is to critically examine the impact of auditing on organizational performance using Nigeria Bottling Company Lagos State as a case study. By extension, this study will specifically;

Determine whether internal audit enhances financial controls in Nigeria Bottling Company Lagos State.

Determine whether internal audit facilitates effective financial planning, regulation and monitoring in Nigeria Bottling Company Lagos State.

Find out whether internal audit contributes to the effective of utilization of resources in Nigeria Bottling Company Lagos State.

Determine the effectiveness of auditing on organizational performance of Nigeria Bottling Company Lagos State.

1.4 Research Questions

Does internal audit enhance financial controls in Nigeria Bottling Company Lagos State?

Determine whether internal audit facilitates effective financial planning, regulation and monitoring in Nigeria Bottling Company Lagos State?

Does internal audit contributes to the effective of utilization of resources in Nigeria Bottling Company Lagos State?

What is the effectiveness of auditing on organizational performance of Nigeria Bottling Company Lagos State?

1.5 Research Hypothesis

Ho: Internal audit does not have a positive impact of auditing on organizational performance.

Ha: Internal audit have a positive impact of auditing on organizational performance.

1.6 Significance of the Study

The major significance of the study is to enlighten the public on the need to adopt the usefulness of auditing in business organization. Business organization are facing serious problem due to lack on internal auditing. If more attention is given to it, it will contribute greatly towards the development of the organization as a whole. It is significant to study the importance of auditing in business organization in Nigeria and by so doing it gives management a better insight as to know how to operate with the auditors in order to make the objective of the organization or company.

To the management/directors, the benefit from this system will help in terms of internal control and the prevention of fraud that may occur in the organization. It would also show the importance attached to audited account made by auditors to the management and external users is financially sound and having met up with the requirements of the information.

As the organization /company continues to exist and make profit, management will now know that auditing is good in term of financial statement given by the auditor that the account is true and fair.

In addition, it widen the knowledge of the researcher, in the course of study and other researchers can go through it for further knowledge of gathering relevant facts.

1.7 Scope of the Study

This study is structured to generally analyse the impact of auditing on organizational performance.

1.8 Limitation of the Study

Like in every human endeavour, the researcher encountered slight constraints while carrying out the study. Insufficient funds tend to impede the efficiency of the researcher in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size. More so, the researcher simultaneously engaged in this study with other academic work. As a result, the amount of time spent on research will be reduced.

Moreover, the case study method utilized in the study posed some challenges to the investigator including the possibility of biases and poor judgment of issues. However, the investigator relied on respect for the general principles of procedures, justice, fairness, objectivity in observation and recording, and weighing of evidence to overcome the challenges.

1.9. Definition of Terms.

Audit:

Accounting to Webster business dictionary is an examination of accounting document and of supporting evidence for the purpose of reaching propriety fairness, consistency and conformity with accepted principles.

Internal Audit:

This refers to the institutionalized examination of accounting procedures with an organization.

Performance:

Performance is defined as what an employee does or does not do. The aspects of performance may include; quantity of output, quality of output, timeliness of output, presence at work and cooperativeness.

1.10 Organization of the Studies

The study is categorized into five chapters. The first chapter presents the background of the study, statement of the problem, objective of the study, research questions and hypothesis, the significance of the study, scope/limitations of the study, and definition of terms. The chapter two covers the review of literature with emphasis on conceptual framework, theoretical framework, and empirical review. Likewise, the chapter three which is the research methodology, specifically covers the research design, population of the study, sample size determination, sample size, and selection technique and procedure, research instrument and administration, method of data collection, method of data analysis, validity and reliability of the study, and ethical consideration. The second to last chapter being the chapter four presents the data presentation and analysis, while the last chapter(chapter five) contains the summary, conclusion and recommendation.

Summary, Conclusions and Recommendations:

5.1 Introduction

This chapter summarizes the findings on the impact of auditing on organizational performance using Nigeria Bottling Company Lagos State as a case study. The chapter consists of summary of the study, conclusions, and recommendations.

5.2 Summary of the Study

In this study, our focus was to examine the impact of auditing on organizational performance using Nigeria Bottling Company Lagos State as a case study. The study was specifically focus to determine whether internal audit enhances financial controls in Nigeria Bottling Company Lagos State, determine whether internal audit facilitates effective financial planning, regulation and monitoring in Nigeria Bottling Company Lagos State, find out whether internal audit contributes to the effective of utilization of resources in Nigeria Bottling Company Lagos State, and determine the effect of auditing on organizational performance of Nigeria Bottling Company Lagos State.

The study adopted the survey research design and randomly enrolled participants in the study. A total of 50 responses were validated from the enrolled participants where all respondent are auditors of Nigeria Bottling Company Lagos State.

5.3 Conclusions

In the light of the analysis carried out, the following conclusions were drawn.

Internal audit enhance financial controls in Nigeria Bottling Company Lagos State.

Internal audit facilitates effective financial planning, regulation and monitoring in Nigeria Bottling Company Lagos State.

Internal audit contributes to the effective of utilization of resources in Nigeria Bottling Company Lagos State.

Auditing on organizational performance of Nigeria Bottling Company Lagos State is somewhat effective.

5.4 Recommendation

Based on the findings the researcher recommends that;

Since internal audit can assist management in meeting its desired goals, there is need for proper empowerment of internal auditors to acquire the requisite skills and technique in order to be able to face the changing complex operation in public sector organizations.

The internal auditors at all level should be adequately independent of members of various departments within the organization so that they can carry out their duties effectively.

There should be regular evaluation of internal control system in order to determine their effectiveness in operation and identify and report to the appropriate authority the weakness, so that corrective action can be taken. Prompt implementation of internal auditors report will encourage them to improve in their functions.

The internal control system should be documented and properly communication to all staff of the organization.

Management should establish and implement periodic review of internal audit unit to ensure that its role and value to the hospital is maximized.

Continuous professional training and development of internal auditors is necessary. This is because the quality of internal control system is only as effective as the quality of the personnel who performs and implements the controls.

Furthermore, remuneration and fringe benefits of internal auditors should be improved as this would enhance their efficiency and honesty in the discharge of their duties and uphold integrity, objectivity and transparency in the conduct of their respective audit functions.

Title Page

Certification

Dedication

Acknowledgement

Table of Content

List of Tables

Abstract

Chapter One:

Introduction

1.1 Background of the Study

1.2 Statement of the Problem

1.3 Objective of the Study

1.4 Research Questions

1.5 Research Hypothesis

1.6 Significance of the Study

1.7 Scope of the Study

1.8 Limitation of the Study

1.9 Definition of Terms

1.10 Organisations of the Study

Chapter Two:

Review of Literature

2.1 Conceptual Framework

2.2 Theoretical Framework

2.3 Empirical Review

Chapter Three:

Research Methodology

3.1 Research Design

3.2 Population of the Study

3.3 Sample Size Determination

3.4 Sample Size Selection Technique and Procedure

3.5 Research Instrument and Administration

3.6 Method of Data Collection

3.7 Method of Data Analysis

3.8 Validity of the Study

3.9 Reliability of the Study

3.10 Ethical Consideration

Chapter Four:

Data Presentation and Analysis

4.1 Data Presentation

4.2 Analysis of Data

4.3 Answering Research Questions

4.4 Test of Hypotheses

Chapter Five:

Summary, Conclusion and Recommendation

5.1 Summary

5.2 Conclusion

5.3 Recommendation

References

APPENDIX

QUESTIONNAIRE

• Role Of Auditing In Ensuring Organizational Effectiveness
• Auditing As An Instrument For Organizational Success

• Accounting Project Topics and Materials