CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Internal audit had been defined “as an independent appraisal function established within an organization to examine and evaluate its activities as a service to the organization”. Internal auditing is a process generally adopted toward ensuring and safeguarding of resources and promoting operational efficiency in organizations. The responsibilities for effective internal auditing normally rest on with the internal auditors who in turn rely a great deal on the soundness and effectiveness of internal control system.The business world is developing so in the complex nature of the organizations and hence the management has led to the much broader role at internal audit. The role of internal audit is fast moving from mere checking of documents and physical duties to analyzing the ability of organization to react to changing circumstances.
Auditing for the public sector like local government councils aimed at preventing of mistakes, shortcomings and misdeeds in the public administration the internal audit has become a good control measure that can foretell all the incidence of fraud and misappropriation of fund in government ministries if properly put in place.In Nigeria, research has showed that Nigeria local government councils have internal audit department with internal audit staff that carried out internal audit activities (Adeyemi, Akindele, & Agesin, 2012, Coker & Adam’s 2012; Ebimobowei & Kereotu: 2011; Jansson, 2003; Kuta 2008; Kwanbo, 2009; Ojo 2009; Unegbu & Kida 2011). This establishment is consistent with the provision made by department of local government under internal audit guidelines; which strongly recommends that all local government councils should have internal audit function for the following reasons;
1. To support good internal governance.
2. To ensure consistency with the levels of government.
3. To improve effectiveness of risk management, control and governance processes.
4. Help to instill public confidence in an organization’s ability to operate effectively and efficiently (IAG, 2008).
In addition Al-Twaihry et al (2003) also note that there must be confusion in organizations that do not have internal audit departments with respective role of internal audit within organization operation. Because having such department could add value to organization in various ways which include; helping the organization to attain its objectives, strengthen internal controls, improve risk management and enhance overall cooperate governance (Jerome, 2009; Pforsich & Kramer 2008).
Therefore the objective of this research is to assess the impact of internal audit functions on the local government activities.Internal AuditInternal audit has been described as an independent review of operation and records. Lindbergh and Cohn (1972) stated that “internal auditing or audit is an independent appraisal activity within an organization for the review of accounting, financial and other operations as a basis for productive service to management” Internal Auditing or Audit is a part of internal control, which is a device by management or administrators to safeguard or protect assets and liabilities against waste, fraud, stealing, damages or destruction and inefficiency (Akpakpan 2002).