Auditing Efficiency For Improving Companies Performances

Auditing Efficiency For Improving Companies Performances

Auditing Efficiency For Improving Companies Performances

Company performance is very important if such a company wants to achieve its purpose of starting its business without positive impact of any organization, it means that the way of achieving the objectives when the business has commenced will be a difficult situation for that organization.

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It is obvious that the performances of companies sis not unto expectation. That is why the researcher wants to know the impact auditing create in improving companies performances.

Since companies have been encountering some problems like fraud, misappropriation of funds and properties, lack of effective management and others that made people to be asking whether auditing plays any significant role towards ensuring efficiency and judicious use of funds set aside for various purposes.

Some activities and programmes organized by people as re- assumed to be done on behalf of the people. They are deserved to be assured that eh resources which they put at the disposal of these programmes are effectively, efficiently and economically managed since it is known that not all are judicious in public affairs entrusted to them.

Therefore, for proper and efficient accountability, it is obvious that auditors will manifest their principles to be able to arrive at what is expected of them in order to be convinced that the financial position of the organization as presented show a clear and fair view of the organization.

Consequently, because of biased nature of the organization as a result of poor investigation of the organization position, past rulers have pledged to introduce a more responsible system of government with accountability but their subsequent conduct has shown that they have little or no understanding definition and application of efficiency in the improvement of companies performances.

Auditing which is regarded as one of the recently established professions turn out of the complexity of modern business world. It becomes relevant so as to discourage people from erring and to expose those that gave wrong account of how they managed the funds and properties under their custody. The account or report is usually done by means of financial statement. In order to verify the true and fair view of this report an independent person is needed to audit the account.

The question that is normally asked is in spite of all those provisions and safeguards why is it that one still experience the alarming rate of fraud and misappropriation of public funds and properties by those they are entrusted to safeguard. That is why a great emphasis has to be laid on proper auditing to improve companies performances in public sectors.


The practice of auditing commenced on the day that an individual assumed stewardship over another one’s property. Stewardship is a name given to the practice by which productive resources owned by one person or group are managed by another person or group of persons. In reporting on his stewardship, accuracy, efficiency and reliability of that information would have been subjected to some sort of critical review. Evidence has shown that many years ago, Egyptians, Greeks, Romans and others utilized their opportunities of using check and counter check on the accounting of public funds in order to maintain efficient and effective accounting of public funds committed to them.

Historically, the Auditor had the accounts read to him since the word audit originated from the Latin ‘audire’ meaning the hear.

The original skill required by the Auditor is that which would enable him to carry out an exhaustive examination of the documents and the books which is from the financial transactions of the business especially with the intention of ensuring that all are in order and that no fraud was committed by the employees.

The main objective is to ensure that he account reveal a true ad fair view of the business and its transactions so that all the activities in the organization will be moving smoothly without any obstacle.

Therefore, since the above mentioned countries were successful on the method they used, this economy has to borrow a leaf from them or even find a better way of accounting for public funds since this is the only way the performance of the organizations will enhance.

In this section, the researcher wants to know how auditing efficiency helps to improve the performances of the companies. The effectiveness of an independent is not however limited to statement of credibility derived directly from audit itself. There is a side effect of the prospective audit on employees who might be tempted to defraud their employers and also on the side of management that might find it expedient to endeavour to deceive third party by preparing a misleading financial statement.

The problem is that the funds and properties of the organizations are entrusted to certain individuals in the organization and in most cases., those individuals are not brought under thorough surveillance. The result is that much funds and properties are diverted to personal.

Another problems is that there is still increase in fraud, mismanagement and lack of trust despite the fact that the financial statements of these organization are suited.

This means that if adequate care is not taking, the rate will continue to be increasing until the organizations fold up.

Also on the side of Auditor, some of the difficulties he encounter during his work will make him not to carry his work as and when due. Sometimes, it may be lack of knowledge, time and other constraints that Linder him form effective and efficient exercising of his duty.

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Managers also contributes to the problems of organization since their problem is for their own welfare and not for the business.


