Impact Of Auditing And Internal Control On The Efficient Performance Of Public Enterprises

GENERAL INTRODUCTION
1.0 INTRODUCTION
It is generally agreed that the oil boom of the 1970’s encouraged the public sector to play on increasing dominant role in the Nigerian economy. By the beginning of 1890’s the public sector accounted for about 50 percent of the gross domestic product (G.D.P) two third (2/3) of employment in the production sector and maintained about 70 non commercial parastatals and 110 federal commercials, many of which needed financial support to cover operating losses. Furthermore, Nigeria like many other developing countries since independence in 1960 and particularly during the oil boom of 1970’s witnessed a growing involvement of the state in economic activities as a means of fostering rapid economic growth and development.
Public enterprise are organized enterprise set up by the state for certain specific purposes such as employment generation for citizens, revenue generation to the state for provision of essential services to the citizens, economic growth and development, breaking of monopoly etc. Some of which are designed to be profit mating, public enterprise are centered in some cases because their business c an not be efficiently carried out by the government departments and are also unsuitable or unattractive to private enterprise. In Nigeria and other West African countries, the railways supervision of its performance and adherence to guidelines and company corporate policy. In the period of economic crises, the need for accountability becomes more pronounced. The question of effective audit, consequently, is worth examined. How can the management of these public enterprises ensure that the organization resources are efficiently used and as well understand what happen at all level of operation: The most pertinent answer is the installation of internal control system which is an aspect of auditing. Internal control, according to ROBERT,W,U(2001:139) the process by which necessary resources are provided and employed efficiently and effectively towards the achievement of the set goals. According to B N Okezie (2002:74) classified internal control can be likened to the heart which regulates the business blood. Nobusiness can success without effective internal control system. According to MORALITY (1991:4) effectiveness and efficiency of an organization is measure so as to determine the manner its management has control the firms resources.
The attainment of any organizations dreams depends largely on how effective its management is controlling actions of undertaken. If there is proper application of internal control and auditing in public enterprise, assets will be completely safe guarded from waste, fraud and efficient use, error and irregularities will be detected and prevented as well as controlling large sales financial malpractice. On the other hand, a weak and inefficient auditing and internal control system would hardly lead to the achievement of an organization goals. There would be collusion of duties as a result of inadequate segregation of duties the organization could face large scale of fraud either by fraud stars, or by the employees, intentional forgeries, stealing due to unsafe guarded assets. Some enterprises may have to falsify their financial statement in order their deceit by enterprise, an audited financial report may contain among other things the following terms.
1) The financial statements (Balance sheet, income statement and note on accounting conventions and policies)
2) The directors report
3) The auditors Reports
According to Taylor G (1979L430) the fundamental objective of a financial report is to communicate economic measurement of information about the resource and performances of a reporting entity. The auditors opinion on the financial report established and published by the enterprise gives credence to the public and/or investors. On the final note, this research work or study is being conducted in order to find out whether public enterprise produce account and financial accounts fro audit, whether auditing and internal control has a positive impact on the efficient performance of public enterprises, whether audit report comes out yearly in arrears which makes it possible for the use of financial data in management decisions etc giving recommendations where necessary.

1.1 BACK GROUND OF THE STUDY
HISTORY OF THE ORGANIZATION: Casar paper ill Ltd commences business in 1992 a small scale industry. They were into importation of paper mills from carbon to Nigeria and scales to other paper mills companies in Nigerian in 1996 and 1997.
CASAR PAPER MILL LTD: Is located atAfor- Ogbe Ahiara Aliazu Mbaise Imo State opposite Eze Oberenwa Compound. It have braches at Aba Abia States. The company also specialized in the production of issue.
papers, Note books, Totters, and other writing materials etc. The companies have about three expatriate technical management staff from GARBON including some indigenous managers who are involved in the management team. Other members of staff ranges from senior staff and lowest cadre are the casuals. The company has over 158
Distributors Nation- wide who are being supplied of the industrial products. Since 1992 the companies have maintained its good products in the production line.

