TABLE OF CONTENTS
Cover page i
Title Page ii
Declaration Page iii
List of tables vi
CHAPTER ONE: INTRODUCTION
- Background to the study 1
- Statement of problem 5
- Objectives of the study 6
- Research Questions 7
- Research hypotheses 7
- Significance of the study 9
- Scope and limitations of the study 9
- Definition of Terms 10
CHAPTER TWO: REVIEW OF RELATED LITERATURE
- Conceptual framework 11
- The Concept of Auditing 11
- Auditing and Accounting Functions 15
- Overview of InternalAudit 16
2.1.4 Overview and principle of Internal control 20
2.1.5 Purposes of Internal Control 22
2.1.6 Objective and Purpose of theInternalAudit 24
2.1.7 The concept of Audit Independence 25
2.1.8 Types of Audit Independence 29
2.1.9 Safe Guarding Auditors Independence 32
2.2 Theoretical Frameworkof thestudy 38
2.3 Empirical Review 39
CHAPTER THREE: RESEARCH DESIGN AND METHODOLOGY
- Research design 46
- Sources of data 46
- Population of the study 46
- Instruments for Data Collections 47
- Validationof the instrument 48
- Reliability of the instrument 49
- Method of data analysis 49
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
- Data presentation 50
4.2 Testing of hypotheses 60
CHAPTER FIVE: SUMMARY OF FINDINGS, RECOMMENDATIONS AND CONCLUSION
- Summary of findings 66
- Conclusion 67
- Recommendations 68
1.1 Background to the Study
At the heart of business establishment, is the audit function; which is evidenced by the fact that all other departments are linked with the internal audit department. The importance of internal audit system cannot be overemphasized where a variety of requirements, processes that are both manual and information communication technology-based (ICT) are used.
Organizations such as the banking sector have recognized internal audit function as a tool for ensuring effective workings of the internal control system. Okolo (2011) describes the internal audit function as an aspect of control mechanism, within a business, manned by specially assigned staff.
In today’s volatile business environment, firms in Nigeria face a wide array of complex business challenges. These challenges come in the form of regulatory compliance, litigation, competitive market pressure, changing technology, investors demand, corporate governance, business ethics and accountability. In a business environment, anyone given the opportunity and the environment can commit fraud. The internal audit staff, in a non-automated or particular environment, may be ill-positioned to investigate fraud. It is established that an internal audit staff who is professionally certificated with the right motivation and training can contribute to the efficiency and effectiveness of the audit department.
Oseni (2014) reveals that an effective internal audit function reduces overheads, identify ways to improve efficiency and minimize exposure to possible losses. According to Lavy (2008), the internal audit provides an independent and objective appraisal of activity for management. Katz (2012) summarizes the core activities of the internal audit as analysis of data, recommendation,counsel and information activities.
He argues that these activities operate to accomplish the mission of organizations. Young (2010) finds out that the internal audit functions assist management in achieving organization’s financial and operating goals by evaluating controls, identifying weaknesses, and providing recommendations through complete and unrestricted access to records, property and personnel.
However, in Nigeria, the audit function in the banking sector has not been fully tapped; consequently, cases of errors and intent to defraud and other fraud cases exist in the industry. It is therefore no wonder that the distress in most banks reflected lack of effective control mechanism of the audit function.
The experiences of failed banks in Nigeria, have called for the reinforcement of internal audit and the strengthening of the controls system. This becomes relevant, given the fact that the banking sector is critical to the survival of any economy. In the light of the above, this study critically appraises the role of internal audit in the management of fraud.
1.2 Statement of the Problem
The duty of detecting fraud and irregularities lies with the management. This could only be done through an effective and efficient internal audit system. But even with the presence of the internal auditor some problems are still inherent in the Nigerian banking sector that interferes with goal attainment. These include:
- Physical cash stolen while signatures are forged in cheques also to steal cash. Out if untimely or inappropriate audit, there are cases of monetary losses due to forged cheques.
- Assets are either misappropriated or not accounted for. Due to ineffectiveness of internal auditors cases of assets misappropriation sometimes occur in the banking sector.
- Frauds perpetuated are only being discovered after a long time. Internal auditors can decide not to reveal the fraudulent activities of staff or management. Such actions are mostly discovered by external auditors after a long while.
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