ABSTRACT
Nigeria emerged from colonial rule with little technological know-how. This attributed to the fact that the colonial masters made no attempt at laying foundation for acquisition of the know-how required to build the economy. Despite this, the Nigerian economy has greatly evolved and is now termed the fastest growing economy in Africa. This is due the fact that they have developed skills and  procedures so  that businesses  and  organizations can prosper. Inn relation to banks, before the 2005 consolidation exercise so many individual had little or no faith at all in these financial institutions as some kept on folding out. How ever the consolidation process endorsed by the Central Bank of Nigeria was see and considered a savior to the economy. The banks later developed schemes and strategies to grow and face their competitors without crumbling; one of such schemes being the thorough function of the internal auditing department. This research reviews the roles and functions played by the internal audit department in organizations. It is therefore unavoidable to talk of the role of the internal audit department without relating to the views of the staff who work in such a department in any organization. Three firms in the same industry (the banking industry were thus selected) and questionnaires were issued to the members of staff working in this department. This project therefore focused on the importance of the existence of an Internal Auditing Department in any organization. It high lights some problems faced by banks and how the IAD could assist them in combating these problems Chapter three dwelt on the research methodology employed in the study.  I discussed the various sources data used, the sample from which information was sought and the reasonability of using such samples. Chapter four provide presentation and analysis of data collected and testing of research hypothesis. Finally Chapter five summarized the findings of the research and offers recommendations and conclusion.
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Through out the past decade, Nigeria has witnessed a rise and fall in several businesses. The businesses or organizations which are still in existence and experiencing growth set up structures and practices of boards so as to monitor the performance of the organizations. This is done so as to impress the shareholders of the various businesses and attract new investors.
The companies or establishments which did not make it could have suffered from one problem or another. The most prominent one which can not be ignored is that of fraud. This alone has caused a lot of damage in the financial markets and the entire economy has been plunged into a terrible crises. The fall of a company like Enron in the United States of America caused an up rise and raised so many eyebrows hence leading to a sagging investor’s confidence.
On the other hand, there are some organizations growing in strength. One of the factors that could contribute to the steady growth of companies is the setting up of an Internal Auditing Department. As fraudulent financial reporting and restatements of earnings have become more prevalent, auditing (be it external, internal or governmental audits) has become more important. So to monitor the procedures and  adherence to principles to  an organization, internal auditing could be looked upon as a key. A typical example is seen in the case of World com, (a financial establishment in United States of America) when Cynthia Cooper (Vice President of the internal auditing team) and her staff unveiled several auditing practices which were not in line with the Generally Accepted Accounting Principles (GAAP). In carrying out this audit, it was discovered that for previous two years, $3.8 billion in cost had been capitalized rather than expensed. This announcement was made in June 2002.
Pinero (2001), in his paper presented at a workshop for internal auditors stated that “the prime objective if the Internal Auditing Department (IAD) in any bank is to evaluate whether the bank’s framework of risk management, internal control and corporate governance processes are adequate and functioning properly and carried out throughout the year. He added that the objective of the internal auditing department (IAD) includes suggesting and recommending the management for improvement in internal control and risk mitigating factors. Internal audit services provided by the IAD therefore exist to add value to the organization, to concentrate on the key risks, to evaluate and assess the Internal Control System (ICS) and contribute to the proper economic, efficient and effective use of resources in banks and other organizations (Miten Keynes Council,2002). As such the IADs of Oceanic bank plc, UBA plc and First bank plc could be looked up to as monitors in their various organizations as they check the risks and ICS of the organizations. Therefore internal auditors in Nigeria, in carrying out their function and roles judiciously could as well save a company or organization from a fall.
From the above, it will be reasonable enough to agree with Frigo (2000) who points out that it is wrong to think of auditing as only “financial” in nature. According to him the scope of internal auditing within an organization is very broad and may involve topics such as:
The efficiency of operations
The reliability of financial reporting
Deterring and investing fraud
Safeguarding assets and
Compliance with laws and regulations
As a result of the broad scope of involvement, internal auditors (those who carry out the profession of internal auditing) may have a variety of higher educational and professional backgrounds.
It can be interpreted from the above that audit departments in organization function in a particular way to ensure the growth and development of the organizations.
1.2 Statement of the Problem
Technology has made people assume that the world is a global village. This is due the technological changes. This has led to the establishment of several businesses like financial houses and manufacturing houses. It implies that businesses today are faced with a lot of challenges. One of the greatest problems is heavy competition thus organizations are always trying to come up with something new so as to keep in line with changes and gain a greater market share. This problem is an external problem; this from the outside environment.
