According Griffiths, D. (2006), Internal Audit in United States of America are performed to ascertain the validity and reliability of information; also to provide an assessment of a system’s internal control. The goal of an internal audit is to express an opinion on the person /organization/ system (etc) in question, under evaluation based on work done on a test basis. Due to practical constraints, an internal audit seeks to provide only reasonable assurance that the statements are free from material error. Hence, statistical sampling is often adopted in audits. In the case of financial audits, a set of financial statements are said to be true and fair when they are free of material misstatements a concept influenced by both quantitative and qualitative factors.
Auditing is an independent examination of, and the expression of an opinion on the financial statements of an enterprise by an appointed auditor, in accordance with his terms of engagement and the observance of statutory regulations and professional requirements (Dandago, 2006) and (Mainoma, 2007) This definition clearly stated that there must be someone (auditor) responsible for expressing an opinion on the entire financial statement of an organisation. The auditor here may mean an individual or firm carrying out the audit of an enterprise. The auditor should be approved and must have personal and operational independence in order to perform his duty effectively.
Internal auditing is an independent, objective assurance and consultancy activity systematically designed to add value and improve an organizations operations, performance, efficiency and effectiveness. It helps the organization to achieve its objectives and goals by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of governance, risk control; planning and management control (IIA Report, 2000). In the past, auditors complained of fraud and theft as an objective of auditing and it was the auditors duty to report to shareholders of all the dishonest acts that were observed and had affected the propriety of the contents of the financial statements and by early 1930’s, it was recognized that the auditing objective was for the verification of accounts (Carey, P., 2000).
Many organizations have now employed the use of auditing practice since it is today’s major factor in establishing the quality of the organizations internal control system. Organizations are also struggling to implement more effective governance structures and processes. In such s climate, it is no surprise that the internal audit function is viewed as the most qualified group of professionals to help with such experimentation with improved governance as well as support key governance processes for monitoring the controls over and for evaluating the operational effectiveness of these management strategies and initiatives. However, to take advantage of this tremendous surge in the demand for their services, not only do internal auditors need a considerably enhanced repertoire of skills, attributes and competencies but they also need to commensurately raise their organizational status and profile and align themselves appropriately within their respective organizations (Stone, M., 2000). Internal auditing group was to monitor compliance with the policies and standards and the effectiveness of the internal control structure across the organization. There work was focused on the areas of great risk as determined by the risk assessment approach (CCR, 2008).
In the past, auditors complained of fraud and theft as an objective of auditing and it was the auditors duty to report to shareholders of all the dishonest acts that were observed and had affected the propriety of the contents of the financial statements and by early 1930’s, it was recognized that the auditing objective was for the verification of accounts (Carey, P., 2000).
For the development of a true professional status of internal auditing, the institution of internal auditors became the outgrowth for organizational development. Although the roots are in accountancy, its key purpose lies in the area of management control. It comprises a complete intercompany financial and operational review (Robert, B.M., 1945). The internal audit function became responsible for careful collection and interpretation of selected business facts to enable management to keep track of significant business developments, activities and results from diverse and voluminous transactions (Mautz, 1964).
Organizational financial performance is measured in terms of customer satisfaction, profitability, market share through reduced customer complaints (Kloot, 1999). In order to be able to perform organizations should critically look at customers and all stakeholders in business and know how best they are satisfying their needs. According to (Kloot, 1999) adds that organizations should continuously improve their services through assets accumulation, create value, improved quality services and flexibility. audit practices is intervened with organization’s operating activities and it is most effective when controls are built into the organization’s infrastructure, becoming organization’s part of the very essence of the organizations success in terms of continued improvement on performance standards as part of the competitive advantage of the organization.
By 1993, the statement of responsibilities of internal auditing noted that internal auditing encompasses the examination and evaluation of the effectiveness of organizations system of internal control and the quality of performance in carrying out assigned responsibilities (IIA Report, 2002). It led to reduction in corruption cases in many organizations that was uncovered and had a big impact on the company’s sales and profitability. Auditors had to explain to the shareholders what those effects would have on the organizations growth (www.deloitte.com).
SLK Diagnostic Center today still face many problems despite the presence of internal auditing teams. Companies are seen to have poor management of resources, mainly funds due to the high levels of fraud. The findings of audit were meant to be used by management to ensure that the organization grows but management seems to be so reluctant to take immediate actions hence hindering organizational competitiveness and effectiveness.
Despite of the audit practices in palace such as internal control, fraud issues, financial reporting and misappropriation of the organizations assets by ensuring accuracy, objectivity and consistency of the financial statements as a prerequisite in monitoring proper organizational financial performance (Author, 2005). The performance of SLK Diagnostic Center has not improved (audit report 2015). One wonders why, this is still happing the study is to establish relationship between auditing practice and financial performance growth of SLK Diagnostic Center.
The main objective of the study will be to find out the contribution of the auditing practice department towards the financial performance of SLK Diagnostic Center.
- To examine the types of internal controls applied by at the growth of SLK Diagnostic Center.
- Establish the contribution of internal auditing practices towards the growth of SLK Diagnostic Center.
- Investigate how internal auditing affects the financial performance of the organization
- Examine the relationship between internal auditing practice and financial performance of SLK Diagnostic Center
- What are the types of internal controls applied by at the growth of SLK Diagnostic Center?
- What is the contribution of internal auditing practice towards the growth of the SLK Diagnostic Center?
- How will internal auditing practice affect the financial performance and viability of the organization?
- What is the relationship between internal auditing practice and financial performance of SLK Diagnostic Center?
The study will consider establishing the contribution of internal auditing practices towards the growth of SLK Diagnostic Center..it located along the highway of Mbarara Masaka road. It employs a population of about 15 workers for its effective performance of its activities. Palmgroove metropolis is found in Lagos business suburd in SouthWestern Nigeria.
The study is estimated to take a period of one months and will mainly consider information related to four years that is (2013- 2016). The period of four years will be chosen because it is long enough for the researcher to establish the effect of audit practice on the financial performance at SLK Diagnostic Center.
The study will be carried out to attain the following;
The study findings are hoped to narrow the knowledge gap between the Audit practices and the financial performance of organizations and SLK Diagnostic Center in particular.
The study also added literature review to the already established information about the variables hence acting as a source of literature review to the future academician’s who may get interest in researching about the same study variables of Audit practices and the Financial performance of SLK Diagnostic Center.
The study may further help to bring out the weaknesses in internal Auditing practices mostly found at SLK Diagnostic Center regarding to the auditing as well as financial performance recommendable strategies to solve established weaknesses at the same organization.
The study further helps the researcher to acquire practical skills that may help in carrying out more researches in some future time. This is because during the process of carrying the study, she may come up with the new inspiring problem in the area.
To make organizations aware of the roles of internal auditors to effective and efficient organizational growth. To avail more data on organizational development, this helps future policy makers. To avail more analytical techniques, this could b used by future researchers.
To go back to to the previous page click here: