CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Auditing can be said to be as old as man where people has been required to account for their transactions. In the ancient ages, great land owners would not manage their own land, but would appoint stewards to manage their own land for them. The account of these land owners were regularly checked by having them called out by those who gave them to those in authority (land owners) for hearing otherwise called stewardship accounting. Auditing can therefore be defined as the process of an independent cross-examination of vouchers, internal control system and financial statements of an organization by a person or a group of persons called auditors so that the auditors can form and express opinion whether the vouchers, internal control system and financial statement, give a true and fair view of the organization or not. Auditing is carried out in both the public and private sectors. In the case of public sector, there are two foremost types of audit that are carried out namely: Regulatory audit and financial audit and the third type is value for money (VFM) audit which is yet to be fully integrated in most part of the world including Nigeria. According to Bechberger (2007), it can therefore be observed in the past decades that in order to fight global corruption and strengthening transparency and accountability in public sector organization across the world, public sector organizations are now under pressure from the public to integrate value for money principles in their management practices.
Globally the role of auditing is being appreciated for its operations and activities. Ihe and Umeaka(2006:370) defined auditing “as a process carried out by suitably qualified auditors during which the accounting records and the financial statements of an organization are subjected to examination by an independent auditor with the main objective of expressing an opinion in accordance with the relevant terms of appointment purpose” they also noted that the objectives of auditing were grouped mainly into primary objective which has to do with showing whether the financial statements of organizations show or reflect a true or fair view of the financial dealing and activities of the organization under review during stipulated periods while the secondary objective of auditors is mainly concerned with the detection of fraud and errors and ensuring minimal cases of illicit financial crimes. The kernel of this research work however is based on audit perception gap and internal audit efficiency – which is a very important aspect of auditing, how the internal audit unit of the government can be made effective in order to assist in the efficient administration of local Government Areas (LGA). Internal Audit as defined by Chukwu L. C. (2011: 28) is “an independent appraisal of activity within the organization for the service of accounting, financial and other business practice as a protective and constructive aim of management”. He further noted that, internal audit is a type of control which functions by measuring and evaluating the effectiveness of other types of control. Anosike. C. K (2009:29) noted that the primary objective of internal audit, is to promote utmost efficiency and security in conducting business, in our case, the business or operations of the Local government areas.
1.2 STATEMENT OF THE PROBLEM
The lack of effective auditing in our organizations has led to the poor performance of these firms thus leading to mass retrenchment of workers to survive which by large cripples our economy this has unfortunately resulted to the poor perception of employees of both private and public organizations about internal auditing. These perception stems from the fact that the primary purpose of internal auditing has been defeated as it is either done to settle scores or to conspire against perceived enemies in an organization.