THE ROLE OF AUDITING IN FINANCIAL CONTROL. A CASE STUDY OF SOUS AND SONS ENTERPRISES LIMITED

THE ROLE OF AUDITING IN FINANCIAL CONTROL.

A CASE STUDY OF SOUS AND SONS ENTERPRISES LIMITED

ABSTRACT

The thrust of this work is the role of auditors in financial control, to this end, the concept and practice of auditing were generally examined. The company under review is the sole manufacturer of Sous Vegetable Oil and other like jet bar soap, gold bar soap and its environs, enjoys monopolistic tendencies.

The essence for “financial control” by this level cannot be over-emphasized as the sources and application of funds involving the company has to be presented to the owners.

In a true & fair view, to achieve this objectives, an independent examination and expression of rational opinion on the financial statement of the company is simply called Auditing. Paragraph ‘4’ of the Auditors standards and guidelines states that the auditors should obtain relevant and reliable audit evidence sufficient o enable him draw reasonable conclusion.

In the older, emphasis was not placed on Auditing; but now, Accountants and business-men recognize auditing as an effective instrument of operating and financial control.

Also, it is obvious that the public expectation of Audit reports run at cross-roads with what is obtainable in practice and this widened the gap impacts seriously on the investments decisions of the investing public. Auditing should not be stifled by bad acts which are irrational and unnecessary.

During the research work, the format of research questionnaire were used, interview sessions and etc were also used to complete the effort of questionnaire.

CHAPTER ONE

Introduction

  • background of the study
  • Statement of the problem
  • Objectives of study
  • Significance of study
  • Delimitation & imitations
  • Definition of terms

CHAPTER TWO

Literature Review

  • Origin and purpose of auditing
  • Definition of auditing
  • Role of auditors in financial control
  • Duties and rights of auditors
  • Auditing and computer environment
  • Audit practitioners & types of audit
  • Provisions of “CAMD” 1990 on auditing
  • Impact of professional bodies on auditing
  • The essence of internal control in an organization

CHAPTER THREE

OVER VIEW AND RESEARCH METHODOLOGY

  • SOUS Enterprises Ltd. A model of Sous vegetable oil
  • Functions & Job descriptions of internal & External auditors
  • Types of accounting records.
  • Sources of data
  • Samples used.

CHAPTER FOUR

DATA ANALYSIS AND PRESENTATION

  • Introduction
  • Analysis of responses and presentation
  • Testing of hypothesis
  • Acceptance of tested hypothesis
  • Interpretation of results.

CHAPTER FIVE

  • Summary of findings
  • Discussion of finding
  • Conclusion
  • Recommendation

Bibliography

CHAPTER ONE

INTRODUCTION

  • BACKGROUND OF THE STUDY

The role of auditing have been taken as the major thing in an organization. In the past, the management of the economy has been characterized by corruption and mis-management of funds.

The performance of our economy at past therefore says that the economy problems now are the uncommitted and corrupt leadership. By this dirty characters by our leaders, I begin to wonder what roles the auditors has been playing to build a virile nation.

The aim of accountability in any society is to show how well firms and people of public and private funds and property have performed. Rather, many people in this time involved with the “get rich quick” also known as “419”, this becomes necessary to critically evaluate the importance or even the relevance of Auditing in the face of increasing fraudulent practices.

The accounting profession which requires the members integrity, independence and objectivity of performance as well as strict adherence to accepted professional conduct.

The need for integrity and sense of purpose visa-vis financial control at this state cannot be over emphasized in a bid to channel the surplus funds to prioritized areas.

Even the excess fund realized couldn’t be used for development of a solid technological and industrial base for the organization, therefore there is utmostly more dependence on the outside or foreign sector for technology and raw materials.

The company under review is a case in point, both the technology of raw materials are source externally apart from the Eleme source internally.

Also, the company provides goods & services to the public, generate employment opportunities, as well as contributing substantially to government revenue.

This also comes to an extent that all registered limited liability company should have their financial records audited annually by a firm of Auditors so appointed.

The law stated as above for the auditor to express the position on such financial statements; and for the opinion to be authoritative, the auditor must be seen to be independent.

To achieve efficient and effective financial controls, we make use of various devices and methods such as internal control are used.