1.2 STATEMENT OF PROBLEM
1. Public enterprises in Nigeria has been severally unitized for their operational and pricing inefficiencies.
2. Most of the public enterprises were found to be ills- conceived and economically inefficient, they also accumulated huge financial losses and absorbed disproportionate share of domestic credit as hey were sub-stained through budgetary allocation from the nation.
3. Amy state owned enterprises in Nigeria failed to generate investible surpluses for government instead they becomes a burden on government budget.
4. Most of the managers of public enterprises fuels shy of using financial information or are net trained on how to handle some for decision making purpose thereby rendering the performances of these enterprises inefficient.
5. Some of the public enterprises don’t use internal control talk less of auditing the account as required by law.

1.3 OBJECTIVES OF THE STUDY
This study is carried out to ascertain whether auditing of financial statement and the application of internal control ensures the credibility of the report and makes them more reliable enhances the efficient performance of the enterprise and also measures their acceptability and dependability. The study intends.
– To Determine the extent to which audited financial reports and internal control relate to the enterprise.
To find out the possible effects on the enterprise where it done not adopt the concept of auditing and sound internal control system.
– To ascertain if public enterprises produces accounts and financial documents for audit.
To determine whether audited reports come out yearly in Arrears making it possible for the use of financial data in management discussions.
To find out whether financial data are available at all or when available they are out of data or presented in an irrelevant form for use because of bad accounting system infrequent auditing, weak and inefficient internal control system.

1.4 RESEARCH QUESTION
Base on the points mentioned in the statement of problem, this research work is to provide answers to the following question.
1. What extent do the audited financial reports and internal control relates to the enterprises
2. What effects on the enterprises where it does not adopt the concept of auditing and sound internal control system.
3. What financial documents do the public enterprises produce as account for audit.
4. How did public enterprises make use of internal control in decision making?
5. What report did the management of public enterprises use making planning.
6. What pricing techniques do they operate to control the price inefficiency.
7. If there is internal control, how after do they public enterprises use them in management planning?
8. How can public enterprises found to be ill- conceived and economically inefficient.
9. What measure is the management is using to control losses.
10. Is there any help or efforts Government is making to assist the public enterprises.
11. Is it true that any state owned enterprises in Nigerian failed to generate investible surpluses for government?

1.5 STATEMENT OF HYPOTHESIS
H0: There is no positive relationship between auditing and internal control in the enterprise.
H1: There is positive relationship between auditing and internal control in the enterprises.
H0: There is no significant in the performance of public enterprise with internal control system.
H1: There is significant in the performance of public enquiries control system.
H0: Auditing and internal control do not effectively enhance the efficiency performance of financial statement.
H1: Auditing and internal control effectively enhance the efficiency performance of financial statement

1.6 SIGNIFICANCE OF THE STUDY
The study is of significances with the following reasons.
1. It will aid both the present and parental managers as well as the entire management staff to be aware of ever increasing need and usefulness of auditing and internal control system.
2. It will also serve as reference materials to those who would be conducting research in the same subject matter or topics.
3. It will assist one to understand the impact of auditing and sound internal control system on the financial statement and efficient performance of these enterprises.
4. It help those enterprises which does have any idea of audit and internal control to start implementing and putting it into practices.
5. Finally, the recommendation at the end of this study will enable the companies (public enterprises) in solving most of their auditing and internal control system problems.

1.7 SCOPE OF THE STUDY
This research work will focus its attention on public enterprise in CASAR PAPER MILL LTD Ahliazu Mbaise Imo State. It is aimed at are assessing the system on the efficient performance of these public enterprises.

