AUDITING AS AN INSTRUMENT FOR ORGANIZATIONAL SUCCESS (A CASE STUDY OF ANAMCO LTD. ENUGU STATE)

INTRODUCTION     

1.1 BACKGROUND OF THE STUDY

       The practice of auditing in the primitive form can be traced back to ancient times where the receipts and payments of an estate or a manor were read to the head or proprietor, or the Lord of a manor. The word auditing originated fr4om the Latin word Audire (meaning to hear). The business of this period was characterized by sole proprietorship. But with industrial revolution, there was an increase in business transactions and there emerge partnership and joint stock companies. The evolution of mechanized industries involved the provision of finance far in excess of what it used to be. Business become more complex and required more formal and improved accountability. Under the company form of organization, the shareholders as a body delegated the management of the undertaking to a board of directors and periodically the board submitted to the shareholders accounts of the company in order that the members might be able to see a true and fair view of the financial position and the profit or loss of the undertaking in which they were interested.

       Because of these circumstances the need arose for some means by which the shareholders as a body might be satisfied that the accounts, presented to them by their board of directors, did in fact show a true and fair view of the financial position and earnings of the company. It was for this reason therefore that the practice developed of appointing auditors whose duty it was to verify on behalf of the shareholders the accounts of the directors and to report there on to the shareholders. Under the early British companies Acts, the auditors appointed were one or two of the shareholders of the company.

 As however, the chosen auditors commonly had insufficient technical qualifications, there were probably not able to carry out a very effective audit nor were there paid anything for the work they did although a later Act did provide for them to employ a clerk to do some work, whose remuneration should be provided by the company. It was the British companies Act, 1900, which first made it legally compulsory for every company to appoint independent auditors, as we now know them, and provided for their remuneration. It was undoubtedly the rapid increase in the number of joint - stock companies that took place at this time, and the compulsory professional audit thus provided for in the companies Act, 1900 that gave the great impetus to the development of accounting profession. In Nigeria today the accounts of every company and the majority of partnerships are audited by professional accountants and in the recent year the accountancy profession has expanded greatly in many other directions.

1.2 STATEMENT OF THE PROBLEM

Modern-day organizations are increasingly facing performance driven challenges that tend to erode the confidence placed on the financial statements prepared by management of these companies (Bamidele, 2009). In charting the course for other scholars, Okozie (2008) frowned at the problems trailing the absence of auditing which, when unattended to, could hamper the quality, form, disclosure requirements of financial statements. These are; Presence of weak interval accounting control system which tends to give unwarranted furious to some dubious company management and or employees.

Material misstatement of crucial assets liability or capital item. This, in turn, leads to financial statements that do not fairly and truly represent the state of affairs at the company.

Gross violation of statutory provisions, professional guideline as well as weak level of corporate government which if uncorrected, may bring down heavy fines in the company by the various regulatory / professional bodies.

The unattractiveness of company’s shares due to unaudited nature of its account which might scare off investors.

Wikipedia (2012) posited that auditing as a vital part of accounting which provides an assessment of a company’s internal control, seeks not only to solve the above mentioned challenges but also to provide an assurance that financial statements are of the highest quality which would impact on the success of such reporting entity.

1.3 OBJECTIVE OF STUDY

The following are the key objectives the researcher proposes the study / research to active.

1. To use auditing as a means of evaluating the success of a company internal control system.
2. To disclose any firm of material misstatement that may exist in the account of a company through the activity of auditing.
3. To help companies ascertain their level of compliance to both statutory, professional disclosure requirement with a view to correcting variances.
4. To use as a tool to prevent fraud, embezzlement of funds in organizations.
5. To improve the investment potentials of companies through the mechanism of auditing.
6. To determine if auditing is really the backbone of organizational success or not.

1.4 RESEARCH QUESTION

Asika (2001) defined research questions as the set of questions which the research hopes in mind that the study would give answers to this research work shall answer the following questions:

1. Can auditing truly evaluate company’s internal control system?
2. Would auditing ensure a reduction, if not elimination of fraud, embezzlement in company’s annual reports?
3. Is auditing really the backbone of organizational success
4. Can auditing improve the investment potentials of companies?

1.5 STATEMENT OF HYPOTHESES

Hypothesis 1

H0: There is no significant impact of auditing on organizational success.

H1: There is a significant impact of auditing on organizational success.

Hypothesis 2

H0: There is no significant relationship between auditing and organizational success.

H1: There is a significant relationship between auditing and organizational success

1.6 SIGNIFICANCE OF THE STUDY

The research is expected to make reasonable impact in the following areas.

Enlighten bothprivate and public companies regulatory agency as well as its audience in the impact of auditing in organizational success.

Educate the researcher’s audience in the concept of auditing so as to increase their awareness level.

It would serve as a base for future researchers who may want to dive into the world of auditing as their research area

It would proffer workable recommendations based of research findings, so as to solve organizational challenges.

1.7 SCOPE OF THE STUDY

The concentrates solely on a manufacturing company in Enugu state with special reference to Anambra Motor Manufacturing Company (ANAMCO) Enugu State. The organization undertakes business in motor manufacturing especially Mercedes Benz products. Particular attention will be paid to the methods and procedures employed by the accounting department in performing its duties.

1.8 LIMITATION OF THE STUDY

These are the apparent difficulties experienced by the researcher which tend to water down the overall quality of the study: these are;

The time frame for carrying out the research work is too short studies of the nature take longer duration that what the researcher used.

The number of sample was inadequate

The research base of Enugu is inadequate. This, if not for financial constraints, would have been increased.Sourcing of literature of the study was quite difficult.

1.9 ORGANIZATION OF THE STUDY

The project works cover 5 distinct chapters, in line with approved format of the faculty of management sciences.

Chapter one introduces the project work at hard, this chapter gives the audience a quick rundown of what to expect in other chapters of the project.

Chapter two review relevant literatures surrounding auditing in order to enrich the researcher’s work.

Chapter three projects the research methodology adopted by the researcher in a bid to collect, analyze, interpret and prevent data.

Chapter four analyses the data collected usually an agreed data analysis method.

Chapter five concludes the study by giving discussion of findings, recommendation as well as areas of future studies.

1.10 SUMMARY

The researcher, under this chapter, has taken an in-depth review of  the concept “with a view to establishing its importance in organizations, conditions warranting its introduction into the scheme of workings of modern day companies to achieve the crucial objectives of the study, important research questions were asked, hypothesis stated etc.In essence, the chapter under review gives the audience a quick, though comprehensive, sketch of the project work.