The Role Of An Auditor In The Achievement Of Organizational Objectives A Case Study Of Nestle Nigeria Plc


The Role Of An Auditor In The Achievement Of Organizational Objectives A Case Study Of Nestle Nigeria Plc

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Internal audit is an independent appraisal function established by the management of an organisation for the review of the internal control system as a service to the organisation. It objectively examines, evaluates and reports on the adequacy of internal control as a contribution to the proper, economic and effective use of resourcesThe essentials for effective internal auditing are:independence;The internal auditor should have the independence in terms of organisational status and personal objectivity which permits the proper performance of his duties staffing and trainingThe internal audit unit should be appropriately staffed in terms of numbers, grades, qualifications and experience, having regard to its responsibilities and objectives. The internal auditor should be properly trained to fulfil all his responsibilities .relationships;The internal auditor should seek to foster constructive working relationship and mutual understanding with management, with external auditors, with any other review agencies and, where one exist, the audit committee ;due care;The internal auditor should exercise due care in fulfilling his responsibilities .planning, controlling and recordingThe internal auditor should adequately plan, control and rec;ord his work .evaluation of the internal control system;The internal auditor should identify and evaluate the organisation’s internal control system as a basis for reporting upon its adequacy and effectiveness .evidence;The internal auditor should obtain sufficient, relevant and reliable evidence on which to base reasonable conclusions and recommendations.reporting and follow-up;The internal auditor should ensure that findings, conclusions and recommendations arising from each internal audit assignment are communicated promptly to the appropriate level of management and he should actively seek a response. He should ensure that arrangements are made to follow up audit recommendations to monitor what action has been taken on them .The terms of reference for the internal audit function should be formally confirmed by the organisation and should have proper regard to the contents of this guideline; demonstrable independence of the function is crucial to its effectiveness. For certain public sector organisations the need for an internal auditing function is prescribed by statute and this provides a basis for defining specific standards and guidance for the practice of internal auditing in these organisations.To achieve full effectiveness the scope of the internal audit function should provide an unrestricted range of coverage of the organisation’s operations, and the internal auditor should have sufficient authority to allow him access to such records, assets and personnel as are necessary for proper fulfilment of his responsibilities. It is a management responsibility to determine the extent of internal control in the organisation’s systems which should not depend on internal audit as a substitute for effective controls. Internal audit, as a service to the organisation, contributes to internal control by examining, evaluating and reporting to management on its adequacy and effectiveness. Internal audit activity may lead to the strengthening of internal control as a result of management response.One of the objectives of internal auditing is to assist management in the pursuit of value for money. This is achieved through economic, efficient and effective use of resources.It is a management responsibility to maintain the internal control system and to ensure that the organisation’s resources are properly applied in the manner and on the activities intended. This includes responsibility for the prevention and detection of fraud and other illegal acts. The internal auditor should have regard to the possibility of such malpractice and should seek to identify serious defects in internal control which might permit the occurrence of such an event. An internal auditor who discovers evidence of, or suspects malpractice should report firm evidence, or reasonable suspicions to the appropriate level of management. It is a management responsibility to determine what further action to take.Independence;Independence is achieved through the organisational status of internal audit and the objectivity of internal auditors.Organisational status The status of internal audit should enable it to function effectively. The support of management is essential. Internal audit should be involved in the determination of its own priorities, in consultation with management. Accordingly the head of internal audit should have direct access to, and freedom to report to all senior management including the chief executive, board of directors and, where one exists, the audit committee.Objectivity of the internal auditor Each internal auditor should have an objective attitude of mind and be in a sufficiently independent position to be able to exercise judgement, express opinions and present recommendations with impartiality. The internal auditor, notwithstanding his employment by the organisation, should be free from any conflict of interest arising either from professional or personal relationships or from pecuniary or other interests in an organisation or activity which is subject to audit. The internal auditor should be free from undue influences which either restrict or modify the scope or conduct of his work or over-rule or significantly affect judgement as to the content of the internal audit report. The internal auditor should not allow his objectivity to be impaired when auditing an activity for which he has had authority or responsibility. An internal auditor should be consulted about significant proposed changes in the internal control system and the implementation of new systems and make recommendations on the standards of control to be applied. This need not prejudice the auditor’s objectivity in reviewing those systems subsequently. An internal auditor should not normally undertake non-audit duties but where he does so, exceptionally, he should ensure that management understands that he is not then functioning as an internal auditor.


Delathe (2012) stated that auditing in the past, have been   considered as a simple administrative procedure comprised mainly of checking accuracy of transactions pre-payment verification and control, counting assets and reporting in past event, a combination of forces, has, in recent time, let to a quiet revolution in the accounting profession, Government, private and public companies are moving towards a higher level of transparency and as such demonstrate accountability and stewardship in the use of resources entrusted  to them. Reason for Auditing includes,Evaluation and risk management ,Control and Government processes, Investigative and Advisory services .Clement (2012) note that audit system is important for a company because its enables it to pursue and attain its various corporate objectives. Business processes need various forms of interval control to facilitate supervision and monitoring, prevent and detect irregular transaction, measure ongoing performance, maintaining adequate business records and to promote operations productivity, interval Auditors, review the design of the interval control and informally propose improvement and document any materials irregularities to enable further investigation by management if it is warranted under the circumstances.Manguis (2011) observed that auditing helps top management manage corporate affairs, providing guidance on various issues ranging from financial accuracy to interval control to regulatory compliance. They also help department heads indentify tools and methodologies to improve operational activities, putting companies on a more sustainable path. The need for Auditing stems from Internal control ,Financia lReview, Regulatory monitoring.



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