1.8 LIMITATION OF THE STUDY
There is hardly, any activity in a dynamic environment that is not constraints by one factor or the other. Likewise, this study cannot be deemed completely from the following limiting factors.
a. TIME CONSTRAINTS: The number of enterprises needed for the survey will be affected by time constraint. This will no doubt limit the extent of the research work. However the result of the surveyed public enterprises should be taken as a fair representation of what is obtainable.
b. FINANCIAL CONSTRAINTS: Another glaring limitation would be the financial constraints in carrying out the study. Despite these limitations the study will achieve its objectives and would be benefice to anyone who seek the knowledge of expanding on this subject matter.
c. METHOD OF ANALYSIS: The research study will be affected by the method of analysis finding on a simple percentage resources. It is hopeful that the result will not be different if another statistical analysis techniques are used. Therefore generation of finding would be accepted without reservation.

1.8 DEFINITION OF TERMS
In order to eliminate the contusion what might occur during the reading of this project, the researcher deemed it necessary to define certain terms.
– PUBLIC ENTERPRISE: According to Chukwu (2001:482) It comprises government ministries department and other not for profit organization established by the government to render specified services
– CONSISTENCY: In Okezie (2002:12) It states that when a company selects a method, it should continue (Unless conditions warrant a change) to use that method in subsequent periods so that a compensation of accounting figures over will be meaningful.
POLICIES: those bases, rules, principles, conventure and procedures adopted in preparing and preventing financial statement Chukwu (2006 106)
– CREDIBILITY: In accounting audit, this means that financial statement can believed and relied on by outsiders. This includes stockholders creditors, government and other interested parties. MEIGS AND MEIGS (199:2)
– AUDIT: The investigation by internal or external auditors fro the purpose below:
i. protection of undertaking against frond, waste and other avoidable losses.
ii. Adherence to prescribed policies and procedures
iii. Indicating how the control effectiveness and profitability of t he and related functions can be improved. Johnny (2003:175)
– ACCOUNTING: The concept process by which financial and economic data primarily quantitative are gathered and summarized in report for decision making Okezie (2001:1)
– INTERNAL CONTROL: This is an independent appraisal activity within an organization for the raiser of the operations as a services to management. It is a managerial control which functions by measuring and evaluating the effectiveness of other controls. Okezize (2004:108)
– ACCOUNTABILITY: This is the state of being liable to report on and justifying actions in relations to specified mattes. ANDERSON (1983:10)
– ACCOUNTING CONTROL: These are the procedures, techniques and practices that will protect the company’s resources and provide for reliable financial statement.
– ACCOUNTING SYSTEM: Of records procedures and equipments that routinely deals with the events affecting the financial performances and position of the entity. HORNGEEN (1982:998)
– ASSETS: These are those properties that belongs to the business or what the business owns. Fixed assets, current assets and tangible assets Okezie (2002:30)
– MANAGEMENT: The process of getting things done through people/subordinate by planning organizing, directing, coordinating, and controlling their activities for the purpose of accomplishing objective DAPPER (2005:127)
– AUDITED FINANCIAL STATEMENT: This is a financial statement that has been prepared within the organization as authorized by management and being attested by an independent external auditors MEIGS AND MEIGS (1982:3)
– FINANCIAL STATEMENT: This is a statement which reports the result.
– EFFECTIVENESS: This is the quality of being able to bring the result intended and making a striking impression.
– FINANCIAL AUDIT: A systematic examination of the financial statement record and related operations to determines adherence to the general accepted accounting principles, management polices and statement. HOLMES (1977:70)
– FRAUD: The deliberate steps by one or more individuals to deceive or mislead with the objective of misappropriating assets of business, distorting an organizations apparent financial performance or strength or otherwise obtaining an unfair advantages. OSIEBE (2202:52)
– AUDITOR: An independent criterion appointed to verity the books of accounts and Vouchers’ of a business prepare by other.
He approaches his tasks in a critical frame of mind. This does not means that he should assume that there are bound to be errors and inaccuracies on the accounts subject to his audit. MEIGS AND MEIGS (1982:20)
Internal control: According to HOWARD (!982:30) internal control as not only internal cheek and audit but also the whole system of financial control and otherwise established by the management in order to carry out the business of the company in orderly manner as to safeguard the assets and scarce resources.