1.1 BACKGROUND OF THE STUDY
According to Orjih John (2001:2) every business organization profit making has objectives and goals in mined to achieve their goals. It is to satisfy the social need of the citizens, and in the achievement of these purpose supervisor more often than not its activities, play a document role. The size and scope impossible for the executors to exercise personal and first hand supervision of operations. It is in this light that audit committee, financial or otherwise established by management is initiated.
By section 360 of the companies and avoid matter act 2004, the auditor is expected to carry out investigations as would be necessary to enable him from a opinion. It follows from above, that even the law does specify the extent of the examination to be carried out by the auditor. This is left to the director of the auditor. This decretion is not abused by the auditor. In practice he goes beyond the legal requirement in discharging his duties and his primary focus is to plan for the projects to be audited and how each project it’s the organization’s needs. This brings to bear on his job a very high standard of professional practice and considerations.
An auditor will therefore involve for distinct practice and procedures via:
Ascertain the validity of original transactions.
Confirming the completeness and accuracy of the recording of these transactions.
Ensuring that the financial statements have been prepared from and are in agreements have been prepared from and are in agreements with the record and
Confirming that the financial statements conform to the relevant status and accounting standards.
According to Chambers Andrews (1974), a complex organization needs an auditor as an extension of the eyes and ears of management who however effective the organization might be unable to inspect the work of their subordinates whose stewardship is dilegated to them.
Internal control system can be broadly divided into two main categories.
It is the accounting or financial control function that internal audit, audit committee, internal checks and other accounting policies and systems built into the initial control network to promote and encourage the attainment of the objectives of the firm.
Initial audit is an initial function which means that it is conducted by the employers of an organization specially designed for this purpose.
It is an organization management responsibility to establish the department not to do so.
The objective of audit committee as internal auditing is to assist all members of management in the effective discharge of their responsibilities, by furnishing them with analysis, appraisal, recommendation and pertinent commentary in the activities reviewed.
To attain such overall objective, initial audit involves such activities as:
Where an internal audit department operates the statutory auditor pays particular attention to its activities as these will have a direct bearing on the scope and depth required by members.
According to Onovo (2011:282), the auditor should consider whether analytical procedures that are perform at or near the end of the audit when forming an overall conclusion as to whether the financial statement as a whole are consistent with the audit’s knowledge of the business indicate a previously unrecognized risk of material misstatement due to fraud. Determining which particular tends and relationships may indicate a risk of material misstatement due to fraud require professional judgment.
Material misstatement of financial statement due to fraud offer involved the manipulation of the financial reporting process by recording inappropriate of unauthorized journal entries throughout the year or at period end, or making adjustments to amounts reported in the financial statements that are not reflected in formal journals entries, such as through consolidating adjustment and reclassifications.
1.2 STATEMENT OF PROBLEMS
It has been stated earlier that the duty of detecting frauds and irregularities lies with the management.
This could only be done through effective and efficient audit committee of the internal control system in an organization. But even with the presence of the internal auditor some problem are still inherent in organization that interfere with goal attainment.
Stock disappears in large numbers on their daily basis.
Assets are either misappropriated or not accounted for.
Those names appear in large numbers on payroll and are undetected for at longtime.
Physical cash are stolen while signatures are forged in cheques also to steal cash frauds perpetuated are only being discovered after longtime.
This project is intended to find out with the above or other problem. If any, is caused by lack of good internal control system by the audit committee in an organization.
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