PRESENTERS: MR EMMANUEL Y. DAVID MAL MOHD. A TANIMU. AUDIT DEPARTMENT: NOH DALA KANO 2 nd September 2015 Topic: The impact of Internal Audit on Organization’s.

PRESENTERS: MR EMMANUEL Y. DAVID

MAL MOHD. A TANIMU.

AUDIT DEPARTMENT: NOH DALA KANO

2nd September 2015

Topic: The impact of Internal Audit on

Organization’s Financial policies

A: INTRODUCTION:is not only relevant to the Hospital system, but to every Organization especially, the Public Sector. The topic is very broad considering the various policies put in place by the Government, especially, the attempt by Government to fight corruption, cut waste and promote accountability, transparency and due process in our national life.

• However, our discussion will be limited to the role, the Internal Audit is expected to play to enable the Government achieve the cardinal objectives of accountability, transparency, due process, elimination of corruption and waste.

• Management of every organization requires some internal checks and these are best provided through an effective Internal Audit.

• Internal Audit is a review of operations and records on continuous basis within an Organization by its staff.

• Internal Auditor is charged with the responsibility of safeguarding the assets and liabilities of an organization and other assurance services that will enhance the efficiency and effectiveness of the operations of the Organization, through the review of Accounting System, review of

• Internal Control System, review of implementation of the cooperate policies, plans and procedures and by carrying out special investigation as may be assigned to him/her by the Management.

• One of the main objective is to assist Management in visiting it responsibilities and to evaluate compliance with cooperate procedures.

B: SOME SPECIAL ABILITIES AND SKILLS REQUIRED BY INTERNAL AUDITOR

• For the Internal Auditor to perform effectively

and remain relevant, the Auditor must possess the following abilities and skills:

• Maintain high standard of integrity since highly confidential documents will be seen in the course of the audit

• Fluency to express oneself orally as well as in writing

• Think logically and remain objective in the course of carrying out his/her audit assignment

• Have knowledge of principles, practices and procedures used in auditing the Hospital financial system.

• Must have general knowledge of Generally Accepted Accounting Principles, Auditing Standard and other financial and Administration Circulars in issue

• Proficient in the use of Computers and software applications relating to auditing and program evaluation in order to cope with the demand of the computerization of accounting systems.

C: GOVERNMENT FINANCIAL INSTRUMENTS AND

AUTHORITIES USED IN AUDITING

• The operations of Government Accounting are governed by certain rules and regulations which include the following:

• 1999 Nigerian Constitution• The Constitution is a legal document that

regulates the receipts and payments as regard to public fund. It covers powers and control over public funds, establishment of funds accounts (Federation

• Account, Consolidated Revenue Fund Account, Development Fund Account, Contingencies Fund Account), provision for the existence of Government Audits and its independence etc.

• Audit Act Of 1956• The Act spelt out the duties and powers of the

Auditor General, specifications of the accounts which the Accountant General should prepare and present for audit etc.

•

Finance (Control And Management) Act 1958

• The Act governs the Management and operations of all Government Funds including the accounting system and the books of accounts to be kept.

• Appropriation Act• This is approved estimate/budget for the year• Financial Regulations• These regulations provide instructions on the

procedures to be followed in carrying out all financial transactions and keeping of the relevant accounts in public sector.

•

Treasury and Finance Circulars

• These are Administrative Tools, which are used to amend the existing provision of Finance, Civil Service Rules etc and the introduction of new Policy Guideline.

D: THE ROLE OF INTERNAL AUDITOR ON THE FINANCIAL

POLICIES OF THE ORGANISATION

• Ensure Financial lay down principles as contained in Government pronouncement

• Ensure Management pronouncement/policies re-awakening Management commitment on operation on the system

• Auditors objectivity and independent• Internal check/separation of roles within the

Institution • Control over expenditure

• Institution Accounting System adequately identify the receipts and expenditure of the grant contract

• It brings fraud to the bearest minimum• They monitor the economical and efficiency in

the use of resources. It appraises the economy.• They ensure reliability and integrity of

information. They review the reliability and integrity of financial information and the means used to identify measure, classify and report such information.

• Compliance with policies plans procedures laws and regulation. The Internal Audit review the system to ensure compliance with the policies plan, procedures, laws and regulation which could have a significant impact in operation and reports. They determine whether the organization is in compliance.

• It reviews where necessary make recommendation for the improvement of system control and procedures to ensure that they are both efficient and effective in the light of changing circumstances and practices.

•

E: PROBLEMS MILITATING AGAINST EFFECTIVENESS OF

THE AUDITOR

• There is corruption everywhere and there is no self accounting unit without Internal Auditor. One might be tempted to ask the continue relevance of Internal Auditors as bewildered with problems that are preventing performance to expectation. The problems are: -

• Lack of proper training and retraining exposures for the Department. Knowledge is wasting assets unless improved upon.

• Independence is a vital attribute of Auditors. This, the Internal Auditors’ lack. Hence with the absence of such vital ingredient, the Auditors may not be able to give honest and unbiased opinion.

• Untimely access to financial document • Fear of victimization and punishment

especially, if the Auditor point out the wrongdoings of a powerful individual in the system. Sometimes, Auditor may have to decide between survival of the family if he/she is thrown out of job or looking the other to retain his/her job and continue to feed his/her family.

• The Auditors lack the authority to cause implementation of his/her report even in the face of glaring lapses, the role is only advisory in nature.

F: RECOMMENDATION

• Auditors should be given adequate exposures through training and retraining to touch up their knowledge. Most especially training organized by Accountant General of the Federation, Auditor General and relevant Professional bodies.

• The government should promulgate an act similar to United States Whistle Blower’s Act to protect employees (including auditors) from retaliation by Management and other employees for reporting suspected wrongdoing.

• Prompt update of all the financial records.• Prompt dissemination of information arrived at

TMC meetings as touching financial issues. •

G: CONCLUSION

• The efficiency of internal audit system rest heavily on the degree of independence under which it functions, the extent of its investigative character and the co-operation it can attract within other departments. If efficiently operated the system will curtail the risk of occurrence of frauds and irregularities, prevention or elimination of deliberate and non deliberate errors.-

• Audit is said to have failed when internal system of checks, inspection and control is not effective and efficient, though the primary aim of internal audit is not to prevent frauds or to detect

cont

• frauds and irregularities, but it can enhance proper checks and control over the funds and assets of the organization. However, by the findings of this work, it can be concluded that internal audit and investigation are effective and efficient as a mechanism in

• • •

cont

• organizations, otherwise irregularities, frauds and misappropriation will be common in the organization. If any diversification of concern in the system of internal control can be

• strengthen with the necessary mechanisms like staff training and work incentives, it will be more dependable.

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