The peculiar problem which usually crops up within the organization or business (internal) is that of “management”. There could be unscrupulous individuals in an organization who try to satisfy their own selfish aims at the expense of the business. This is usually done in the form of embezzlement, fraud and misstatements in the financial statements, carried out consciously.
The aforementioned problems have led to the fall of so many companies all over the world. Organizations therefore have to try to avoid a fall or crash by trying to set up different schemes and may be some policies as to how the different employees do their work. UBA and Oceanic bank being new generation banks after the 2005 consolidation process have tried to stay in the game just as well as an old generation bank like First bank plc. All three banks develop different strategies and schemes to grab a greater market share, stay in the game as they resulted from mergers during the consolidation exercise and finally try to meet up in the ever growing competition.  Before the consolidation exercise took place, the Central Bank OF Nigeria report of 2004 showed that many banks exhibited weakness among which included under capitalization, illiquidity, weak/poor asset quality, fraud  and poor earnings.  At  the  conclusion  of  the consolidation  exercise  on  31st  December  2005,  UBA  plc  was  made  up  of Standard  Trust bank,  United  Bank for  Africa  and  Continental  trust  bank; Oceanic bank plc was made up of Oceanic Bank and International truest bank
and First bank plc was made up of First bank of Nigeria plc, FBN Merchant bank and MBC (Kama,2006). This project will thereby point out how the internal audit department can be used as a scheme by these aforementioned banks to combat fraud and embezzlement.
1.3 Objectives of the Study
The main objective of this work is to outline the functions of the internal audit department in an organization; thereby investigation is carried out to know the part it plays in the success and growth of the organization. The sub-objectives are:
1) To find out the ways in which the internal auditing department of the organization protects the assets of the company in order to prevent fraud.
2) To find out how the department functions in order to improve on the performance of management.
3) To determine the ways in which the department functions to improve control and operational activities.
1.4 Research Questions
How does the audit department improve the Internal Control System of an organization?
1) In what way does the audit department help the organization discover and deter fraud?
2) What contribution does the audit department make in efficiency and effectiveness of an organization?
3) How do the ideas and recommendations proposed to the management by the audit department affect the growth of the organization?
1.5 Hypotheses
In light of the above research questions and objectives, evidence is sought to test if;
1. The roles and functions carried out by the internal audit department have an impact on the growth of the organization in terms of efficiency and adherence to the laws of the Federal Republic of Nigeria.
2. The role played by this department has helped reduce the level of embezzlement, fraud and material misstatements in the financial statements of organizations.
3. The role played by the internal auditing department, in checking the Internal Control System (ICS) regularly solely improves the effectiveness and efficiency of organizations.
1.6 Significance of Study
In Nigeria, it is not just enough for an establishment, business or organization to exist. Growth and expansion is a necessity to these organizations as well. The growth in its way helps to develop the economy, standard of living as well as the financial markets.
Bases on the above, there is therefore a need for accounts of organizations to be audited periodically to ensure that the company is on the right track with respect to capital, assets and liabilities as well as the laws governing the nation. As a result;
1) This study will bring forth to light the relationship between the audit department of an organization and the growth of the organization in which it exist.
2) It will also expose the factors (whether internal or external) that will influence the output of the employees of such a department.
3) It will also outline some limiting factors that hinder the independence of the employees working in the audit department.
This implies that the research will be useful to:
Management teams of organizations
The government
The employees of the internal audit department of any organization
On-coming researchers who will use this work as the basis of further research work
1.7 Scope and Limitation of the Study
This study will appraise the importance of internal audit departments in organizations and their effect on the success of these organizations. The study will be limited to Enugu East LGA of Enugu state.
This study will be limited by the following
1. Time Factor: It is not possible to gat information from all organizations which have an internal audit department within the time this study is to be completed.
2. Financial Constraints: Due to finance, it is not possible to make a wide and far reaching into the various roles and functions of as many audit departments of organizations as possible.
3. Another factor is the reluctance of management body of some organizations to respond to our request to carry out research in their companies. They are skeptical in that the study could release some secrets to their competitors as far as it concerns their internal audit departments.
1.8 Definitional Terms
1. Organization: This is a group of people intentionally organized to accomplish an overall, common goal or set of goals (Wilton, 1996).
2. Risk Management: It is the process of analyzing exposure to risk and determining how best to handle such exposure (Anton 2002)
3. Corporate Governance: This refers simply the structures and practices of board, the overall importance being to monitor corporate performance and oversee the conduct of management on behalf of shareholders and/or stakeholders (Osisioma, 2006).
This material content is developed to serve as a GUIDE for students to conduct academic research
THE ROLE OF THE INTERNAL AUDITING DEPARTMENT IN ORGANIZATIONS: A CASE STUDY OF SELECTED BANKS IN ENUGU STATE
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