Internal Auditing As An Instrument Of Effective Management

1.1 BACKGROUND OF THE STUDY
The successful management of an internal audit depends on an effective system of planning and control. The object of the plan is to ensure that all activities of the organization or company are examined in a logical and systematic way. The plan based on the assessment of risk to ensure that the degree of attention paid to any particular activity is consistent with the size, value and strategic importance of the activity.
The development of internal audit is largely due to the expansion in the size of many corporate entities. In a small business, consisting of an owner of manager and a small number of employees, the owners will be able to keep in close touch with all activities. However, as the size of the business increases, this task would become more and more difficult. Similarly in the relatively small organization, the senior manager can personally supervise the day to day running of the business so as to ensure full compliance with management guidelines. This of course, is not possible in multi-branch and diversified enterprises. With the result that the top management realizing the need for an independent check on the activities of middle managers and lower cadre employees established what is now known Internal Audit Department, which is an offline control serves as a security checking device to all on-line controls.
Moreover on-line controls consists of on-group, measures and procedures designed to provide reasonable assurance that all the significant action of the company are regarded for efficiency and protection of corporate asset while off line control is an appraisal activity designed to evaluate the adequacy and effectiveness of the company, which is performed by Internal Audits.
Therefore the services of internal audit are very essential in many organizations and are responsible for advising on management functions and enforcing the operation of internal check within an organization. These are to avoid loopholes in the organization as a result of funds and properties being diverted to personal use.

BRIEF HISTORY OF IMT
The institute is one of the foremost citadel of learning in technological education east of the Niger which was establish under the military regime of Gen. Murtala Muhammed in 1973, should definitely have something to show for the position it occupies in the scheme of things in this country.
One will say that if the Institute of Management and Technology, Enugu is realizing this objective for which it was set up, the activities of the internal audit cannot be ignored. The internal audit which is an arm of the management monitors the implementation and realization of the institute’s laudable objectives as a watch-dog of the organization.
Moreover, reports have shown that lack of internal audit/control has given rise to the collapse if they can no longer provide the necessary facilities needed to realize the objectives for setting them up. This is so because ordinate accounting records form the bedrock of effective management and continuity of any business or establishment. The result of accurate record keeping is that high productivity and adequate provision of good and enviable learning environment will be assured. Adequate accounting records enable the organization monitor the performance of the top management and take necessary and adequate corrective action to ensure Institute of Management and Technology Enugu (IMT) the case study of this work, as one of the foremost citadel of learning in technological education east of the Niger.
The Institute operates line function in the governing council of IMT government by Enugu State. The rector which is assisted by the Deputy Rector reports to the governing council of IMT. There are many departments (Finance, Admission, Auditing, Registrar, exams and Records) to name but few with each and every one of them headed by a head of department high performance at all levels.
In an attempt to ensure effective and efficient system of management control various devices and methods called, internal controls are adopted depending on the nature of the enterprise and the scope of its activities. The internal audit which is an aspect of internal control acts as a watch-dog to bring about completeness and accuracy of accuracy of records and transaction.

