INTERNAL AUDITING PRACTICES AND PERFORMANCE AUDIT (A STUDY OF

EKET LOCAL GOVERNMENT, AUDIT DEPARTMENT, EKET)

A RESEARCH PROJECT

BY

NSEOBONG, VICTORIA
REG NO: 20091033

SUBMITTED TO

DEPARTMENT OF ACCOUNTANCY FACULTY OF MANAGEMENT SCIENCES

HERITAGE POLYTECHNIC, IKOT UDOTA, EKET, AKWA IBOM STATE

AUGUST 2022.
INTERNAL AUDITING PRACTICES AND PERFORMANCE OF AUDIT
DEPARTMENT.
(A STUDY OF EKET LOCAL GOVERNMENT, AUDIT DEPARTMENT)

A RESEARCH PROJECT

BY

NSEOBONG, VICTORIA STEVE

REG NO: 20091033

SUBMITTED TO

DEPARTMENT OF ACCOUNTANCY, FACULTY OF MANAGEMENT SCIENCES.

IN PARTIAL FULFILLMENT FOR THE AWARD OF NATIONAL DIPLOMA IN

ACCOUNTANCY.
HERITAGE POLTTECHNIC, IKOT UDOTA, EKET AKWA IBOM STATE

AUGUST 2022
 DEDICATION

Dedicated to my family for their love, encouragement, moral and financial support throughout
this course. They ignited the little energy left in me and encouraged me to finally accomplish my
goals
 CERTIFICATION

We certify that this research project on "INTERNAL AUDITING PRACTICE AND

PERFORMANCE OF AUDIT DEPARTMENT ( A CASE OF EKET LOCAL GOVERNMENT,
AUDIT DEPARTMENT, EKET) is an original work written by NSEOBONG, VICTORIA STEVE
with registration number 20091033 and was carried out under our supervision: We have
examined and found it acceptable and worthy for the award of national diploma (ND) in
accountancy.

________________ _________________
Supervisor Signature/date

________________ _________________
H.O.D Signature/date

________________ _________________
External Supervisor Signature/date
 ACKNOWLEGEMENTS

This work wouldn't have been a reality without the help of various individuals who contributed
immensely to the success of this work.
I am most grateful to God, the giver of wisdom and strength.
I am duely grateful to my supervisor Miss Jenny Jacob for her patience and time and for also
insisting on having nothing but the best, words alone cannot express my greatest appreciation
to her.
My sincere appreciation and thanks. goes to my HOD, Head of Department, Pastor Nkererwen
Udiong for his careful and immerse teachings that helped me in my studies.
I would also like to acknowledge the following important persons in my life. My love and thanks
my beloved parents, Engr and Mrs Steve Edem for their love, financial Support and
encouragement in the pursuit of my studies. Engr. Christopher Steve Edem, my elder bro ther is
in no small way, a huge contributor and financial pillar in making my educational dream come
true. My other siblings, Blessing, Precious and favour and my niece, Star are deeply
appreciated for their love and support.
Academically and morally as it pertains my stay in Heritage Polytechnic, I give my upmost
appreciation to my esteemed lecturers, Chief Edimoh Edoha, who carried me in his fatherly
arms and gave teachings that would stand the test of time, Mr Donatus kufre, for his support,
teachings, advice and assistance in my research study. My special thanks also goes to Mrs.
Blessing kufre for her treasured teaching and confidence in me to be the best I could be and to
Mrs Mary Bassey, my amiable lecturer. Mr Ekpo Abakasanga for his quality teachings, Mrs
Glory Imaikop, for her teachings and advice.
I also thank my esteemed Founder, Dr Emmanuel Ekott for the special opportunity in being one
of the beneficiaries of his benevolent nature.
I thank my Coursemates for an and amazing experience, my friends, Chris, Happiness,
Blessing many more for their love and support.
 ABSTRACT

