ABSTRACT
This research assesses the effectiveness of the internal
auditors by assessing the factors which determine the Ghana Water Company
internal audit effectiveness. The research design selected for this study was
exploratory-descriptive and Cross-sectional design. This design was selected
because it is flexible and a lot of information could be gathered in the course
of the research. The purpose of this study was to carry out an investigation
the efficiency and effectiveness of audit unit of the Ghana Water Company.
The researcher used exploratory study design to describe the
independent and dependent variable at the Ghana Water Company offices in
Central Region. The researcher administered questionnaire to 25 purposively
selected respondents’ which included accountants, internal auditors, and other
category of staff working in various branches of Ghana Water Company in Central
Region. The findings showed audit committee existed in the organization the overall rating
on Improvement of control system, risk management and corporate governance was
high meaning that they tend to agree that Improvement of control system, risk
management and corporate governance was done based on internal auditors
recommendations. We can conclude that both stakeholders and internal auditors
themselves recognize the critical focus of management under internal audit is
analyzed, which require the fundamental rethinking of the internal audit
strategy. Therefore internal audit unit of the Ghana Water Company functions
effectively and efficiently.
CHAPTER ONE
INTRODUCTION
Background to the Study
The management of the public institutions is entrusted with
public resources and saddled with the responsibility of managing these
resources effectively and efficiently. It is expected that, the public servants
entrustedwith the management of public resources at public institutions will
give account of how these resources are being managed under their care. In
order to ensure proper utilization of these resources entrusted to the local
government officials, laws are enacted to control the local government revenues
and expenditures.
However, the process of accountability is not complete
without auditing, which presently remains one of the most neglected and
misunderstood area of the financial management cycle, especially in the public
sector (Maru, 2002).Therefore, for an audit to be meaningful the audit unit
must be seen to be truly independent and the report produced by internal
auditor will assist in providing information for planning, decision making and
performance evaluation as well as control of activities especially if such
information has certain attributes such as relevance, completeness, timeliness,
understanding and comparability.
In global view internal auditing is an independent, objective
assurance and consulting activity designed to add value and improve an
organization's operations. Globally, it is reasoned that understanding the
concept of internal audit is essential for developing an understanding of its
impact on the performance of an organization. Internal audit of an entity is
strictly interrelated to the structure used by
management to oversee the activities of the organization (Chartered Institute
of Management and Accountancy, 2008).
Millichamp (2000) defined internal auditing as “An
independent appraisal function within an organization for the view of system of
control and the quality of performance as a service to the organization. The
objective of auditingis to review and evaluate the activities of the
organization with a view to express an opinion on the efficiency and
effectiveness of management, as well as the adequacy of internal control within
an organization.
According to Dandago and Suleiman (2005), both external and
internal auditors are expected, based on their terms of engagement and the
accounting and internal control system in place, to express professional
opinion on the financial statement(s) vouched or examined and be guided by statutory
regulations and professional requirement indischarging their duties. Therefore,
an auditor should not be seen as a mere watchdog, he/she should learn to ‘bark
and bite’, where necessary.
In every country that is administered in a democratic policy,
there is the need to be accountable in the use ofpublic resources and in
providing effective, efficient and economical (3e’s) service delivery so as to
prevent misappropriation and mismanagement of state resources. Toachieve those
government objectives, applying internal audit function were the major
mechanism forcontrolling and using of all scarce resources available in the
corporate organization. Ever morelarger and complex systems require greater
competitiveness, thus internal audit has had to becomeever more professional
(Van Gansberghe, 2003).
The government of Ghana has launched
much initiative to ensure a major change from the old dispensation to one of a
democracy, openness, transparency and accountability. As part of these
initiatives, series of discussions has been held by the government, the Audit
General Department, Controller Accountant General as well as other civil
societies to ensure that the maladministration and negligence were highlighted
and curbed. The Public Account Committee among others has been formed to check
irregularities, non-compliance to regulations and general lack of
accountability. Internal auditing is an integral part of the corporate
governance mosaic inboth the public and the private sectors (Cohen, 2002).
It is a fact that public sector has a significant role in
improving the wellbeing of thecommunities in any nation. In Tanzania, local
government authorities fall in the categoryof public sector institutions. These
local governments are the ones whose management hasa direct impact on people’s
lives in their respective localities (Chacha,2006). In thisway, improving the
manner in which these local institutions are managed is likely to
besignificance not only on the way they delivery goods and services to the
population butalso provide a good image of the public sector institutions
within and outside Ghana.
Given this importance of public sector institutions, in the
current moment the governmentin Ghana has put much attention on developing and
strengthening the audit department/function in the local government
authorities. The logic behind this initiative isthat in so doing there is a
likelihood of improving the management of these institutionsand hence being
able to serve better the people in this era of decentralization. Therefore this research is set to look at the
current development in the management of the publicsector, especially the
initiative to strengthen the internal audit function in the publicsector.
