PROPOSAL
The Relevace of Auditing in the Enhancement of Accountability in private companies (A case study of phinomar Nig. Ltd).

In the past, private Companies did not pay much attention to external and internal audits. It was only the accountability of public funds that was given a public notice or concern, but the increase rate of mismanagement, fraud and Embezzlement in every business concern has brought the awareness of the indispensability of an audit.

The research needs to ascertain the relevance of auditing in the enhancement of accountability. It is also aimed at correcting the misconception which the general public have about audits.

Furthermore, it is aimed at identifying the inherent problem which auditors encounter in course of their duties and the necessary steps that should be taken to exterminate these problems.

The data aim to use for the study are to be sourced from primary sources and secondary sources of data collect through questionnaires, personal observation interviews, desk research e.t.c.

The data will be analyzed using simple percentage and simple awareness while the test of hypothesis will be ascertained using chisquare statistical table.

This study will be conducted using phinomar Nigeria Limited as a case study. Questionnaire will be developed and administered to some members of the company. The result of the test and analysis will show the auditors importance for proper attainment of accountability.

TABLE OF CONTENTS
Title page                                                                                i
Approval page                                                                        ii
Dedication                                                                               iii
Acknowledgement                                                                   iv-v
Proposal                                                                                  vi-vii
Table of Contents                                                                    viii-xi

CHAPTER ONE
INTRODUCTION
1.0     Background of the study                                                         1

1. Historical Background of study                                              4
2. Statement of the problem                                              8       
3. Purpose of the study                                                      8
4. Hypothesis Developed for the study                                       10
5. The Scope and Limitation of the study                                   10
6. Organizational of the study                                           12
7. Research Hypothesis                                                     12
8. Definition of Terms                                                       13

References                                                                               16
CHAPTER TWO
2.1     HISTORICAL DEVELOPMENT OF AN AUDIT    17
2.2     Reasons for Audit                                                                   20
2.3     Essential features of an Audit                                        21
2.4     Audit evidence, sources and Types                                22
2.5     Audit scope                                                                             26
2.6     The Auditors powers, rights and Duties                        27
2.7     Auditors professional Ethics                                         29
2.8     Auditors Legal Responsibilities                                     30
2.9     Internal and Accounting control                                    33
2.10   The Important of internal control Audit                        35
2.11   Auditors Reliance on internal control                                      37
2.12   Standards of Reporting                                                 38
2.13   Advantages, Debates on Audits                                     39
CHAPTER  THREE
3.0     RESEARCH METHODOLOGY DESIGN                41

1. The research Design                                                       41
2. Data sources, primary and secondry Data                     42
3. Determination of sample size                                         43
4. Questionnaire                                                                43
5. Interviews                                                                      44
6. Inspection                                                                      45
7. Questionnaire distribution and collection                      45
8. Validity of Responses                                                    47
9. Methods of Data Analysis                                             47
10. Library Research                                                            48

CHAPTER FOUR
4.0     PRESENTATION AND ANALYSIS OF DATA                 49

1. Responses to Questionnaire                                          51
2. Further Testing of Hypothesis one, two and three                  59
3. Conclusion on Test of Hypothesis                                 71

CHAPTER FIVE

1. SUMMARY, RECOMMENDATION

AND CONCLUSION                                                   72

1. Summary of findings                                                     72
2. Recommendation                                                           73
3. Conclusion                                                                     75

Bibliography                                                                  77
Appendix                                                                       80

CHAPTER ONE
INTRODUCTION

1. BACKGROUND OF THE STUDY

In the past, private companies did not pay much attention to external and internal audits. It was only the accountability of public funds that was give to little public notice or concern, but the increasing rate of mismanagement, fraud and embezzlement in every business concern has brought the awareness of the indispensability of an audit. The definition of a private company is pertinent for a proper understanding of the topic .a private company as defined by Webster dictionary is “any company founded and operated for the purpose of making money for the share holders of the company.

It can also defined as a company which is restricted to a membership of fifty shareholders (excluding employees and ex-employers) and it is prohibited from issuing  any invitation to the general public for subscription of shares. Private companies have become very popular and have virtually replaced partnerships in commerce and industry. Thus, there are laws guiding the operations of  private companies, these laws are included in the companies and Allied matters Act 1967 and currently the companies and Allied matter Decree CAMS 1990.

