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Format: MS WORD
| Chapters: 1-5
| Pages: 73
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The study of auditing became necessary to check upon persons and day to day transaction of organizations, whose business was to record the receipt and disbursement of money on behalf of others. The ancient Egyptians, the Greek and the Romans all utilized system of effectiveness of internal control system to carried out check and counter-checks among various financial officers. The person whose duty was to make such an examination of account became known as the auditor, the word being derived from Latin meaning to hear originally. Prior to the medieval times, auditing was referred to as a process of public hearing in which financial statement or financial records were read aloud. The auditor was referred to as someone who has sole authority to hear and comment on the readings. In medieval times, audit was made to determine whether the person in position of fiscal responsibilities in government were acting and reporting in good faith or in an honest manner.
However, auditing has taken a new dimension in our society today and it will continue to be improved upon as a result of growth and expansion of business, especially in the private sector.
The relevance of auditing in business world of today needs no emphasis as the solution to problem of credibility in reports and accounts lies in appointing an independent person called an auditor to examine and report on his findings. The process of examining and reviewing the accounting transaction in order to give assurance that the financial statement presents the financial position of the firm fairly as at particular period.
Attestation to true and fair view of financial statement of a business refers as auditing. The accounting parties were required to attend before the auditor who examines prepared account to ensure accuracy of underlying record.
The emergence of double entry books system made it possible to record not only cash transactions, but also all transactions involving matters of account, thereby increasing the duties of auditor.
From the above explanation of the meaning and origin of auditing, it has a great psychological effect on those officers or employees entrusted with money and goods and their employers. The importance with which the public and the private sectors and the business community attach to the practice of auditing in Nigeria engendered the federal government to recognize the institute of chartered accountant of Nigeria by an act of parliament to formulating standards to be followed by members of the institute in the practice of effective accounting and auditing profession.
Every member of the institute is duty bound to follow the guidelines and code of conduct as enunciated by the institute. Any member who infringes the code of conduct will be punished in any other way as the institute think fit. An internal control system [ICS] is fundamental to any business. In small business the ‘’Boss’’ can run everything himself whilst a system would be helpful it is not a necessity. In larger organisation it is essential and in very large organisation middle rank managers responsible for the system. Today there is pressure to ensure the ICS is effective as part of the corporate governance initiatives. ICS is the system which enables management to implement the business mission and ensure that implementation is correct and complies with applicable laws and regulations.
No system will ever be perfect therefore an essential ingredient of any ICS is to be able to detect failures and limit the consequent damages such failures to the organization. Excellent ICS have achieved such that the level of residual failures is manageable.
In the past, there was what is called counter-check, which has been used as financial check-up. This system was on until one person whose duty was to make an examination of books and account of the business known as the auditor. This person’s duty was to record the receipts and disbursement of the money on behalf of other. And it came to pass that he became an auditor for checking the books balance sheet of the company.
It is therefore necessary for efficient accounting records and effectiveness of internal control system so as to enable them knows their financial condition and control.
Internal audit help private sector to carry out their work efficiently and effectively. However, any private sector without audit programme and control is like a ship setting out tosail without a compass.
Audit in private sector adopt what is called a cleared and special tick for effectiveness of work done by them for example, touching of cash, casting of subsidiary books, physical checks and posting of machines records and work on the personal ledgers, etc. The auditor may decide to use a special coloured biro-pen in signifying the work already done so that staff of the client i.e. those involved in the accounting work may not make alterations to what had been audited.
Many auditors use initials of their firm to indicate the work already done, while others simply dock right in a very characterize way to differentiate it
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The study of auditing became necessary to check upon persons and day to day transaction of organizations, whose business was to record the receipt and disbursement of money on behalf of others. The ancient Egyptians, the Greek and the Romans all utilized system of effectiveness of internal control system to carried out check and counter-checks among various financial officers. The person whose duty was to make such an examination of account became known as the auditor, the word being derived from Latin meaning to hear originally. Prior to the medieval times, auditing was referred to as a process of public hearing in which financial statement or financial records were read aloud. The auditor was referred to as someone who has sole authority to hear and comment on the readings. In medieval times, audit was made to determine whether the person in position of fiscal responsibilities in government were acting and reporting in good faith or in an honest manner.
However, auditing has taken a new dimension in our society today and it will continue to be improved upon as a result of growth and expansion of business, especially in the private sector.
The relevance of auditing in business world of today needs no emphasis as the solution to problem of credibility in reports and accounts lies in appointing an independent person called an auditor to examine and report on his findings. The process of examining and reviewing the accounting transaction in order to give assurance that the financial statement presents the financial position of the firm fairly as at particular period.
Attestation to true and fair view of financial statement of a business refers as auditing. The accounting parties were required to attend before the auditor who examines prepared account to ensure accuracy of underlying record.
The emergence of double entry books system made it possible to record not only cash transactions, but also all transactions involving matters of account, thereby increasing the duties of auditor.
From the above explanation of the meaning and origin of auditing, it has a great psychological effect on those officers or employees entrusted with money and goods and their employers. The importance with which the public and the private sectors and the business community attach to the practice of auditing in Nigeria engendered the federal government to recognize the institute of chartered accountant of Nigeria by an act of parliament to formulating standards to be followed by members of the institute in the practice of effective accounting and auditing profession.
Every member of the institute is duty bound to follow the guidelines and code of conduct as enunciated by the institute. Any member who infringes the code of conduct will be punished in any other way as the institute think fit. An internal control system [ICS] is fundamental to any business. In small business the ‘’Boss’’ can run everything himself whilst a system would be helpful it is not a necessity. In larger organisation it is essential and in very large organisation middle rank managers responsible for the system. Today there is pressure to ensure the ICS is effective as part of the corporate governance initiatives. ICS is the system which enables management to implement the business mission and ensure that implementation is correct and complies with applicable laws and regulations.
No system will ever be perfect therefore an essential ingredient of any ICS is to be able to detect failures and limit the consequent damages such failures to the organization. Excellent ICS have achieved such that the level of residual failures is manageable.
In the past, there was what is called counter-check, which has been used as financial check-up. This system was on until one person whose duty was to make an examination of books and account of the business known as the auditor. This person’s duty was to record the receipts and disbursement of the money on behalf of other. And it came to pass that he became an auditor for checking the books balance sheet of the company.
It is therefore necessary for efficient accounting records and effectiveness of internal control system so as to enable them knows their financial condition and control.
Internal audit help private sector to carry out their work efficiently and effectively. However, any private sector without audit programme and control is like a ship setting out tosail without a compass.
Audit in private sector adopt what is called a cleared and special tick for effectiveness of work done by them for example, touching of cash, casting of subsidiary books, physical checks and posting of machines records and work on the personal ledgers, etc. The auditor may decide to use a special coloured biro-pen in signifying the work already done so that staff of the client i.e. those involved in the accounting work may not make alterations to what had been audited.
Many auditors use initials of their firm to indicate the work already done, while others simply dock right in a very characterize way to differentiate it
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