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The Impact Of Process Auditing On Production And Profitability In Manufacturing Company
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Morris (2011) assert that software vendors that market enterprise resource planning (ERP) system have taken advantage of this new focus on internal controls by emphasizing that a key feature of ERP system is the in-built controls that mirror a firm’s infrastructure. They emphasized these feature in their marketing literature, asserting that these systems will help firm’s improve the effectiveness of their controls as required by Sarbanes-Oxley Act.
2.3 Empirical Literature Review
Jean (2014) argues that audit exists because interested individuals or groups are unable for one or more reasons to obtain for themselves the information or reassurance they require. Hence, an audit function can be observed as a means of social control because it serves as a mechanism to monitor conduct and performance, and to secure or enforce accountability. The researcher further argued that in the foreword to The Accountability and Audit of Governments made the following remark: “Without audit, no control; and if there is no control, where is the seat of power?†All in all, an audit function plays a critical role in maintaining the welfare and stability of the society.
As Okezie(2004) puts it, the main objective of internal auditing is “to assist management in the effective discharge of their responsibilities by furnishing them with analysis, appraisal, recommendations and pertinent comments concerning the activities reviewedâ€. Ejoh and Ejom (2014) opined that internal audit has become an indispensable management tool for achieving effective control in both public and private organizations, control mechanisms are those processes set up to monitor and to direct, promote or restrain the various activities of an enterprise for the purpose of seeing that enterprise objectives are met. By detecting weaknesses in management operations, Internal Auditing provides a basis for correcting deficiencies that have eluded the first line of defense before these deficiencies become uncontrollable or are exposed in the external auditor’s report.
Hutchinson and Zain’s (2009) [16] investigated the relationship between internal audit and organizational performance in Malaysia and recommended to consider several models that probably affect the quality of internal audit and increased firm performance. Furthermore Al-Matari et al. (2012) examined the role of board characteristics in firm performance in Kuwait and suggested to examine the relationship between internal audit and organizational performance whether it is direct relation there is a moderating effect of some other variable too. Ljubisavljević and Jovanovi (2011) investigated the association between the internal audit and firm performance in Serbia. The findings suggested no association between the internal audit and firm performance. Ljubisavljević and Jovanovi (2011) investigated the association between the internal audit and firm performance in Serbia. The findings suggested no association between the internal audit and firm performance.
Ondieki (2013) stated that there are three accounting based performance indicators: return on assets, the return equity and return on investment as they are frequently used to evaluate the of firm performance, including financial firms. Financial analysts use return on assets and return on equity to measure firm performance and predict future trends in firms value as well as use as input in statistical models to predict firm future position i.e. failure or success etc (Khrawish, 2011) . These indicators are also used for several other purposes such as measuring profitability. As firm size is an important moderator in governance and control researches and combines in the variable of ROA as the denominator is the total assets hence it is important to take the measure of firm performance by ROA.
The internal audit function has been acknowledged as a value-adding function to an organization because of its unique role in governance, control, and risk management (Soh and Martinov-Bennie, 2011). Specifically, the internal audit functions has been acknowledged to reduce risks, improve control risks, minimize external monitoring cost, minimize earnings management, moderate fraud risks, reduce opportunistic behaviours and perform other non-financial statement related task within an organization (Ege, 2015; Prawitt, et al 2009). Also, the quality of the internal audit is capable of ensuring sound governance and accountability in the public sector (Lapointe, 2008). Internal audit, working under the right conditions and supported by top management who is committed, can help the local government achieve goals that impact the lives of communities. The internal audit quality includes competence, independence, quality of work, training and development, and management support for internal audit.