An audit on the other hand has receive a lot of definitions both from authors and accounting bodies. There is little or no need to say that it has suffered a lot of misinterpretations, most of those mis given interpretations seen an audit at “fraud and error detection” some business concerns have misconception that an Auditor should be employed only when  fraud is suspected to have been committed and some employers of auditors see them as fraud detectors but auditing involved much more than that. Only of the most involved and acceptable definitions of an audit so far is that issued by the consultative  council of Accounting Bodies (C.C.A.B) which sees an audit as the independent examination of an expression of opinion on the financial statement of an enterprises by an appointed auditor in compliance with any relevant statutory obligation.

Deductively, an audit is the objective securitization of some one’s work by a third party who is different form the users and the prepared of the presentation. The general essence of an audit is to ascertain the compliance of the organizations financial statement and operational polices with given accounting standards. Accountability has also suffered some misconceptions surprising, most laymen’s conceptual understanding of accountability   relates it to “communicating about monetary matter”.

The Webster encyclopedia dictionary of English defines accountability as “the state of being accountable, liable or responsible ‘Accountable is further defined as liable to pay or make good in case of loss, responsible for a trust, liable to be called to account. Put in another way and much related to the topic is the article in Aba times of September 1988 captioned. Accountability in third Republic it says: Accountability connotes answerability and stewardship. By answerability is ment answering for one’s actions and decisions.

The paper defined stewardship as any body who is entrusted with any responsibility should be answerable to the person or people who put the trust on him. For accountability, to be accorded its rightful  place in private companies, there should be adequate internal control measures and efforts should be made to ensure that the accounts of private companies are subjected to independent audits after each financial period. It is the manner that it is required of the employees of private companies to answer for their stewardship of the kinds and properties entrusted in their care by their employers. The desire for accountability gave rise to what is to day known as an audit. This topic. The relevance of audit in the enhancement  of accountability will de well on how invaluable an audit is to a private company in order to attain its desired objective. The write up have been divided into five chapters to ensure an intensive research work and for better understanding of the work.

1. HISTORY BACKGROUND OF STUDY

The company phinomar Nigeria Limited is fully owned by the Agulofu family with Royal Highness Igwe I.O.U Ayalogu as the chairman and managing Director. The company was fully incorporated in 1979. the company has its Headquarters at Ngwo in Udi Local Government Area of Enugu state. The company was started by the Igwe with a small mud oven and twelve birds as a hobby in 1963. through the advice of a British salesman and a friend, the Igwe increased his take in both business but become more interested in the poultry area. The company has since developed tremendously and has grown into a group namely:

1. Goodwill poultry farm
2. New Nigerian bakery
3. Multipurpose crop farm
4. Precision machine tools and fabrication plant.

The organizational and functional structure of the company has the Board of Directors at the apex, tem managing Director, General manager  and the Deputy General manager, below two deputy General manager are the offices of the company on the same horizontal line in charge of their various departments namely: the accountant who is in charge of the Accountants Department, the internal auditor takes care of the Audit Department, Human resources manager heads the Human Resources Department and the General secretary of the company is the head of the public relations Department. Further down the line but on the same horizontal line are the production manager, sales manager and purchases manager in charge or the production department, sales department and purchases department respectively.

The last on the chart are the manual labourers who make up majority of the staff strength and their services are of paramount importance to the company.

 

ORGANIZATION AND FUNCTIONAL CHART OF PHINOMAR NIGERIA LIMITED

     

                                                                                     

1.2     STATEMENT OF THE PROBLEM
The increasing wave of fraud and embezzlement in every business concern including private companies has brought to highlight the problems associated with accountability in private companies. In this write up,, it is proposed that auditing will help enhance  the accountability in private companies, the researcher has used the following questions.

1. To what extent has phinomar Nigeria limited engaged in the practice of auditing.
2. What factors inhibit or facilitate the pratice of auditing
3. Are auditors recommendations over applied after appraisal of auditors report.
4. Is the present degree of accountability in the company attributed to audits.

1. PURPOSE OF STUDY

Having stated the problems, the purpose of the study are:

1. To ascertain the rule of auditing in the enhancement of accountability.
2. To enable the employers of  auditors have a good knowledge of what an audit is all about and what to expect from an audit.
3. To ascertain the problems that independent auditors encounter in the discharge of their duties
4. To play the loopholes that hare denied private company accountability.