The objectives that made the researcher to go into this topic includes:

i. To find out the role of auditing in improving company performances

ii. To find out problems facing auditors which hamper their performances in their public sector.

iii. To find out the auditors roles towards protection of funds and properties in the organization

iv. To find out whether the standard of auditing has fallen in recent years

v. To find out the effectiveness of audit reports and implementations

It is believed that he information collected form this study will

highlight the benefits of auditing towards ensuring proper performance and accountability in any organization and also serve as a foundation for carrying out regular audit work.

Also through this study, auditors will know that they play

significant role towards performance of any organization.


The scope of this study “Auditing efficiency for improving companies performances” is the public sectors in Enugu State.


Like other research topics, this study was faced with a lot of

problems which include the following:

Limitation Time: This has been a great constraint in conducting this research, with academic disturbances, there is time mapped not for attending lectures coupled with other activities including writing this project.

Finance: Financial handicap has always been a problem in conducting research, since conducting this research required going from one place to another in search of information, it means that a lot of money is required.

Since the researcher is a student, it means that nothing is left for this research because he has no money for conducting it.

Lack of Information: This is another problem facing conducting this research. Since there is not adequate information for this, the research is therefore limited.

Lack of Research Knowledge: Since the researcher has little or no knowledge of this topic and how to tackle it, it therefore becomes a problem for proper and accurate conducting of this research.


Auditing: This is an act of investigation by an auditor into the evidence from which the final revenue accounts and balance sheet or other statements of an organization have been prepared in order to ascertain that they present true and a fair view of the affairs and operation of the organization during a period under review.

Efficiency: According to Oxford Advanced Learner’s Dictionary. This is the act of being able to work well without wasting time or resources. OR a way of achieving much things with less resources.

Improving: This is the ability to make something or someone to improve or become better. OR the act of enhancing the situation of something.

Company: This is a place where production takes place OR a place or building where raw materials are converted into finished products.


This chapter is designed to show the detailed study of the research work made in the role of Auditing Efficiency for improving companies performance in the public sector.

Since a lot of organizations are not operating with internal control, what it will lead such organizations to and some of the possible ways of solving the problems. It will equally reveal some of the salient strategies or methods an organization will adopt that will help in boosting up the quality, quantity and effective accountability and stable movement of the organization.


As earlier said, since a lot of organizations have not seen the importance of working with good internal control, it has become a big problem in maintaining effective an efficiency in the company performances, that is the reason why different auditors have viewed about auditing.

Some of these views include:

“Auditing is a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and establishment of criteria and communication of such results to interested users.

Anderson succinctly put it as “the process of examine evidence regarding a report statement or other assertion to determine its correspondence to establish criteria” it is equally defined by Stettler as “the examination upon which the report of attestation is based”.

Bisong defined it as “the verification of the financial position as a disclosed by the books of accounts of a business for a particular period.

Auditing is an examination and evaluation of the authenticity and therefore the reliability of the firm’s business documents and records.

It equally involves making inquiries to make sure that the financial statements on which the auditors are reporting and which have been prepared from those records display a true and fair view of the financial results or position of that area under review and a true and fair view of the state of affairs at the end o the year.

How far such examinations must extend will depend upon the individual circumstances of the case, but the auditor should obtain relevant and reliable audit evidence to enable him draw reasonable conclusions.

An audit always involve a written report signed by the auditor and addressed to personnel to whom he is reporting to.

According to Leshie R. Haward, “No investigation may be termed an audit unless a report is ultimately provided. The report is usually set out at the base of the statement so that it is clearly identified with the information to which is refers.

In the case of a limited liability companies, the method of presentation is laid down by the Companies and Allied Mater Decree (CAMD) 1990, but in other cases, the report may be issued separately from the financial statements.

There are also opinions of some people concerning accountability. But before this, it is pertinent to know that for any organization to perform efficiently, the major requirement is accountability, therefore, on this area, it is advisable to discuss accountability in relation to efficiency in companies performances.

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Ghartey defined accountability as “furnishing (to someone) a satisfactory, reliable, verifiable and accessible records, reasons and explanations for actions of those having custody of power, human resources, public money and other resources.