The performance of an internal audit department must function in a manner that is in

accordance with applicable professional standards such as Standards for professional Practice
of Internal Auditing (SPPIA, 2000) and the quality of the internal control systems.
Given the current business scenario, the study looks at the internal auditing practices and
performance of internal audit departments, Using data from auditing practioneers in the
Departmeal of the Elect Local Government Secretarial, this study suggests the independence,
scope of audit work, audit reviews objectivity and professional proficiency are important internal
auditing practices from the perception of internal auditors. This study suggests that risk
assessment, control activities, control environment, information and communication and
monitoring are important quality of internal control system from the perception of andit
committee.
In carrying out this study, various research instruments such as questionaires were used to
collect data from respondents and a research design with a sample size of 40. The statistical
tool this work was Simple percentage and chi-square. Based on this work, it was discovered
that the scope of audit work, professional proficiency, independence and audit reporting of the
internal practices significantly influence the performance of internal audit department.
Finally, the study shows the risk assessment of the quality of internal control system pertially
mediates the audit reporting of the internal auditing practices and performance of the internal
audit department.

TABLE OF CONTENTS

COVER PAGE
Title page
Dedication
Certification
Acknowledgement
Abstract
Table of contents

CHAPTER ONE - INTRODUCTION

10 latroduction
1.1 Background of the study
1.2 Statement of the Problem
1.3 Purpose of the study
1.4 Objectives of the
1.5 Research Questions y
1.6 Significance of the study
1.7 Delimitations / Scope of the study 1.8 Limitations. of the study
1.9 Definition of Terms

CHAPTER TWO - LITERATURE REVIEW

2.0 Introduction
2.1 Overview of Internal Auditing Auditing
2.2 History and Evolution of Internal 2.3 The Roles of Internal Auditor
2.4 The Roles of Audit Committee. 2.5 Development of Standards for the Professional Practice
of Internal Auditing (SPPIA)
2.6 Elements of SPPIA
2.6.1 Independence and Objectivity 2.6.2 Professional Proficiency and Care
2.6.3 Scope of work.
2.6.4 Performance of Audit Work
2.7 Internal Control System.
2.7.1 Risk Assessment
2.7.2Control Environment
2.7.3 Control Activities
2.7.4 Information and Communication
2.7.5 Monitoring
2.8 Previous Literatures Internal Audit Practices.
2.8.1 Types of Auditing
2.9 Audit and Internal Control in the Organization
2:10 The Purpose of Internal Audit 2.11 Perception of the Importance of Internal Audit
Department.

CHAPTER THREE - RESEARCH METHODOLOGY

3.0 Introduction
3.1 Research Area
3.2 Population of the study
3.3 Sample Size the study
3.4 Sources of data collection
3.5 method of data collection
5.6 method of data presentation and analysis

CHAPTER FOUR - DATA PRESENTATION AND ANALYSIS 4.0 Introduction

4.1 Data Presentation
4.2 Analysis of Data
4.3 Test of Hypothesis Summary
4.4 Summary
CHAPTER FIVE - SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
5.0 Introduction
5.1 Summary
5.2 Conclusion
5.3 Recommendations
References
Appendix
Questionnaires

CHAPTER ONE

INTRODUCTION

1.0 INTRODUCTION
This chapter introduces the research agenda of this study. This chapter outlines the background
of the study, statement, research questions, research objectives, research significance,
definition of terms and organization of the remaining chapters.

