The Role of the Internal Auditing Department in Organizations

Abstract

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.

In 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.

However, 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

Introduction

Background Of 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.

References

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Aghili, S. (2009) “A Six Sigma Approach to Internal Auditing.” Strategic Finance: 38-43

Albrecht, W. S. and C. O. Albrecht (2004), Fraud Examination and Prevention.South-Western Educational Publishing

Alvin, A., Randal, J. and Beasley M. (2002). Auditing and Assurance Services: An Integrated Approach. Eleventh Edition, Pearson Prentice Hall.

Andy, W. (2001). Audit Independence: “The Case of Nigerian Public Service.”Seminar presentation in UK for Certified Internal Auditors.

Association of Certified Fraud Examiners (2003). Fraud Examiner’s Manual.