In his article, Ibezue said “Accountability is not just stewardship at retuning what is entrusted to the manager but that associated with profitability and growth within a specified time. In other words, it implies prudent employment of scarce resources – man, machinery, materials, money and moment, which have countervailing claims to obtain optimum rewards.

There are also Biblical records of the need for accountability as recorded in the gospel of Mathew where a man was going on a journey and called his servants and entrusted his properties to them, each recording his performance.

After sometime, he came back and demanded for account for their works. In public sector, efficiency is attained by proper accountability, reliance in terms of regularity, timelines and accuracy is provided by accountability.

Therefore, for any company, organization etc. to function well, it needs proper accountability and such an aim will be achieved only when someone is employed to verify and take a closer look at the financial statement and other records to view the efficiency ad effectiveness of such an organization and to suggest a way of remedying the situation if it is not performing well.


Public sector includes that section of the economy that is publicly owned. They are controlled by the government. This implies that the welfare, the operation and whatsoever such as organization embark on is being taking care and financed by the government.

The expression “the public service” is defined in section 277 of the constitution of the government including that of the federal government of Nigeria in 1979 as service in any capacity in respect of the government including service in parastetals, the Armed Forces an the Police, the judiciary and educational institution established and taking care by the government.


The auditing procedures involves the following:

i. Ensuring validity of the transactions

ii. Ensuring the definite purpose completeness and accuracy in recording the transactions

iii. Ensuring finally that the records quite agree with financial statement.

The above procedures have purposes by which they can be


Following these procedures will enable the auditor to report credibly on the truthfulness and fairness of the financial statements. In other to achieve this, it is essential that he must follow the procedure to enable him examine and investigate into set of books which are prepared from genuine documentary evidence.

This will enable him to be satisfied in expressing his opinion that the financial statements prepared thereof give a true ad fair view of the operation ad state of affairs of the organization for the financial period under review.

Some of the main areas of examination by the auditors are:

The auditors will compare the profit and loss account and balance sheet with the books and records in order to see whether they are in accordance therewith.

The items in the profit and loss account with particular reference to adequate description, disclosure of information and significance of variations as compared with previous periods.

The compliance with requirements of the Acts (Companies and Allied Matter Decree) compliance with appropriate statement of accounting standard (SAS).


Internal control is the whole system of controls, finance and otherwise, established by the management in order to carry on the business of the enterprise in an ordinary and efficient way to ensure adherence to management policies, safeguard of assets and reliability of its records.

Important characteristics of effective internal control is that directors should review the company’s financial operations and position at regular and frequent intervals by means of interim accounts and reports, operating summaries and other appropriate financial and statistical information. Comparison with results of previous periods may indicate disagreement that calls for examination or where budgeting control is in use, attention would be drawn to material variances and explanations required.

In addition to regular reviews of this nature, management will from time to time call for special reviews of the wages department, these constitute another instrument of control.

Managerial supervision and reviews of this nature are essential elements ineffective internal control system. To some extent, it is possible for management to delegate this function especially as regards to detailed examinations and special reviews and hence its existence in some large organizations of internal audit department made up of specially assigned staff with the principle accounting objective of assuring management of efficient and effective design and operating of internal checks within accounting system.


Few people outside accountancy profession realized the importance of the internal audit department. Some organizational management adduced the argument that internal auditors being the employees of the organization have no liberty to exercise the unbiased and independent attitude so necessary of an auditor.

All the same, for efficient performance, accountants have started highlighting the need for internal audit department in any organization whether governmental organization or private organization. Stressing the importance of internal audit department in an organization. This is noted as a means through which managers discharge their responsibilities to the corporate body. During the internal auditing, the managers promote the concept of self control and accountability of officers in their organization. Also commenting on the need for internal audit in any organization, power said “it is the best equipped body to advise on either the shape o new system or in a particular on the suitability of proposed control features.

The objective of internal audit in the public service or any other organization cannot be overemphasized. This has been testified by a great number of auditors writing on the objectives of internal audit.

