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THE ROLE OF AUDITING IN FINANCIAL CONTROL(A CASE STUDY OF SOUS AND SONS ENTERPRISES LIMITED)

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The role of auditing has been taken as the major thing in an organization. In the past, the management of the economy has been characterized by corruption and mis-management of funds. The performance of our economy at past therefore says that the economy problems now are the uncommitted and corrupt leadership. By this dirty characters by our leaders, I begin to wonder what roles the auditors has been playing to build a virile nation.

The aim of accountability in any society is to show how well firms and people of public and private funds and property have performed. Rather, many people in this time involved with the “get rich quick” also known as “419”, this becomes necessary to critically evaluate the importance or even the relevance of Auditing in the face of increasing fraudulent practices.

The accounting profession which requires the members integrity, independence and objectivity of performance as well as strict adherence to accepted professional conduct. The need for integrity and sense of purpose visa-vis financial control at this state cannot be over emphasized in a bid to channel the surplus funds to prioritized areas.

Even the excess fund realized couldn’t be used for development of a solid technological and industrial base for the organization, therefore there is utmostly more dependence on the outside or foreign sector for technology and raw materials.

The company under review is a case in point, both the technology of raw materials are source externally apart from the Eleme source internally. Also, the company provides goods & services to the public, generate employment opportunities, as well as contributing substantially to government revenue. This also comes to an extent that all registered limited liability company should have their financial records audited annually by a firm of Auditors so appointed.

The law stated as above for the auditor to express the position on such financial statements; and for the opinion to be authoritative, the auditor must be seen to be independent. To achieve efficient and effective financial controls, we make use of various devices and methods such as internal control are used.

Since companies differ both in degree and in substance depending on the nature of business and the commercial environment it operates, reliance on internal control systems (ICS) is dependent on certain factors.

Through the Auditors operational standards and guidelines, the paragraph 5 states that if the auditors wishes to reliance on any internal control, he should ascertain and evaluate those control & perform compliance rest on their operation”.

Which is to ensure completeness and accuracy of all financial records and transactions.

1.2 STATEMENT OF THE PROBLEM

The man aim of Audit is to provide assurance the needs of this assurance are the external users of the financial statements like the creditors, government agencies, share holders, Bankers and he public at large.

These people need confidence that the picture of the firm as depicted by the directors is not totally meaningless and mis leading.

The problems which undermine the rational of this study are as follows

a.     What is the role of audit in ensuring this control?

b.    How can efficient financial control be achieved?

c.     Can auditing really serve as a useful tool in financial controls?

Cases of irregularities are on the increase inspite of adequate provision for controls. In all these facts, considering the fact that it is not the duty of auditors to detect fraud. 

1.3 OBJECTIVE OF THE STUDY

The main objectives of this study are:

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