OBJECTIVE OF THE STUDY
The misgiven interpretations and misconception of the functions of audit by most people have dented the credibility with which the profession was known. The research has therefore, taken to this study for the objectives to:
a.       Bring buck to full flame, the dwindling image of the noble profession.
b.       Restore peoples’ confidence and reliance on auditor. Reports
c.       Correct the misconceptions of the functions of an audit
d.       Emphasis or objective for the private companies compliance on auditors report.
Most importantly to reassure the employers of auditors on the indispensability of audits.

1. HYPOTHESIS DEVELOPED FOR THE STUDY

A hypothesis is a tentative state which is subject to further proof. Based or this, the researcher has generated the following tentative statements for the purpose of this study.
1.       Audit does not influence accountability in private companies
2.       Audit influence accountability in private companies
3.       Audit is not necessary for accountability in private companies.
4.       Audit is necessary for accountability in private companies.
5.       Accountability is not a function of audit in private companies
6.       Accountability is a function of audit in private companies
7.       Audit does not make any positive contribution towards the improvement of accountability in private companies.
8.       Audit makes any positive contribution towards the improvement of accountability in private companies

THE SCOPE AND LIMITATION OF THE STUDY
The study focus mainly on private companies, and their accountability and the role of auditing plays in enhancing it, with phinomar Nigeria limited as a case study. The researcher will go beyond desk research into the fields to sample the opinion of workers, officers and executives in the company as well as the auditor.

This will be done through construction and issues of questionnaire to the potential respondents and through oral interview.

On the other hand, it is not real easy to carry out any research work. They all have their several and specific problems, relevant data for analysis have been a particular problem in this very research since most of the data are classified as “confidential” there were also the problem of time and financial constraint.

It must be noticed that in spite of those problems, the research work must be carried out as its essence is to highlight the company (phinoar) critical and also provide a useful appraisal of the corporaes social responsibilities so that at sound body of knowledge would be useful to providing solution for a conflict free operation. Therefore this study is of conducive in itself but may serve as a starting block for further research.

ORGANIZATION OF THE STUDY
The write-up has been divided into five chapters  for convenience  and proper understanding of the topic. Chapter one covers the introduction, organization of the study historical background of the study, statement of the problem, purpose of study and definition of terms. Chapter two will cover related literature review of the study.

Chapter three will cover the research methodology and  design. Chapter four will deal with analysis of data and findings of the research, chapter five will deal with recommendations and conclusion based on the findings.

RESEARCH HYPOTHESIS
Having stated the problems, purposes and hypothesis of this write up, it is imperative to mention some basic research methods used.

1. Questionnaire
2. Oral Interview based on sampling method.
3. Desk research
4. Observations.

The questionnaire will be structural to lower the topic of the study. The questionnaire s will be tendered to responses to staffs of phinomar Nigeria Limited especially those whose line of duty in the company are financially related as they are considered as potential respondents. Te questionnaire will be used to give the respondents a free hand that will be devoid of bias, provision will be made for those who will not be able to answer the questions correctly due to forgetfulness, time constraints or ignorance, by using the oral interview method in order to ensure that the study is thorough and objective. There will also be an indebt desk research to exploit the ideas that not begotten through questionnaires and oral interviews.

DEFINITION OF TERMS
Audit: This is independent examination of an expression of opinion, on the financial statements of an enterprises by an appointed auditor in pursuance of that appointment and in compliance with any relevant statutory obligation.

Auditor: An individual appointed to carry out on audit of financial statements of an accounting entity
Internal Audit: This is function carried out within organization of examining, evaluating and reporting on accounts and other controls of an organization.
External Audit: An audit of an accounting entity carried out by a auditor who is not employed by that entity or by its manager’s and is as far as possible, independent of the persons who manage the entity.
Accountability: The state of being accountant.
Accountable: The required provision for the analysis and evaluation of actions.
Audit Report: They report by an auditor on a mater which an opinion is sought within the terms of an auditors appointment.
Internal control systems: The whole systems of controls financial and otherwise, established by management inorder to carry out on the business of the enterprise in an orderly and efficient manner, ensure adherence to management policy, safeguard the assets and secure as far as possible the completeness and accuracy of the records.

REFERENCES FOR CHAPTER ONE
Leslier R. Howards, Auditing 7th Editing London Macdonald and Evans ltd, 1982.

Louis Odum, Accountability in the 3rd Republic Aba Times, Sunday 24th September 1989.

David Meedtten and Robert Dnars field Business studies in practice, 2nd ed. P.16

Webster Encyclopedia Dictionary.

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