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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. Inn 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. How ever 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

Chapter three dwelt on the research methodology employed in the study. I discussed the various sources data used, the sample from which information was sought and the reasonability of using such samples. Chapter four provide presentation and analysis of data collected and testing of research hypothesis. Finally Chapter five summarized the findings of the research and offers recommendations and conclusion.

CHAPTER ONE

INTRODUCTION

1. Background to the 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. So to monitor the procedures and adherence to principles
to an organization, internal auditing could be looked upon as a key. A typical
example is seen in the case of World com, (a financial establishment in United States of America)
when Cynthia Cooper (Vice President of the internal auditing team) and her
staff unveiled several auditing practices which were not in line with the
Generally Accepted Accounting Principles (GAAP). In carrying out this audit, it
was discovered that for previous two years, $3.8 billion in cost had been
capitalized rather than expensed. This announcement was made in June 2002.

 Pinero (2001), in his paper presented at a
workshop for internal auditors stated that “the prime objective if the Internal
Auditing Department (IAD) in any bank is to evaluate whether the bank’s
framework of risk management, internal control and corporate governance processes
are adequate and functioning properly and carried out throughout the year. He
added that the objective of the internal auditing department (IAD) includes
suggesting and recommending the management for improvement in internal control
and risk mitigating factors. Internal audit services provided by the IAD
therefore exist to add value to the organization, to concentrate on the key
risks, to evaluate and assess the Internal Control System (ICS) and contribute
to the proper economic, efficient and effective use of resources in banks and
other organizations (Miten Keynes Council,2002). As such the IADs of Oceanic
bank plc, UBA plc and First bank plc could be looked up to as monitors in their
various organizations as they check the risks and ICS of the organizations. Therefore
internal auditors in Nigeria,
in carrying out their function and roles judiciously could as well save a
company or organization from a fall.

From the above, it will be reasonable
enough to agree with Frigo (2000) who points out that it is wrong to think of
auditing as only “financial” in nature. According to him the scope of internal
auditing within an organization is very broad and may involve topics such as:

• The
  efficiency of operations
• The
  reliability of financial reporting
• Deterring
  and investing fraud
• Safeguarding
  assets and
• Compliance
  with laws and regulations

As a result of the broad scope of
involvement, internal auditors (those who carry out the profession of internal
auditing) may have a variety of higher educational and professional
backgrounds.

It can be interpreted from the above that audit departments in organization function in a particular way to ensure the growth and development of the organizations.

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