Onatuyeh and Aniefor (2013) examined the role of effective internal audit in the management and accountability of the public sector using 245 respondents from audit departments of ministries and government agencies in Edo state in Nigeria. Although their study found some evidence that effective internal audit promotes accountability, their measure of effective internal audit leaves much to be desired as no reliability or previous test of their instrument was reported. Also, the analysis was merely descriptive as no relationship was tested. Similarly, a study by Ebimobowei and Kereotu (2011) in two southern states of Nigeria using 96 internal auditors in state ministries found widespread governance failures resulting from internal audit not performing its role. Their study ignored the quality of internal audit in arriving at their conclusion as the quality of internal audit is important both for role performance and contribution to organizational performance. Baltaci and Yilmaz (2006) acknowledged the limited number of studies on internal audit in the public sector especially at the local government level and called for more research. Furthermore, a close look at internal audit quality shows the similarity of the concept with that of internal audit effectiveness.
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ABSRACT - [ Total Page(s): 1 ]ABSTRACT IS COMING SOON ... Continue reading---
APPENDIX A - [ Total Page(s): 1 ]APPENDIX QUESTIONNAIRE ON THE IMPACT OF PROCESS AUDITING ON PRODUCTION AND PROFITABILITY IN MANUFACTURING COMPANIESDear Respondents, I am final year student of Kwara State Malete writing a project titled “impact of process auditing on production and profitability in manufacturing companiesTherefore, I would be most grateful if the questionnaire is treated well by providing adequate, correct and honest answers to the questions asked in it. The privacy of your answers is guaranteed as nobo ... Continue reading---
CHAPTER ONE - [ Total Page(s): 2 ]CHAPTER ONEINTRODUCTION1.1 Background Of The StudyThe turbulent effects of the global financial crisis have highlighted the critical importance of credible high quality financial reporting. Achieving quality financial reporting depends on the role that the external audit plays in supporting the quality of financial reporting of manufacturing companies. It is an important part of the regulatory and supervisory infrastructure and thus an activity of significant public interest. Process auditing ... Continue reading---
CHAPTER THREE - [ Total Page(s): 2 ]CHAPTER THREEResearch Methodology3.1 IntroductionThis chapter looked at the research methodology that will be use in the study. This chapter will be presenting the following; research design, the population of the study, the sample and sampling techniques, instruments for the study, validity of the instrument, reliability of the instrument, procedure for data collection and method of data analysis.3.2 Research Design This study used survey research design. Ogutu (2012) posits that a survey resea ... Continue reading---
CHAPTER FOUR - [ Total Page(s): 10 ]Hypothesis Ho: process auditing has no impact on production and profitability in manufacturing companiesH1: process auditing has impact on production and profitability in manufacturing companiesDecision Rule: Accept H0if P-value is greater than 0.05, reject if otherwise ConclusionSince the P – value is (0.000) is less than 0.05 we reject H0, we therefore accept H1 and conclude that there is significance relationship between process auditing and production and profitability in manufacturin ... Continue reading---
CHAPTER FIVE - [ Total Page(s): 1 ]CHAPTER FIVESUMMARY, CONCLUSION AND RECOMMENDATIONS5.1 IntroductionsThis chapter of this research gives an overview of the whole research work as this starts with the summary of the work from the first chapter to the last chapter, the findings and the conclusion of this research work, recommendations that were proffered by the researcher as a way by which more research will have a benchmark or point of reference after this research work as to what is expected from them, suggestions were al ... Continue reading---
REFRENCES - [ Total Page(s): 1 ]REFERENCESAdams, M.B. (1994). Agency Theory And The Internal Audit, Managerial Auditing Journal, On Line Http://Www.Emeraldinsight.Com. Aguola, O. (2002). Fundamentals Of Auditing, 2nd Ed. Meridian Associates. Enugu. Anderson, D; Francis, J.R. and Stokes, D.J. (1993).’Auditing, Directorship And The Demand For Monitoring: Journal Of Accounting And Public Policy.Bala, S.K. And Yusus, M. A. (2003). “Corporate Environmental Reporting In Bangladesh: A Study Of Listed Public Limited Com ... Continue reading---
