Effectiveness of internal auditor in controlling fraud and other financial irregularities

Topics: Internal control, Auditing, Audit Pages: 15 (2695 words) Published: November 25, 2013
Research Journal of Finance and Accounting
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol.4, No.13, 2013

www.iiste.org

Effectiveness of Internal Auditor in Controlling Fraud and Other Financial Irregularities in Private Universities in South-West, Nigeria.
ADETOSO, Jonathan Adegoke1 OLADEJO, Kayode Samson2 AKESINRO, Abayomi Sunday3 Department of Accounting, Joseph Ayo Babalola University, P.M.B 5006 Ikeji-Arakeji, Osun State, Nigeria. Email of the corresponding Author: gokeadetoso@yahoo.com,Kay_oladejo83@yahoo.com sunkesh75@yahoo.com

Abstract
The study examined the effectiveness of internal auditor in controlling fraud and other financial irregularities in private universities in Southwest, Nigeria. It has is specific objective as to evaluate the relevance of internal audit report in exposing various form of financial related institutional fraud. The population of the study consist of all private universities in Southwest, Nigeria and purposive sampling was adopted to choose the sampled universities. The data for the study was collected through the use of structured questionnaire. Regression analysis techniques was adopted to test the formulated hypotheses and results shows that internal auditors were effective in controlling fraud and other financial irregularities in private universities in Southwest, Nigeria. Since fcalculated value of 85.355 was greater than the f-tabulated value of 5.320, it also shows that auditor reports were relevant in exposing various means of financial related frauds since F-calculated of 18.794 was 66greater than Ftabulated of 5.990 The study conclude that internal auditor is effective in exposing frauds in private universities in Nigeria if the structural compositions of the university allow them to do their work. The study recommended internal control involve the check and balances, both operational and financial, should be employed by the management of every university, to ensure that the university’s assets are safeguarded, of which cash is one. Keywords: Internal Audit, Fraud, Financial Statement, Financial irregularities, Internal control system, Auditor’s report

Background to the Study
Fraud is the intentional distortion of financial statements or other records by a person (internal or external) to the organisation which is carried out to conceal the misappropriation of assets or otherwise for gain"(Adeniji 2004 and Institute of chartered Accountant Nigeria-ICAN 2006).It can also be define fraud as involving “the use of deception to obtain an unjust or illegal financial advantage; intentional misstatement in, or omissions of amounts or disclosure from an entity’s accounting records or financial statements; or theft whether or not accompanied by misstatements in accounting record or financial statement (Mani,1993). Archibong (1992) describes Fraud as a predetermined and well planned tricky process or device usually undertaken by a person or group of persons, with the sole aim of checking another person or university, to gain ill-gotten advantages, be it monetary or otherwise, which would not have accrued in the absence of such deceitful procedure. Fraud involves recording of transactions without substances, suppression or omission of the effect of transaction from records or document, Intentional misapplication of accounting policies and wilful misrepresentation of transaction of the entity’s state of affairs. (Olatunji2009). According to Pollick 2006, fraud can be regarded as a “deliberate misrepresentation, which causes one to suffer damages, usually monetary losses. However, auditors have a significant role to play in the detection and prevention of fraud because they are not only agents of shareholders but their access to internal and external information makes them efficient monitor (Dyck, Morse and Zingales , 2008). The existence and in fact, the high incidence of fraud in university brings to mind the question of competence, skills, due care, honesty, and integrity...

References: Adeniji, A. (2004): Auditing and Investigation. Lagos, Value Analysis Publishers.
Agbaje, F. (2007). Nigeria Auditors and the Distressed Finanancial Sector. The National Accountant, 6(4) 36-37.
Buhari(2001).Internal auditor control system. Journal of auditor (2001) 42. 423-425.
Dyck, A., Morse, A. and Zingales, L. (2008). Who blows the whistle on the Corporate fraud? www.ssrn.com
(Retrieved 8/03/2011)
Gay, G., Schelluch, P.& Reid, I. (2002): Users’ Perceptions of the Auditing Responsibilities for the Prevention,
Detection and Reporting of Fraud, Other illegal acts and error
Heiman-Hoffma V.B,ICAN (2006): Financial Reporting and Audit Practice. Lagos, VI Publishing Ltd.
Idris, J. (2009): Nigeria Auditors are Toothless Bulldogs. October 3
http://www.sahararepoters.com/articles/external-contrib/3872-nigerias- banks-auditors-are-toothless-bulldogs.html
Lorsase, G.K. (2004). Accountants, Best Practices in the Prevention of Fraud And Financial Crimes. The
Certified National Accountant, 12 (2), 24- 31.
Mani, A.M. (1993): Internal Auditing: Principles and Guidelines, paper presented at NationalSeminar on Fraud
Prevention, Detection and Investigations, or banised byLutonManagement Services held in Minna
Mainoma (2007).Internal auditor control system.Journal of auditor (2007) 42. 423- 425
Olatunji, O.C., 2009
Okaya(2002). Internal auditor system.Managerial Auditing Journal. 20(3):284-303.
Okoya, M (2002). Eliminating the Audit Expectation Gap: Reality or Myth? Available at: http://mpra.ub.unimuenchen.de/232/.
Olofin, T.A. (2005) Criminal Liability of auditors of collapsed financial Institutions. The Certified National
Accountants, 6(7), 19-21
Pollick, M.Y. (2006). What is Fraud:http://www.wisegeek.com/what-is-fraud.htmAccessed:15 February 2010.
Thompson, J. (2003), “Accountability and Audit” _International Journal of Government Auditing. Vol. 30, No.
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • The Auditor and Fraud Essay
  • Internal Auditor Essay
  • Auditors and Fraud Essay
  • Essay on Financial Fraud
  • Recommendation Brief for an Internal Auditor Essay
  • Essay about Difference of Internal and External Auditor
  • Internal and External Auditors Essay
  • Difference Between External Auditor and Internal Auditor Essay

Become a StudyMode Member

Sign Up - It's Free