1.1 BACKGROUND OF THE STUDY

Auditing has a significant role in the management of most organizations. It has become
increasingly varied, both in scope and objective to assist all levels of management in assuring
internal and external constituencies that financial resources are being properly managed and
accounted for. Internal auditing has undergone dramatic changes that have expanded its scope
in a way that allows it to make greater contributions to the organization it serves. Internal
auditing is also performed in diverse legal and cultural environment, within organizations that
vary in purpose, size and, structure; and also by persons within or outside the organization.
Furthermore, the internal auditing profession also walks a tightrope between serving as a
management consultant and an independent professional.
Internal Auditors are best placed to understand and appreciate the business processes of a
company and they act as management consultant to reduce risks. Internal Audit also help run a
compary more efficiently and effectively increase shareholder's value. To accomplish this,
Internal auditing must function in a manner that is in accordance with applicable professional
standards such as the Standard for the Professional Practise of Internal Auditing (SPPIA). By
complying with the SPPIA, the responsibilities of internal auditors can be met. This is because
SPPIA requires that the Chief Auditor to report to a level within the organization that allows the
internal audit activity to fulfill its responsibilities. The purpose of SPPIA is to delineate basic
principles that represent the practise of internal auditing as it should be, provide a framework
for performan and promoting, a broad range of value added internal audit activities, establish
the basis for the measurement of internal audit performance and foster improved organizational
processes and operations (IIA, 2000). By having these responsibilities, the internal auditing
department can assist management to identity and solve problems at the initial stage and not
wait until it is to late to be solved.
As this is the case, internal auditors need to be out in front, leading the business units with
regards to the internal control system and also focusing on strategic business objectives. The
internal auditors also need to establish themselves as vital cogs in their organizations. rather
than as observers who watch from the periphery and wait for events to impact them (Sawyers,
1996). Over the past several years, internal auditing practises have a subject of interest in the
internal auditing literature.
One issue that has emerged related to the internal auditing practices is : "what is proper and
sound measurement of the internal auditing practices?" Before proper and sound measurement
of the internal auditing practices can be done, we have to have a clear understanding of the
roles expected of internal auditing and its impact on the internal auditing practices or on internal
audit effectiveness ( Barret 1986)
In the company environment the management is the most important auditee of the internal
audit department since effectiveness of the internal auditing practices can be described through
the expectations of the management with the regard of the internal auditing practices. The
management will expect the internal auditors to perform their internal auditing practices to a
certain level that is complying with the SPPIA since it can be easily described
Included in the SPPIA(2000) are five elements that are independence and objectivity,
professional proficiency, scope of work, performance of audit work and management of internal
audit department. Therefore the CAE (Chief Auditor Executive) and internal auditors and to
meet or exceed these expectations to be effective with the ever-changwility of the environment,
the effectiveness and credibility of the internal audit function is crucial.
It is also the internal auditor's task to operate within the framework of professionalism to assist
the company in achieving the highest quality results. and long term objectives. Today's business
rely on sophisticated electronic technology in every aspect of their operations and rely, on
sophisteated electronic technology in every aspect of their operations and require timely
information to make decisions regarding global operations. Therefore, the internal audit
department must operate to achieve the higher results. To accomplish this, the internal auditing
practice must function in a manner that is in accordance with the applicable professional
standards and organizational goals.
The internal control system plays an important in the internal auditing pratices since an internal
auditors might be considered as being specialists in management control (chambers, Selim &
Vinten, 1987). Internal auditing practices appraise the effectiveness of control systems, which is
a definition of internal auditing and which also includes an appraisal actions by management to
correct situations, which are at variance. with planned outcomes. The definition of internal
control reveals that it is not fundamentally different from management control, which has an
essential component of control such as plaining, organizing, staffing and directing. (Chambers
et al., 1987).
Senior management and the audit committee normally expect that the chief Auditor will perform
sufficient audit work and gather other available information during the year So as to form a
judgement about the adequacy and effectiveness of the control processes.
The researcher intends to look into the nature of internal auditing practise in the performance of
the internal audit department with particular reference to the public sector the third tier of
government using Eket local government council as case study and to evaluate the internal
control system in line with approved international standard and principles.
Auditing for the public sector like local government councils aimed at preventing of mistakes,
short comings and misdeeds in the public administration. In Nigeria, research has shown that
Nigeria local government councils have internal audit staff that carried out internal audit
activities (Adeyemi, Akindele, & Agesin, 2012, Coker & Adan's 2012, Ebimobowei & Kereotu,
2011, Jansson, 2003, kuta 2008, Kwanbo, 2009, Ojo 2009, Unegbu 8 kida 2011) This
establishment is consistent with the provision made by deportment of local government under
internal audit guidelines which strongly recommends that all local government councils should
have internal audit function for the following reasons,
1. To support good internal governance
2. To ensure consistency with the levels of government
3. To improve effectiveness of risk management, control and governance processes.
4. Help to instill public confidence in an organgations ability to oporate effectively and
efficiently (HRC, 2008)

