TABLE OF CONTENTS

COVER PAGE
Title page
Dedication
Certification
Acknowledgement
Abstract
Table of Contents

CHAPTER ONE-INTRODUCTION
1.1 Background of the study
1.2 Statement of the problem
1.3 Objectives of the study
1.4 Research questions
1.5 Significance of the Study
1.6 Scope of the study
1.7 Limitation of the study
1.8 Definitions of the terms and acronyms.

CHAPTER TWO-LITERATURE REVIEW

2.0 Introduction
2.1 History of the internal audit function in a company
2.2 the importance of the Internal audit function in a company
2.3 Internal Audit roles and responsibility
2.4 Role and risk management
2.5 Role in corporate Governance
2.6 Role in internal control
2.7 Measuring the internal audit function
2.8 Audit project selections or annual planning
2.9 Reporting of critical findings
2.10 Internal audit reports
CHAPTER THREE-RESEARCH DESIGN AND METHODOLOGY
3.0 Research design and Methodology
3.1 Area of the study
3.2 Population of the study
3.3 Sample determination and sampling technique
3.4 Sources of data collection
3.5 Method of data collection
3.6 Data Presentation and analysis

CHAPTER FOUR DATA PRESENTATION ANALYSIS AND DISCUSSION OF RESULT

4.0 Introduction
4.1 Data presentation
4.2 Data analysis and discussion of result

CHAPTER FIVE-SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.0 Introduction
5.1 Summary
5.2 Conclusion
5.3 Recommendations
Appendix
References
Questionnaires

CHAPTER ONE

INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Internal auditing is an official examination of the book of accounts of a business by an independent auditor. It is also an independent
objective assurance and consulting activity designed to add value and improve an organization's operations.
Therefore, internal audit is a tool of control to measure and evaluate the effectiveness and efficiency of the working of an organization
primarily with accounting, financial and operational matters. Internal auditing helps an organization accomplish its objectives by
bringing a systematic disciplined approach to evaluate and improve the effectiveness of risk management control and governance
processes.
According to Montgomery (2000), Auditing is its modern concept as a systematic intelligent, scientific, critical and thorough
examination of books of the organization by an independent person or body of persons with the help of vouchers documents,
information and explanations received from the authorities, for the purpose of ascertaining whether the transactions entered in the
books of accounts are genuine and have been entered with proper authority.
Internal auditors are not responsible for the execution of a company's activities; they advise management and the board of directors
(or similar oversight body) regarding how to better execute their responsibilities.
As a result of their broad scope of involvement, internal auditors have a variety of higher education and professional backgrounds.
The institution of Internal Auditors (IIA) is the recognized international standard setting body for the internal audit profession and
awards certified internal auditors designation internationally through rigorous written examination; other designations are available in
certain countries.
Internal auditors work for government agencies (federal, state and local government); for the public trade companies and non profit
organization across all industries internal auditing departments are led by a CHIEF AUDIT EXECUTIVE (CAE) who generally reports
to the audit committee of the Board of Directors with administrative reporting to the CHIEF EXECUTIVE OFFICER (CEO)
To this end, this study is therefore conducted to find out the impact of internal auditing efficiency as a tool for improving the
company's performance, taking First City Monument Bank, Eket as a case study.

1.2 STATEMENT OF THE PROBLEM

In every organization there are tendencies that employees may make errors or unintentional mistakes in recording and preparation of
financial statements. In other circumstances the rules and regulation established by management may not be adhered to. Internal
audit is set up by management with a view to appraising the work done by other people in the organization. Internal audit is also set
up to control the resources and activities of business so as to ensure that the objectives of the organization are achieved.

1.3 OBJECTIVES OF THE STUDY

The main objectives of this research work are listed;
i) To evaluate internal audit efficiency as a tool for improving the company's performance taking First City Monument Bank, Eket as a
case study, ii) To find out whether internal audit control helped management to achieve its objectives.
iii) To find out if internal audit ensures efficiency and effectiveness of the staff performance.
iv) To find out whether there is any effort put in place to ensure effective internal audit control.
v) To make recommendations based on the findings of this study.
1.4 RESEARCH QUESTIONS
1. Does internal audit contribute to the smooth running of the business?
2. Does the internal audit helps management to achieve its objectives? 3. Does the internal audit ensure efficiency and effectiveness
of the staff performance?
4. Does internal audit control bring any encouragement to organization profit?

1.5 SIGNIFICANCE OF THE STUDY

I am highly optimistic that the completion of this research work will benefit most
people or group of people, among them are:
1. Students and staff in the tertiary institution: This research work will assist
both the student in the future and even the staff in the tertiary institution will
find this research work more rewarding and educative.
2. The Public: The general publics who can cross check this research work, after
proper checking will find this research work more valuable.
3. Professional Accountant: The technology gamed from this research work will
assist the professional accountant whose works are so valuable.
4. Companies: Efficiency in auditing serves as a life wire in any company.
Therefore, most companies that are having problems pertaining to their poor
performance will find this research work more efficient and valuable.

1.6 SCOPE OF THE STUDY

This research work covers the activities and performance of workers in First City Monument Bank (FCMB), Eket.

1.7 LIMITATION OF THE STUDY Some questionnaires were not refunded. Difficulty in obtaining information from the sample study.
operation.

1.8 DEFINITION OF TERM

Audit: this is an examination conducted by an auditor in order to examine the
company(s) performance.

