AUDITING EFFICIENCY AS A TOOL FOR IMPROVING COMPANY’S PERFORMANCE

AUDITING EFFICIENCY AS A TOOL FOR IMPROVING COMPANY’S PERFORMANCE ( A CASE STUDY OF ANAMMCO LTD EMENE ENUGU]

ABSTRACT

Failure of a company to meet its desired goal/ aim is a typical problem that affects both the company and the management teams. Many companies have be affected and influenced negatively by wrong management and incompetence. The purpose, objective and aims of this project work is centered on  the impact of auditing efficiency as a tool for improving company’s performance. This induces the following

  • Whether auditing has carried out in the company in question.
  • If the auditing has helped in controlling the operation of the company.
  • If auditing improved the company’s performance. The company used as the case study is known as Anambera motor manufacturing company Limited (Anammco) Emene Enugu. The instrument of data collection used is questionnaire method. The sample size is fifty (50) samples of ten staff from each of the five departments comprising of account, marketing personnel/ administration, production, treasury and imports were chosen. The responses were analyzed using descriptive method. Result shows that auditing efficiency improves company’s performance.

CHAPTER ONE

  • INTRODUCTION
  • BACKGROUND OF THE STUDY

Audit is a Latin word meaning “He  hears” the word audit was derived in the way because in the ancient times, the account of an estate, domain or manor were checked by having them called out by those who had complied to those authority.

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In this modern sense, an audit is a process carried out by suitably qualified auditors whereby the accounts of business entities including limited liability companies, charities, trusts and professional firms and subjected to scrutiny in such detail as will enable the auditors to form an opinion as to their accuracy, truth and fairness.

This opinion is then embodies in an “audit report” addressed to those interested parties who commissioned the audit or to whom the auditors were responsible under statue.

According to Nwoke (1992p.19) the pursuit of an objective is the characteristics of every company and this objective exist in different dimensions, most  companies have the objective of maximizing profit. Profit objective is the main motivation to venture, other generally  dependent on profit.

For this fundamental objective to be realized, the company must control costs  and expenses incurred in the day to day running of the business. As any company in size, it soon reaches the point where the owner or manager can no longer be adequately be informed of all the activities of the employees and the discharge of the  responsibility assigned to them, the probability of an employee becoming dishonest, incompetents, careless , or lazy becomes significantly high. It then becomes necessary to establish procedure designed to make the employees directly accountable for any regulates in  their behaviour and to encourage them to avoid irregularities.

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Lopes (1896) in his own view descried an audit as a watch dog. The auditor whether internal or external assess scrutinizes, controls and ascertain relevant in formation as they to the transaction on hand.

The auditing work carried out by him  helps the company to grand their property, to prevent waste, mistake, and the like. The duties of the internal auditor is such  that he must be around when the transactions take place on behalf of management who delegated that function to him. He has to enforce reliance with laid down rules and principles and procedures monitoring that compliance so as to prevent wastes and dishonest practices.

Corporate failure is a topical issue that bothers every team player in the field of corporate government. Many companies have been substantially weakened by the recession, dusty, structural changes and consolidations and insufficient financing for investment to remain competitive. The global recession has so far given us the opportunity to draw the line between  companies conceived on sandy ground. This has once again reminded us of the need to rekindle our thinking in line with management practices and principles.

The company and allied matters Decree 1990 section 360(i) confirms the following:

That is shall be the duty of the companies auditors in preparing their report to carry out such investigation as many enables  them from an opinion as to the following matters whether:

  • Proper accounting records have been kept by the company and proper returns adequate for their audit have been received from branches not visited by them.
  • The company’s balance sheet and (if no consolidate) its profit and loss accounts are in agreement with the accounting records and returns.

The auditors considers whether the information given in the director’s report for the year, for which the accounts are prepared is consistent with that account and if they are of the opinion that it is not, they shall state the facts in their report.

Auditing is a means used to evaluate companies performance, the independent review of internal systems and the report on them customarily provided each year is helpful in drawing attention to weaknesses to be corrected special advice are provided when required frauds and other nefarious activities that will hinder the performance of companies are detected and measures are taken to correct them. Auditing is very essential for improving companies performance.

Activities being carried out in the company will be exposed, measures will be measured in accordance to the standard of the firm, all these can be done with the aid of audit.

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Auditing has contributed a lot to company’s performance, it has improved enhanced and helped management in discovering  area where it has not been efficient offending them opportunities to take up measures that will help them achieve the companies objective.

1.2  STATEMENT OF PROBLEM:

Auditing has often served as a means of improving company’s performance, and judging the performance  of some company’s in the past years, it has been encouraging. A lot of problem still militates against performance of companies. Such problems includes limitations in the effectiveness  of the internal control system used in companies from the audit point of view.

  1. Are company’s performance contained by ineffective internal control system?
  2. Are accounting and financial management functions dominated by one person?
  3. Is auditing effective checking the company’s operation.

1.3  OBJECTIVE OF STUDY

The objective of the study include to:

  1. Show the relevance of auditing and highlight on the contributions of auditing to companies.
  2. As certain whether or not a strong internal control system exists in eh company.
  3. Know the measures taken by companies in ensuring that activities are being performed in accordance to the standard of the company.
  4. Critically understand everything about auditing and its applications in companies.
  5. To make the research work act as a guide to other researchers writing on the same topic.

1.4  SIGNIFICANT OF STUDY

There are many reasons why this work was undertaken the most important of these reasons is that the study will give the researcher a thorough understanding of the subject matter titled “Auditing Efficiency and a tool for improving company’s performance”. It will also show the advantages of auditing to firms. Its contributions and uses to company’s performance.

The study will form  a major part of the final examination of the researcher and one of the major  prepemisities for the eventual completion of the course to study. It will give companies an insight  to considering whether auditing and its process is a to be embedded in firms for the smooth running of company’s operations and control.

By centering on a company, the researcher will be afforded the opportunity of knowing the audit procedures adopted by the company and the various problems the company and the various problems and constraints the auditor encounters in his audit work.  The researcher will know how often the firm has been audit work. The researcher will know how often the firm has been audited and whether the company’s is improving in its performance or not.

  • RESEARCH QUESTIONS

This study seeks to answer the following questions.

  1. Whether auditing is carried out in company
  2. Has auditing in anyway helped in controlling the operations of a company’s
  3. Has auditing standards improved a company’s  performance?
  • SCOPE AND LIMITATIONS OF STUDY

This work is based on a company (Mercedes BENS – ANAMMCO LIMITED EMENE). Catering on this company was to enables the researcher to assess critically the use of audit, its effectiveness, advantages and disadvantages of auditing to a company.

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The scope of the study was not widened because of some constraints like;

  1. Time: The researcher cannot use many companies as a case study because of limited time and being a student, she has to allot her time to other course and other aspects of her education as  Moreover, her concentrating on a firm will help her assess the firm well and use her time for other aspects of her studies.
  2. Fund: The researcher cannot cover a wide area of firms because she cannot meet up with cost and expenses.
  3. Inaccessibility: Most company do not allow researcher to use their company as a case study because of fear of too much publicity which they feel might impair the activities of the company (Mercedes  Benz Anammco Emene) which allowed  her to use them as a case study.

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Project topic:AUDITING EFFICIENCY AS A TOOL FOR IMPROVING COMPANY’S PERFORMANCE ( A CASE STUDY OF ANAMMCO LTD EMENE ENUGU]

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