1.2 STATEMENT OF THE PROBLEM

Previous studies have not examined the relationship between the internal auditing functions,
internal control system and performance of the internal audit department. To our knowledge
none of the studies have examined internal auditing practices, quality of internal control system
and the internal audit department's performance and roles.
The importance of internal audit function and internal controls are only recognized and
emphasized after irregularities are discovered. Not with standing the government conneted
effort to enforce or encourage accountability in the public sector through Internal control
systems in place, fraudulent practices such as waste, extravagance, fund embezzlement, and
even breach of contract rea its ugly head In the performance of the internal audit department in
the public sector.
Adherence to established auditing standards and increasing coporate governance awareness,
having of to effective internal audit function's would kead to an improved internal control system
and better performance of internal audit department.
Adherence to this, the greater extent of internal auditing practices, the better will the internal
control system be like to better performance of the internal audit department.

1.3 PURPOSE OF THE STUDY

1. To assess the real function of the internal audit unit/department in the management of
funds in the public sector
2. To find out the purpose of installing internal audit department in the council.
3. To find out the problems associated with the performance of the internal audit
department of Local Government Council.

1.4 OBJECTIVES OF THE STUDY

1. To identify the degree of internal audit compliance to SPPIA in Internal Audit Unit Eket Local
Government Council.
2. To determine what extent internal audit practices will affect the internal control system of the
company.
3. To examine the relationship between internal control system and the performance of the
internal audit department.
4. To suggest new ways of improving the functions of internal auditors in the audit department.

1.5 RESEARCH QUESTIONS

On the basis of the research background this study will be guided by 5 major research question.
1.What is the extent of the internal audit practice in Eket Local Government Council?
2. How do internal audit practices adherence to SPPIA (2000) affect the internal control system?
3. How is the impact of the quality of the internal control system on the performance of internal
audit unit?
4 What is the purpose of instally Internal Audit Unit n the Council?
5. What are the better ways of improving the functions of internal auditors?

1.6 SIGNIFICANCE OF THE STUDY The significance the study can be seen from both
theoritical and practical perspective.
1. The study provides evidence as to the extent of internal auditing practise in Eket Local
Government Council.
2 It provides evidence to the linkage between internal auditing practices, internal control system
and performance of internal audit department.
3. The study also establishes the extent to which SPPIA (2000) contribute to the quality of
internal control system.
4. The study would equally be of great value to internal auditors in other government parastatals
be it state or federal to discover their weakness and means of overcoming them.

1.7 DELIMITATIONS / SCOPE OF THE STUDY

This research work is assessment of the extent of the internal Audit Function in Eket Local
Government Council. The Study will make use of the latest available guidelines and procedures
applicable in Nigerian Local Government.

1.8 LIMITATION OF THE STUDY

The major limitation of the study was first unwillingness of the respondent to answer questions
due to sensitivity and complexity of the topic. However this study also went through series of
shortcomings, due to financial constraints, the researcher had difficulties in paying transport on
a routine basis to gather information. for research work. Furthermore, the combination of other
academic activities with this reach has also posed a problem to the researcher considering the
fact that there was a stipulated time frame allowed for the completion of this academic work.

1.9 DEFINITION OF TERMS

In every study there are some terms that are frequently used.
1.Auditing: Audit or auditing is a formal or official examination and verification of accounts.
(Webster's and New Collegiate Dictionary)

2. Internal Auditing: Internal Auditing is a part of internal control which is a device by

management or administrators to safeguard or protect assets and liabilities against waste,
fraud, staling, damage or destruction and inefficiency (Akpankpan 2002). "Internal auditing is an
independent objective assurance and consulting activity designed to add value and improve
organisations operations" (IIA, 1999)

Internal Auditing Practices: Internal auditing practices refer to the compliance to Standards for
the Professional Practise of Internal Auditing (SPPIA, 2000), which is undertaken. to represent
the practice of internal auditing.