1.2 STATEMENT OF PROBLEM
In today’s society, all meaningful establishments or organization set up an arm to guard against some of the notable ills likely to bedevil the establishment. Reports of corruption, embezzlement, and falsification of records, vandalism and what have you have become the order of the day due to the in-ordinate desire, by most people to get rich quick.
Moreover, the reports of audit committees in most enterprises have always shown one thing “managements” inefficiency. The management’s inability to have perfect control or surveillance on the activities of the staff of the organization further poses the greatest contributing factor to the poor performance of most organizations cases of missing records, files and other irregularities are on the increase today inspite of internal audit devices. As a results venture capitalizes and equity owners are frustrated and paint-hearted over the development of these problems.
It is in a bid to maintain accuracy of records and proper financial control, elimination of lapses or loopholes in the accounting system that the management are advised to set up an internal audit department as an aspect of internal control measures to examine transactions and investigate all cases of crime or fraud perpetrated in an organization.
As it were, it is not the primary responsibility of the auditor, in law to detect or prevent fraud and other irregularities. This was categorically stated in the court in the case of Kingston Cotton Mill Co. (1986). In this famous case, Loopes (1896:3) stated, “an auditor is a watch-dog and not a bloodhound”. He is not bound to approach his work with suspicion. He is entitled to rely on the representation of trusted officers of the company. But in view of the improvement in the auditing techniques ever since 1896 when the case was decided, the courts therefore, in sub secruent pronouncement went beyond relying on representations by trusted officers of the organization to personal and physical inspection. This was the case of Re-Thomas Gerard and Sons Ltd (1967). His duty according to section 360 (2) of CAMA 1990 is to state whether a set of accounts meets a true and fair view and comply with the relevant regulations.
It is unfortunate that inspite of laudable programmes by past and present administrations, namely War Against Indiscipline (WAI) now WAI-C (War Against Indiscipline and Corruption) MAINSER (Mass Mobilization, Social Development and Economic Reconstruction), now know as NOA, National Orientation Agency, we are still not out of the woods of corruption and malpractices in both private and public organization.
No matter how hopeless the situation seems, one way of controlling the ugly phenomenon is by monitoring and controlling the activities of the employees through the instrumentation of internal auditor. Moreover, with the technological advancement, crime waves increase, internal audit functions demand, not only re-appraisal of its adequacy and efficiency but also its role an instrument for effective management has to be tested.
The problem therefore are:-
a. How can effective management be achieve or realized
b. What is the role of internal audit in ensuring this control?
c. How can internal audit be made a useful instrument for management?

1.3 OBJECTIVE OF RESEARCH
The objective of research are as follows:
a. To ascertain the extent of these roles have contributed to the overall performance of the establishment.
b. To identify and define the various internal audit function in the institute.
c. To determine the extent of the independence of the internal department, qualification, experience and skills expected of the audit personnel.
d. To offer useful recommendation based on the research findings. This will lead to accelerated provision of necessary infrastructural facilities for conductive atmosphere for learning.
The researcher believes that the information collected from the study will highlight the benefit of educational institutions in the country without internal audit units have been missing. Also it is hoed that this will serve as a necessary foundation in setting up an independent internal audit department in an establishment where it is not yet in existence.

1.4 SCOPE AND DELIMITATION OF STUDY
The study was limited to the Institute of Management and Technology, Enugu that has been used as the case study. The essence was to enable the researcher have enough time to carryout indept study of the subject matter with regards to its operation in the institute. It is important to state that inspite of the sensitive nature of the issue, the quality of work was neither dilutes nor lacked substance and as such should be reliable in establishing comparative standards of performance.

1.5 RESEARCH QUESTIONS
1. To what extent are control measures adequate in design and effective in operation?
2. To what extent does the internal audit department review and control management policy?
3. Has the internal audit contributed in the overall performance, effectiveness and efficiency of the management of the institute?
4. Does the internal audit prevent fraud and irregularities?
5. To what extent has the competence of internal auditors affected the effective management of the institute.
6. To what extent has the accounts of the institute meets a true and fair view and comply with the relevant regulation in other to promote management in the institute.

1.6 SIGNIFICANCE OF THE STUDY
It is hoped that this study will enable the management of the institute and any other similar institutes, business organizations and the general investing public be guided adequately in pursuit of the realization of their avowed objectives. It will enable them manage the increasing cases of fraud and sophistication of crimes, irregularities and their implications.
Finally, it will be of immense benefit of the practicing accountants in their audit duties, they would be accountants, legal practitioners who need them as a good reference guide for their legal duties.

1.7 DEFINITION OF TERMS
In this piece, there are some words that might appear confusing to the readers, therefore these auditing and accounting and true and fair view are literally explained thus:
Auditing:- Is the official examination of accounts to see that they are in order or can as well be defined as the examination by qualified persons of the book and accounts of a business or undertaking to prevent fraud or inaccuracy on the part of the person keeping it. It is an independent examination and expression of opinion on the financial statement of an enterprise by an appointed auditor in pursuance of that appointment and in compliance with the relevant statutory obligations.
Accounting:- This is a process by which data relation to economic activities are measure, recorded and communicated to interested parties by analysis and interpretation.
TRUE AND FAIR VIEW:-
True:- This means that the facts obtained are reliable.
Fair:- This also means that it is in accordance with accounting law.