ABSTRACT
The impact of a Good Audit committee on the financial management of an organization can not be over emphasized. This is because internal control is the bedrock of any organization that wants continuity in the existence of the organization. The problem facing 7up bottling company plc is that the do not have an internal control system and also they lack organizational control.
I make use of primary and secondary source of data collection, Oral interview, questionnaire, Newspaper etc. and found out that loses occur on daily bases due to there is no relationship between 7up company plc and audit committee. Then I came to a conclusion, therefore it is conclusively to say that the financial management of an organization via internal control system may never be possible if the board and senior managements are not committed in providing well planed internal control system.
CHAPTER ONE
1.1 BACKGROUND OF THE STUDY
According to Orjih John (2001:2) every business organization profit making has objectives and goals in mined to achieve their goals. It is to satisfy the social need of the citizens, and in the achievement of these purpose supervisor more often than not its activities, play a document role. The size and scope impossible for the executors to exercise personal and first hand supervision of operations. It is in this light that audit committee, financial or otherwise established by management is initiated.By section 360 of the companies and avoid matter act 2004, the auditor is expected to carry out investigations as would be necessary to enable him from a opinion.
It follows from above, that even the law does specify the extent of the examination to be carried out by the auditor. This is left to the director of the auditor. This decretion is not abused by the auditor. In practice he goes beyond the legal requirement in discharging his duties and his primary focus is to plan for the projects to be audited and how each project it’s the organization’s needs. This brings to bear on his job a very high standard of professional practice and considerations.An auditor will therefore involve for distinct practice and procedures via:Ascertain the validity of original transactions.Confirming the completeness and accuracy of the recording of these transactions.
Ensuring that the financial statements have been prepared from and are in agreements have been prepared from and are in agreements with the record and Confirming that the financial statements conform to the relevant status and accounting standards.According to Chambers Andrews (1974), a complex organization needs an auditor as an extension of the eyes and ears of management who however effective the organization might be unable to inspect the work of their subordinates whose stewardship is delegated to them.Internal control system can be broadly divided into two main categories.
1. Administrative control.
2. Accounting or financial It is the accounting or financial control function that internal audit, audit committee, internal checks and other accounting policies and systems built into the initial control network to promote and encourage the attainment of the objectives of the firm.Initial audit is an initial function which means that it is conducted by the employers of an organization specially designed for this purpose.It is an organization management responsibility to establish the department not to do so.The objective of audit committee as internal auditing is to assist all members of management in the effective discharge of their responsibilities, by furnishing them with analysis, appraisal, recommendation and pertinent commentary in the activities reviewed.
To attain such overall objective, initial audit involves such activities as:
1. Reviewing and appraising the soundness, adequacy and application of accounting, financial and other operating controls and recommending effective control at a reasonable cost.
2. Ascertain the reliability and relevance of management data development within the organization.
3. Appraising the quality performance in carrying out assigned responsibilities.Where an internal audit department operates the statutory auditor pays particular attention to its activities as these will have a direct bearing on the scope and depth required by members.
According to Onovo (2011:282), the auditor should consider whether analytical procedures that are perform at or near the end of the audit when forming an overall conclusion as to whether the financial statement as a whole are consistent with the audit’s knowledge of the business indicate a previously unrecognized risk of material misstatement due to fraud. Determining which particular tends and relationships may indicate a risk of material misstatement due to fraud require professional judgment.
Material misstatement of financial statement due to fraud offer involved the manipulation of the financial reporting process by recording inappropriate of unauthorized journal entries throughout the year or at period end, or making adjustments to amounts reported in the financial statements that are not reflected in formal journals entries, such as through consolidating adjustment and reclassifications.