Internal Auditing and Firm Performance: A Study of Selected Manufacturing Companies in Nigeria

Reference Code: C069

ABSTRACT

This research thesis investigated the effect of internal auditing on the performance of Nigeria Breweries PLC. In order to achieve the objectives of the study, three research questions and hypotheses were formulated and data collected through the issue of sixty four (64) structured questionnaires to the accounting staff of the company. Data collected was analyzed through Pearson Correlation using Statistical Package for Social Sciences. The findings indicate that there is a positive and significant relationship between internal auditing implementation and the profitability. The findings also reported that there is a positive and significant relationship between internal auditing implementation and fraud prevention of Nigeria Breweries PLC. Finally, the findings show that there is positive but statistically insignificant relationship between internal auditing implementation and loss prevention. Based on the findings as enumerated above, we draw the following conclusions: The implementation on internal auditing is an important determinant of profitability at Nigeria Breweries PLC. Furthermore, the implementation of internal auditing significantly contributes towards the reduction and elimination of fraud in the organization. Finally, it is concluded that the activities of internal auditors at Nigeria Breweries PLC does not significantly prevent the occurrence of loss in the company. Based on the findings and conclusions, the following recommendations are made: The company must ensure a stringent implementation of internal controls in the company. This will help to reduce losses as a result of workers’ malfeasance and negligence. It is further recommended that Nigeria Breweries PLC employ adequately qualified experts in the field internal auditing as well as provide them with the best tools to be able to conduct their activities optimally. Finally, it is recommended that internal auditors in the firm widen their net of monitoring activities in order to capture more areas through which the firm is sure to suffer loss and make adequate recommendations on how to reduce them.

INTRODUCTION

............. Internal audit is a long-standing function and a tool of management in many organizations. It has been a recognized component of internal control of organizations in both the public and private sectors and in most industries for many years. Internal auditing is often seen as an overall monitoring activity with responsibility to management for assessing the effectiveness of control procedures which arc the responsibility of other functional managers.
The internal audit function is not limited to the operation of any particular function within an organization. Rather, it is all-embracing and accordingly is structured in the organization as a separate entity responsible only to a high level of management.
According to Okezie (2004), the main objective of internal auditing is “to assist management in the effective discharge of their responsibilities by furnishing them with analysis, appraisal, recommendations and pertinent comments concerning the reviewed activities”. Internal auditing which is often seen as constituting a large and significant aspect of an organization’s financial control system is a vehicle to success and survival.
According to Magara, (2013) “internal auditing is taking on increased importance in many of today’s global organizations by assisting management in evaluating controls and operations and thereby providing an Important element of global control”.
Cadez & Guilding, (2008) also recognized the control role of internal auditing when they stated: It is generally recognized that the proper organization, staffing and methodology of internal audit presents the board with the best means of focusing on its obligation to ensure proper controls in the business.
However, the need for an internal audit function will vary depending on company specific factors including the nature, scale, diversity and complexity of the company’s activities and the number of employees as well as cost/benefit considerations.
Moreover, Cadez & Guilding, (2008) had argued that for an internal audit function to be effective to enable an organization realize its full benefits, the function must have clearly defined objectives, authority, independence and appropriate resources. The internal audit department is very important inside a firm that the internal audit is regarded as the key element in the application of accounting systems which in turn, helps in evaluating the work of the department.
The internal audit is considered as the backbone of the business accounting as it is the section that records all businesses related to the sector. The efficiency of internal audit helps develop the work of the company because the financial reports reflect the internal audit department’s quality.
Internal audit is also a significant part of the Corporate Governance structure in an organization and Corporate Governance encompasses oversight activities taken by the board of directors and audit committees to make sure that the financial reporting process is credible (Chan, Farrell, and Lee. 2008). ............... FOR ACCESS TO THE FULL PROJECT WORK, USE THE ORDER NOW! BUTTON BELOW

TABLE OF CONTENTS

CHAPTER ONE

INTRODUCTION
1.2 BACKGROUND OF THE STUDY 1
1.2 STATEMENT OF RESEARCH PROBLEM 6
1.3 AIM AND OBJECTIVES OF THE STUDY 8
1.4 RESEARCH QUESTIONS 9
1.5 RESEARCH HYPOTHESES 9
1.6 SIGNIFICANCE OF THE STUDY 10
1.7 SCOPE AND LIMITATION OF STUDY 11
1.8 BRIEF HISTORY OF NIGERIA BREWERIES PLC 12

CHAPTER TWO
REVIEW OF RELEVANT LITERATURE
2.1 THEORETICAL FRAMEWORK 14
2.1.1 The Agency Theory 14
2.1.2 Stewardship Theory 18
2.1.3 Stakeholder Theory 20
2.2 CONCEPTUAL FRAMEWORK 23
2.2.1 Overview of Internal Auditing 23
2.2.2 History and Evolution of Internal Auditing 27
2.2.3 The Roles of Internal Auditors 30
2.3 REVIEW OF EMPIRICAL LITERATURE 36

CHAPTER THREE
RESEARCH METHODOLOGY
3.0 INTRODUCTION 43
3.1 RESEARCH DESIGN 43
3.2 STUDY POPULATION 44
3.3 SAMPLE AND SAMPLING TECHNIQUE 44
3.4 NATURE AND SOURCES OF DATA 45
3.5 METHOD/INSTRUMENT OF DATA COLLECTION 45
3.6 METHODS OF DATA ANALYSES 46
3.7 VALIDITY AND RELIABILITY OF INSTRUMENT 47

CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
4.0 INTRODUCTION 48
4.1 DATA PRESENTATION 48
4.1.1 General Information about Respondents 48
4.1.2 Familiarity with Internal Auditing 51
4.1.3 Analyses of Research Questions 53
4.2 DATA ANALYSIS 60
4.3 TESTING OF HYPOTHESES 62
4.4 DISCUSSION OF FINDINGS 64

CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
5.1 SUMMARY OF FINDINGS 67
5.2 CONCLUSION 68
5.3 RECOMMENDATIONS 70
REFERENCES 72
APPENDICES 76

Reference Code: C069
Reference Code: C069
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95 Pages

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