EFFECTIVENESS OF INTERNAL AUDITING AND ITS CONTRIBUTIONS TO MANAGEMENT DECISION PROCESS IN AN ORGANIZATION (A STUDY OF GEETA PLASTIC PRODUCTS NIGERIA LIMITED, LAGOS)

EFFECTIVENESS OF INTERNAL AUDITING AND ITS CONTRIBUTIONS TO MANAGEMENT DECISION PROCESS IN AN ORGANIZATION (A STUDY OF GEETA PLASTIC PRODUCTS NIGERIA LIMITED, LAGOS)

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ABSTRACT

The aim of this study was to investigate the internal auditing and its contribution to management decision process in an organization, a study of Geeta Plastic Products Nigeria Limited, Lagos. Find revealed that the calculated value of 16 was compare with the critical value 2.01 after 0.05 level of significance without losing sight of the degree of freedom 48 which invariably postulate that the null hypothesis is rejected min the place of alternative. The research area was confined to Geeta Plastic Products Nigeria Limited, Lagos. Total number of 50 was used as a population after employing the Taro Yamani formulae, questionnaire were administered to the whole 50 and were retrieved which is the basic for analysis in chapter four. Data analysis technique employed was the Pearson’s product correlation coefficient. At summary, attempt to give a general view of effectiveness of inter auditing and its contribution to management decision process in an organization both positively and negatively. In view of this, I hereby recommend that since internal audit is crucial in detecting fraud in an organization, directors should consider it to be a do or die affairs and more emphatically the issue of internal auditing should not be overemphasized.

CHAPTER ONE

INTRODUCTION

1.1            Background Statement

Organizations are set up to produce goods and services to customers with the aim of making profit from such transaction.  Thus, profit maximization is the sole aim of all business ventures.  This profit can be used in two ways:  kept as retained earnings and or shared as dividend. Business ventures or organizations required financial capital for its management or which earning need to be effectively manages if the organization will continue in operation.  It becomes pertinent function of management of the organization who are saddled with the responsibility of running the organization to ensure that these resources are not siphoned, misappropriated or mismanaged.

It is against this background that the internal audit is created in organization.  Thus it was necessary by the perspective to create or establish a business of the company in an orderly manner, safeguard its assets and secure as far as possible the accuracy and reliability of the organization records and account. The internal audit department was therefore in addition to the above duties ensure the following;

-     The all monies due to the organization are received and lodged with the bank or otherwise properly accounted for.

-     That all the assets of the organization are accurate and up to date.

-     That all the asset of the organization are in proper custody.

-     That the organization does not suffer any loss due to any irregularities committed by members of staff such as fraud, misuse or dereliction of duty in any shape or form.

-     That policy of the organization are reviewed and adjusted as a result of changes in political and economic situation.

-     That the laid down policies and procedures of management in all areas of operation.

-     The management in constantly fed with information it requires for planning and  control purposes, particularly, information in respect of any significant variance between plans and actual results.

From the outlines functions we can see that in additions to ensuring an accurate and reliable internal audit also involved in planning, compliance and policy adjustment and re-examination. Thus, internal audit is an integral part of management of organization. Considering the roles and functions of internal audit, we intend to examine in the work how its effectiveness had contributed in management decision making process in an organization.

1.2         Research Problem

Prior to the creation or establishment of the internal audit in organization, most organization have existed without this very important section or departments when it established.  It was created to solve financial misappropriation, fraud and other financial irregularities.  The department was created to detect frauds, count pretty cash, spot dummy workers and management operation or decision making process of the management.

Some organization does not see the need for the establishment of this department either because of ignorance of its very important role of their inability to manage the department.  Those who had the department or section now stated that internal audit was not all about fault finding and fraud detection. An in-depth examination or review of the functions and duties of the internal audit reveal it encompasses, safeguarding and securing the assets, ensuring accuracy and reliability of accounting record as a way of minimizing profit and other financial misappropriation.

It is against the background of the very important function of the internal audit that this work is design to examine the effectiveness of internal audits contribution in management decision making process.  Thus we intend to study or examine how the function or duties carried out by the internal audit department have contributed to the management of organization in its decision processes.

1.3         Objective of the study

          The main aim of this research work is to arrive at the importance of the role of internal audit in the organization decision process.  Specifically, it shall strive to look at the following;

i.                   To find out the impact of internal audit in an organization.

ii.                To determine the contribution of internal auditing in an organization.

iii.             To examine the internal audit in an organization.

iv.             To determine the factors affecting internal auditing in an organization.

v.                To examine the role of the internal audit in the organizational decision process.

1.4            Research Questions

In order to scientifically carryout this study the following major research questions were asked;

i.                   How does the internal audit affect the financial status in an organization?

ii.                To what extent has internal audit influence organization decision making?

iii.             What are the benefits derived from internal auditing in an organization?

iv.             Is there any important variable to be kept in mind when auditing company’s account?

v.                Does internal audit hinder the growth of organization?

1.5            Research Hypotheses

1.     HO: There is no significant relationship between internal audit and management decision making.

HI: There is a significant relationship between internal audit and management decision making.

2.     HO: There is no positive and significant relationship between internal audit and efficient organizational performance.

HI: There is a positive and significant relationship between internal audit and efficient organizational performance.

1.6         Significance of the study

No matter the conflicting opinion as regards the establishment of internal audit its duties and responsibility, as raised in the proceeding section the fact remains that internal audit is an integral part or department in organization.  This status or position its attain by the very significant function it carries out which ranges from safeguarding of company asses, accurate and effective accounting records, ensuring compliance with policies, effective financial transaction, policy review and readjustment to information and data generation.

Thus in this study we intend to examine effective discharge of these duties contributed to the decision making process or organization. This work is therefore significant because upon completion it will be a useful instrument for:


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