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CHAPTER ONE
INTRODUCTION
1.1 Background To The Study
The Internal audits constitute an independent appraisal function which review the internal control system of the
organization established. Auditing ensures the effective, proper, and economic use of resources in the
organisation through the objective examination, evaluation and reporting on the adequacy of internal control.
The effectiveness of the auditing functions lies on its independence; The independence in terms of
organisational status and personal objectivity of the internal auditor facilitates the proper and effective
performance of his duties .It is therefore essential that the internal audit unit be appropriately staffed with
people with the right qualification and given the training necessary .The internal auditor must constructively
align its functions with the management policy and maintain a good working relationship and mutual
understanding with management, external auditors, and other review and exercise due care in executing its
function of planning, controlling and recording of work. The internal control system must be properly evaluated
to ensure its adequacy and effectiveness .The evidence obtained in the audit function should constitute the
auditor’s report which must be communicated to the management for appropriate action. It is also the auditors
role to ensure that all recommendations and conclusions are monitored to determine that action has been taken
on them .The organisation terms of reference for the internal audit function should be clearly specified to
enhance the auditors independence in the execution of his legitimate functions. A crucial function of internal
auditing is to facilitate management in the creation of value for money. through economic, efficient and
effective use of resources. Consequently the auditor must be objective in the presentation of its report to
management
So as to exercise judgement, express opinions and present recommendations with impartiality.
MALAYSIAN
INSTITUTE OF ACCOUNTANT (2007) INTERNAL AUDIT GUIDELINES
1.2 Statement of the Problem
The effectiveness of the auditing functions lies on its independence; The independence in terms of organisational
status and personal objectivity of the internal auditor facilitates the proper and effective performance of his
duties .It is therefore essential that the internal audit unit be appropriately staffed with people with the right
qualification and given the training necessary. But many instances reveal that the internal auditor is not given the
freedom and independence to exercise his functions objectively.
Unnecessary influences by some senior staff
who are part of management some time digress the sense of objectivity of the internal auditor in presenting is
report and recommendations to management
This as a result affects the objective of audit and that off the organisation in ensuring effective and economic use
of the firm’s resources. Therefore the problem confronting the research is to determine Auditors independence;
Enhancing Accountability and transparency in corporate organisations.
1.3 Objectives of the Study
To determine the role of Auditors in corporate organization
To determine Auditors Independence, Accountability and Transparency in corporate organizations.
The internal auditor must constructively align its functions with the management policy and maintain a good
working relationship and mutual understanding with management, external auditors, and other review and
exercise due care in executing its function of planning, controlling and recording of work. The internal control
system must be properly evaluated to ensure its adequacy and effectiveness .The evidence obtained in the audit
function should constitute the auditor’s report which must be communicated to the management for appropriate
action. It is also the auditors role to ensure that all recommendations and conclusions are monitored to determine
that action has been taken on them .The organisation terms of reference for the internal audit function should be
clearly specified to enhance the auditors independence in the execution of his legitimate functions.
1.4 Research Questions
What is the role of Auditors
What is the impact of the Auditors independence in enhancing Accountability and transparency in corporate
organisations?
1.5 Significance of the Study
The study proffers the important role of the Auditor in the organization and the need for the independence of the
auditor in facilitating accountability and transparency in the organization.
1.6 Research Hypothesis
Ho The level of Auditors independence in corporate organisation is low
Hi The level of Auditors independence in corporate organisation is high
Ho The impact of Auditors independence in enhancing Accountability and transparency in corporate
organisations is negative
Hi The impact of Auditors independence in enhancing Accountability and Transparency in corporate
organisation is positive.
1.7 Scope of the Study
The study focuses on the appraisal of the Auditors independence in Enhancing Accountability and transparency
in corporate organisations.
1.8 Limitations of the Study
The research was confronted by some constraints as geographical factor and logistics
1.9 Definition of Terms
Organisation The organisation consists of a group of people in the conduct of business
activities of providing goods and services with the common purpose of achieving
corporate aims and objective.
Audit Committee
A committee Instituted to carry out the external and internal audit plans, programs
and reviews internal control arrangements.
Internal Auditor A person whose function is the conduct of internal audit in the organisation.
Internal Control
The regulation of work activities through systems designed in the organisation
and implemented for the purpose of achieving management objectives.
Internal Audit The Internal audits constitute an independent appraisal function which review the
internal control system of the organization established. Auditing ensures the
effective, proper, and economic use of resources in the organisation through the
objective examination, evaluation and reporting on the adequacy of internal
control.
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