Since companies differ both in degree and in substance depending on the nature of business and the commercial environment it operates, reliance on internal control systems (ICS) is dependent on certain factors.

Through the Auditors operational standards and guidelines, the paragraph 5 states that if the auditors wishes to reliance on any internal control, he should ascertain and evaluate those control & perform compliance rest on their operation”.

Which is to ensure completeness and accuracy of all financial records and transactions.

 

 

  • STATEMENT OF THE PROBLEM

The man aim of Audit is to provide assurance the needs of this assurance are the external users of the financial statements like the creditors, government agencies, share holders, Bankers and he public at large.

These people need confidence that the picture of the firm as depicted by the directors is not totally meaningless and mis leading.

The problems which undermine the rational of this study are as follows

  1. What is the role of audit in ensuring this control?
  2. How can efficient financial control be achieved?
  3. Can auditing really serve as a useful tool in financial controls?

Cases of irregularities are on the increase inspite of adequate provision for controls. In all these facts, considering the fact that it is not the duty of auditors to detect fraud.

 

 

  • OBJECTIVE OF THE STUDY

The main objectives of this study are:

  1. To ascertain how far these roles have contributed to financial controls.
  2. TO offer useful recommendation based on the researches finding.
  3. To examine that statutory principles of audit in relation to financial controls.
  4. To identify and define various audits functions in the company under review.
  5. To evaluated the present system approach of audit in the company under review.

Furthermore, in operating the subject matter, certain operational standards are indicated;

  1. Audit evidence
  2. Accounting system
  3. Planning controlling and recording
  4. Effective date
  5. Review of financial statements.
  6. Universal application
  7. Internal controls ascertainment and evaluation.

By this, all companies and institution are subjected to regular audits and auditing ensures adequacy in design, effectiveness in operation and consistency in application.

Finally the benefits derived from oil produce firm cannot be overlooked as such all hands must be on deck to protect it from touching the ground or mixing with any other liquid agent as a result of unhealthy product.

 

  • SIGNIFICANCE OF THE STUDY

The need to investigate the role of auditing as a play in financial controls with regards to the company.

However, as stated earlier, the users of financial statements need assurances and this assurance can only be provided by an independent mind-auditor.

This study will highlight possible problems and solutions based on the finding and will serve as a guide for high performance and productivity. It is hoped that the findings of this study will be meaningful to the owners of the company, the management and staff as well as students.

This (work) will serve as a guide in the performance of their respective duties.

 

  • DELIMITATION AND LIMITATIONS

This research work is limited to SOUS Enterprises Limited to enable the researcher carry out an in-depth study of the role of auditing in financial controls, as it is obtainable in the company.

The researcher looks at auditing as a whole and not as individual types bearing in mind that the whole is greater than the sum of the individual types.

Absenteeism by some staff coupled with reluctance to give out corporate a classified information constitutes constrains and considering the sensitive native of these study, the study was carried out successfully and with substances.

 

 

  • DEFINITION OF TERMS

During the research of this work, the researcher defines briefly some terms which due to the technical nature carry special meaning for proper understanding of this work.

AUDITING: Auditing according to the auditor operational standards and guidelines, is known as and independent examination of the expression of opinion on the financial statement of an enterprise by an appointed auditor in pursuance of that appointment and in compliance with any relevant statutory obligation.

The external auditors is outside the organization in accordance with the provision of section 357 and 358 of the companies and Allied matters decree ( CAMD) 1990.

The internal auditor is staff within the organization.

FINANCIAL CONTROLS: Is an integral part of financial resources are obtained economically and used efficiently and effectively in the accomplishment of desired goals.

Financial control also forms part of planning, budgeting, accounting, reporting and review.

INTERNAL CONTROL SYSTEM: this is known as the whole system of control financial or otherwise established by management in order to carry out the business of the enterprise in an orderly and efficient manner, to ensure adherence to management policy, safeguard the assets and secure as far as possible the completeness and accuracy of the records.

ENGAGEMENT LETTER: The purpose of an engagement letter is to define clearly the extent of the auditors’ responsibilities so as to minimize areas of misunderstanding between the auditor and the clients.

Furthermore, the engagement letter also provide written confirmation of the auditor acceptance of his appointment, the scope of the audit, the form of his report.

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