-
The Impact Of Process Auditing On Production And Profitability In Manufacturing Company
CHAPTER TWO -- [Total Page(s) 3]
Page 3 of 3
-
-
-
According to Gholamreza and Samira (2015) argued that more qualified auditing firm with better quality can affect the management discretions in the selection of the accounting procedures and its motivation for manipulating the profit. Also, the more there are accounts such as accounts receivable, accounts payable, and inventory (of the optional accrual items), the more there would be observed demands for better supervision and more qualified auditing. Also Asghar (2010) argued that the bigger the size of the auditing and the longer the tenure period of auditor, the higher the quality of the auditing will be and the higher the quality of auditing the extent of its influence will be greater on the management discretions in the choice of the accounting procedures and his or her motivation for manipulating profit to reach personal interests and the higher would be the reliability of financial statements
Chen et al. (2005) in a study under the title of the auditing quality and profit management for the companies involved in the initial public offering (IPO) of Taiwan stock market by selecting top 4 big auditing firms as the quality auditors and the comparison of the profit in the audited firms by these four firms and the profit in the audited firms by auditors other than these four big firms studied the auditing quality relationship and profit management in the stages before and after the IPO and they came to this conclusion that, firstly, in such companies profit management takes place and secondly, there is a significant relationship between profit management and audit quality, and it is in a way that the higher the quality of auditing the lower the profit management of such firms.
Also, Bal and Shiva Kumar (2005) stated that the private companies in comparison with the governmental companies are in short for the timely announcement of their losses. Tendello and Vanstraelen (2008) also in a study under the title of “profit management and auditing quality in Europe: private distribution firmsâ€, by considering the top 4 big auditing firms as the high quality auditors and the survey of the profit management in the audited firms by these four firms and the profit management came to this conclusion that there is a significant relationship between profit management and audit quality and the high quality of auditing in the companies having similar taxation regulations causes the profit management to go down.
According to Husam et al (2013), audit is playing an important role in developing and enhancing the global economy and business firms. Auditors express an opinion on the fairness of financial statements. This is important for the users of financial statements to gain assurance that the data are being reported, properly measured, and fairly presented. Auditors must raise their skills in order to increase the probability to rely more on the auditor's report and audited financial statements which are more relevant, unbiased and accurate for the decision makers. Audit quality is not just affected by auditor qualification, the company’s internal control system might be another factor that affects audit quality, and the size of the audit firm might also matter. However some regulators and small audit firms claimed that audit firm size does not affect audit quality and therefore should be irrelevant in the selection of an auditor.
There is enormous pressure on all manufacturing businesses today to be more agile in the way they operate. Customers and markets demand increased product customization, greater product variety and frequent changes in batch sizes. Coupled with the pressure of shortening delivery lead times and expectation of increased delivery reliability and increasing costs, these demands require a complete change from the steady, reliable but relatively inflexible production practices of the past. This paper introduces an audit, which focuses specifically on assessing the contribution that production can make in responding to these increasing pressures.
According to Ejoh and Ejom (2014), auditing serves as an important link in the business and financial reporting processes of corporations and not-for-profit organizations, internal auditors play a key role in monitoring a company’s risk profile and identifying areas to improve risk management. The aim of auditing is to improve organizational efficiency and effectiveness through constructive criticism. Auditing has four main components: viz; verification of written records, analysis of policy, evaluation of the logic and completeness of procedures, internal services and staffing to assure they are efficient and appropriate for the organization’s policies; and reporting recommendations for improvements to management. The subject is worthy of attention because auditors are important, even crucial, in an economy that relies upon independently produced information.
Aguolu (2002) while commenting on the evaluation of internal control stated that it is almost impossible to study auditing or to be able to perform any meaningful audit in practice without having a perfect grasp of the concept of internal control. According to him, internal control system forms the bedrock of auditing both from the point of view of management and the auditors.
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 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).
CHAPTER TWO -- [Total Page(s) 3]
Page 3 of 3
-
-
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---