Statement of the Problem
Internal auditors have the right and ability to access all
information in every part of the organizationand their function lies in every
activities of the corporate governance system. All the stakeholderswill
therefore benefit from having a strong Internal Audit Function which will
provide valueto the other cornerstones of corporate governance (Smet&
Mention, 2011) because internal auditors can make line managers aware of their
responsibility; can act as a consultant in monitoring risk, identifies weakness
in internal control system, and facilitates the implementation of risk
management as well as contributes to the appropriateness of procedures and
operations of the audited body (Cohen and Sayag, 2010; Arena &Azzone, 2009;
Dittenhofer, 2001).
Internal audit is an integral part for managing the finance
of public organizations. Aconstant complaint in the sector is that internal
audit department is too understaffed andgenerally under resourced to make it be
fully effective. There is a claim that internal auditis challenged by the
inadequate knowledge of Electronic Data Processing (EDP) andhence complicates
the efficiency in auditing the computerized systems. The reliance onpaper
working has been the order of the day in the auditing function whereas working
onpapers does not make the auditing function seem to ruin its efficacy as a
crucial management tool for effectiveness of the public sector institutions.
Despite these challenges, still the auditing function stands at the centre in
the management of institutions. Thus understanding how its effectiveness can be maintained is
likely to improve their sustainability and enable them realize their goals and
objectives (Adeniyi2004).
However, the 2008-2009 global economic crises (Credit crunch)
has undermined the very roles and purposes of the internal audit and above all,
reduced the integrity of the internal audit units in promoting good corporate
governance. Misappropriation of funds and corruption are now the order of the
day in the public sector in all countries due to weak internal control systems
(Van Gansberghe, 2005). Centre for Democracy and Development (CDD) of Ghana
(2000), reported that government officials misappropriate public funds
especially at the local government level and this has resulted to huge
government budget deficit, low standard of living, and poor economic
performance. Thequestion that everybody will ask is, are the internal audit
units effective in this present situation since they are the key element of the
internal control systems of every organization? This has motivated the
researcher to investigate into the effectiveness of the internal audit units
audit as an instrument for improving the management of localgovernment
authorities.
Objective of the Study
General Objective
The general objective of this study is to investigate how
effective and efficient Internal Auditors at Ghana Water Company is. Specific
Objective
Specifically, the researcher tried to achieve the following
objectives;
To examine the effectiveness of the Internal Audit at Ghana
Water Company.
To examine the challenges facing the efficient delivery of
services by the Internal Auditors of Ghana Water Company.
Research Questions
The research has proposed to answer the following research
questions;
How effective are Internal Auditors at Ghana Water Company?
Are Internal Auditorat Ghana Water Company efficient?
What are the challenges facing the efficient delivery of
services by the Internal Auditors of Ghana Water Company?
Significance of the Study
Through this study, internal auditors could unearth new
approaches to effectively execute their functions as it will discover practical
challenges hindering the effective service delivery of internal auditors and
offer solution to it. Therefore, this research is very essential to show the
effectiveness of the internal auditors byassessing the factors which determines
the Ghana Water Company internal audit effectiveness. In addition, this
research is important for the empirical evidences for the public sector offices
and their implementation of work duties and procedures. Moreover, the study
would assist the management of the institution to strengthen its internal
control mechanism if there happens to be some weaknesses. Finally, the study
will serve as a contribution of knowledge to help future researchers on the
same topic. Researchers may fall on this study as a secondary source of
literature on their research work.The research will also add up to the stock of
knowledge that the future researchers will use in their literature review.
The study focuses on the influence of the internal audit
functions on the successful conduct in all public sector officesbut due to
time, logistical and financial constraints it is out of the touch of the
individual researcher, the study is limited to Ghana Water Company, Central
Regional Office only. In addition the intent of this study is to investigate
the selected determinants of the effectiveness of staff; such as management
perception, management support, organizational independence, adequate competent
internal audit staff, work done within a given time and presence of internal
audit charter in the selected public sector offices.
Limitation
The researcher would have liked to conduct this research on
all public institutions but for financial, logistics and time constraints so
the research was limited to only Ghana Water, Company Cape Coast. Further, the
research was limited by some respondents delay in responding to the
questionnaire and given all data needed. The researcher had to go back to
respondents to complete or seek further clarification on the data given.
Organisation of the Study
This research paper would consist of five chapters. The first
chapter with its sub topics would be introductory parts incorporating the
introduction, statement of the problem, research objectives, research
questions, significant of conducting the study, scope and limitation of the
study, and the methodologies used to conduct this study. The second chapter
describes the detail review of related literatures with regard to the internal
audit effectiveness and the variables which affect the internal audit
effectiveness.
The third chapter expresses the
information regarding the sampling techniques used to conduct the research. The
fourth chapter is the analysis, discussions and presentation part of the
research findings and finally, the last chapter describe about the conclusions and
recommendations of the case study followed by the references and appendixes.
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Item Type: Ghanaian Topic | Size: 72 pages | Chapters: 1-5
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