CHAPTER ONE
1.1 INTRODUCTION
An effective internal audit department is a prerequisites to the growth and survival of any business organization since all organization either small or big, profit oriented, operate within the conditions or resources constraints and also run high risks of fraud and errors, in view or this, there is a need to introduce or establish operating rules and procedure by establishing on internal audit department in other to ensure that the use of their resource are maximized and that the potential risk of internal risk and unintentional irregularities are reduced to the minimum.
This study attempts to examine the internal audit as practiced by government parastatals which is described as those parastatal whose means of operation is less than average comparing with company(s) for the government of the federation through an assessment of Lagos State judiciary, for the purpose of these write up a review of internal audit would be carried out to determine the effectiveness and problems of internal audit department in a government parastatals. In the light of this study, a brief discussion of information protection and control as vital aids to management would be explained. Most information needed by management in order to keep informed about finance and the progress of operations comes from the accounting records. The information to be maximum value must be variable complete and timely. Therefore inaccurate information is no little better than no information at all.
The classification of account, all aspect of the accounting system must be designed to assist management gather information as to answer the question “DOWE HAVE ENOUGH STAFF TO MEET THE ANTICIPATED VITAL ASPECT OF INTERNAL CONTROL” protection of the resources of government is important against a multitude of possible losses ranging from embezzlement to such cases as careless use of government properties.
Internal audit is necessary to ensure that government policies and directives are properly adhered to management internal audit is a key factor in the effectiveness and efficient management of a government parastatals. Internal auditing can be said to be a form of auditing.
Auditing can be said to be such an examination of the books, voucher and accounts of a business and shall enable the auditors to satisfy himself whether or not the balance sheet and profit and loss account are properly complied so as to exist it a true and fair view of the affair to the business, whereas internal audit is independent appraisal or review activities with the organization for the review of the operation as a service to management, it is a management control which function by measuring and evaluating the effectiveness of other control.
Internal audit as defined by millichamp as an independent appraisal function established by the management of an organization for the review of the internal check and internal control system as a service to the organization, it objectively examines, evaluate and report on the accuracy of internal controls as a contribution to the proper economics efficient and effective use of resources.
From the above definition it is clear that:-
a) Internal audit is an internal function which means that it is conducted by the employees of an organization specially assigned for that purpose.
b) Internal audit is a service to management i.e is a managerial control, consequently the scope and objectives depend upon the management assessment of what is needed and its willingness to assign the task to the internal audit departments.
The functions of internal audit or auditor is to be independent i.e to be a special and separate entity. (It means separate department from the account department and it reports to the top managements).
The definition of internal audit is broader than the meaning sometimes attributed to the term, it recognizes that internal audit extends beyond those matters which relates directly to the function of the accounting department. This broad definition may be summarized by stating that internal audit is the means by which management obtains the information and protection of errors and fraud that are vital to the successful operation of government parastatals.