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Tovell said “internal audit is concerned with ensuring that financial operations are conducted in accordance with set out rules and standards as well as procedures and operations are run on minimal cost and that expected results are obtained”

Any business organization, before carrying out its objectives, must first of all plan what is intends to do. It must then establish systems and policies for each control area e.g. cash control, stock control, sales ad purchases control as well as setting up a suitable organizational structure to ensure a satisfactory and economic division of responsibilities.

Internal audit department performances a number of functions in an organization.

These responsibilities are equally valuable in non-profit oriented organizations. Where there is no accepted measure of performance numerous authors have certified this assertion writing on the functions of internal audit department of an organization.

Vos stated that they include the following:

– Reviewing and appraising the soundness, adequacy and application of accounting, financial and other operating control and promoting effective control at reasonable cost.

– Ascertaining the extent to which organizations assets are accounted for and safeguarding them from losses of any kind.

– Ensuring the reliability of management data and for information generated within the organization.

– Appraising the quality of performance in carryout assigned responsibilities

– Recommending operating improvement

Also in his contribution, Millicham said that the functions consists of the following:

– Ensuring that all social responsibilities adopted or resolved by to management are carried out in a good manner

– To see that all policies formulated by management are implemented.

– To make sure that information supplied to the management are accurate and reliable

– To certify that changes in business environment are reflected in the internal control system

– To see that assets of the organization are safeguarded.


According to Aguolu (1993); the primary objective of

auditing is the examination of financial statements prepared by the officers of the company and to report to the people. Some of the objectives include:

– detection and prevention errors and fraud in the financial statements

– offering constructive advice

– reporting in internal control

However, Bitola (1998) in his contribution added that the

objectives of auditors are:

– To determine whether financial statements are in accordance with financial activities of the business and also in conformity with accounting standard

– To examine financial transactions in terms of legal use

– To access the efficiency and economy of certain activities and projects.

From all these contribution, it implies that the objectives of auditing is to find out if the accounting records are sufficient to show and explain the transactions and to disclose with reasonable accuracy the financial position of any organization.


Having examined in details the position of auditors and their vital roles towards ensuring efficiency in companies performances, one could rightly conclude that without auditors, government activities will be in confusion. It is because of this invaluable roles of the auditors and that they are often described as the watch dog of the public fund. The auditor is seen as the last hope of a common man. By seeing that the financial statements contain a true and fair view automatically relaxes the minds of the owners of the business and users of the financial statements.

Government auditors have contributed a lot towards the development of this country through the recovery of public funds which has gone into the hands of certain unpatriotic person.

Since auditing is the only tool for the promotion of sound financial management and cannot be substituted with any other thing, that is why auditing efficiency help in company performances.


It could be established that even though there is still frauds in government sectors, but he frequency has reduced drastically due to the impact of the auditors.

The researcher also went through the relevant sections of the constitution relating to audit and it was found that the constitution confers a total independence in audit department. This has offered the audit department to report its findings without fear or favour. It could also be noted that the practice of fraud and misappropriation of public funds and properties can be corrected by mounting serious campaign against it and giving the directors of audit the power to implement audit report.


As maintained in the foregoing, the audit profession is faced

with a lot of problems as has already been analyzed and explained. In view of this, the researcher offers the following recommendations towards minimizing or solving the problems hindering the efficient performance of the auditors.

– Establishment of panel on the implementation of the audit

Repost: Government should set up a special panel charged with the responsibility of ensuring that auditors recommendation are carried out. This panel will help to recover all funds improperly paid out to any person or organization.

– Correction of Erroneous idea about Auditors: The members of the public should be educated on the roles of auditors and what they aim to achieve. This will correct the erroneous idea that auditors are “watch hunters” who always seek for errors.

– Employ a Qualified )professional) Accountants into Public

Service: One of the problems affecting auditors jobs is lack of proper records (books) of account. This is because most of the accounting officers are not qualified whereby a qualify accountant is employed, proper recording will be ensured.

Auditing Efficiency For Improving Companies Performances


To place an order for the Complete Project Material, pay N5,000 to

GTBank (Guaranty Trust Bank)
Account Name – Chudi-Oji Chukwuka
Account No – 0044157183

Then text the name of the Project topic, email address and your names to 08060565721.  

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