Internal audit: an element of the internal control system set up by the

management of an enterprise in order to review accounting, financial, and
operating and determine whether the prescribe policies are being adhered
to.

External auditors take into account the work done by an internal auditor such as letters of independence, staff resource, test mode,
and influence by the management action.

Efficiency: this is referred to the ability to perform a duty well and produce a
statistical result.

Tool: it is an instrument used in doing a certain work or producing a certain

result, especially those that require accountancy or precision.

Company; an association of persons for a business purpose in particular which is incorporated in the united kingdom under the
companies Act or by the Act of parliament or by royal charter. In Nigeria, company is registered by a Corporate
Affairs Commission Abuja and regulated by the companies and allied matter
decree 1990.

Improvement: this means to make or become better or addition or alteration,

form of repaired to better the face of an asset or to enhance the value of
anything.

Diagnosis: ascertaining, analyzing, or determining the cause of the nature of the problem, situation from observation.

Performance evaluation: the easement by a superior or a subordinate and an

important part of any management control system. To evaluate performance is necessary to decide which measures represent
organizational goal, how
qualify, what standard is to be used, what step back is to be taken.

CHAPTER TWO
INTRODUCTION
2.0 LITERATURE REVIEW
This Chapter reviews the related literature applicable to internal auditors in an organization; the study makes a wide survey of the
views of the professional writers about the subject matter. This survey is aimed at reviewing textbooks, journals, newspapers and
other important articles.

2.1 HISTORY OF INTERNAL AUDIT The internal auditing profession evolved steadily with the progress of management science
after world war ii. It is conceptually similar in many ways to financial auditing by public accounting firms, quality assurance and
banking compliance activities. While some of the audit technique underlying internal auditing is derived from management consulting
internal and public accounting professions, the theory of internal auditing was conceived primarily by Lawrence Sawyer (1911-2002)
which is referred to as "the father of modern internal audit" and the current philosophy, theory and practices of modern internal
auditing is defined by the international professional practices framework (IPPF) of the institute of internal auditors owes much to
Sawyer's vision. With the implementation in the United States of the Sarbanes Oxley Act of 2002, the profession's exposure and
value was enhanced, as many internal auditors possessed the skills required to help companies meet the requirement of the law.
However, the focus by internal audit departments of publicly traded companies on Sox that are related to financial policy and
procedures derailed progress made by the profession in the late 20th century toward Larry Sawyer's vision for internal audit. In 2010,
the IIA once again began advocating that broader internal auditing should play in the corporate arena in keeping with the IPPF's
philosophy.

2.2 THE IMPORTANCE OF THE INTERNAL AUDIT FUNCTION IN A COMPANY Internal audits provide vital review of the finance
and operations of growing businesses. Internal audits provide a number of important services to company management. These
include detecting and preventing fraud, testing internal control, and monitoring compliance with company policy and government
regulation. Smaller companies may require these functions often more than large companies. A small business simply cannot afford
employee fraud, waste, or a government foal. Establishing an internal audit function provides a vital step in the growth of a small
business.
1. MONITORING INTERNAL CONTROLS:
A formal internal audit policy, even if conducted part time by individuals normally assigned other duties, performs other tasks besides
detecting fraud. Examining policies and procedures on a regular basis ensures that the company minimizes its exposure to fraud and
other losses. Extension of credit to the customers provides one such area of loss prevention. If you have formulated a policy
regarding extension of credit, internal audits test compliance with that policy. Designing a credit policy with the intention of reducing
bad debt does good but is not followed.
2. OPERATIONAL AUDIT: Operational audit examined the practices of a company, rather than its finances. Ineffective operations
add to overhead without increasing profit. An operational audit reveals these inefficiencies or points to unnecessary paperwork.
Finding out you do not comply with the government regulation before the government discovers that fact avoids fines or other legal
actions. A rapidly expanding business needs to monitor compliance with human resource law as a new employee joins the company.
Internal audit performs a vital service in reviewing these functions.
3. PLANNING YOUR INTERNAL AUDIT: Your small business likely cannot create an internal audit department, but with careful
planning, you can create a system for checking up on your company and its employees. This loss of a formal system using people
you already have can still provide the information you need to improve your operations and financial controls. Such an internal audit
requires two people working as a team. This avoids personality conflicts and prevents the auditor from simply checking his own work.
It also provides an opportunity for the team members to discuss results and prepare an objective report to ownership. An information
of formal process helps employees understand that the internal audit function provides an opportunity for the company to thrive and
grow.

2.3 INTERNAL AUDIT ROLES AND RESPONSIBILITY

A baseline definition of internal auditing provides a starting point for understanding the roles and responsibilities of internal audit
functions. THE INSTITUTE OF INTERNAL AUDITORS (IIA) offers the following description. Internal auditing is an independent,
objective assurance and consulting activity designed to add value and improve on organization operations. It helps an organization
accomplish its objectives by bringing a systematic disciplined approach to evaluate and improve the effectiveness of risk
management, control and governance processes.

MAJOR ROLES AND RESPONSIBILITIES OF INTERNAL AUDIT FUNCTION

1. Evaluate and provide reasonable assurance that risk management, internal control and governance systems are functioning
as internal and will enable the organization objectives and goals to be met.
2. Report risk management issues and internal controls deficiencies identified directly to the audit committees and provide
recommendations for improving the organization's operation in terms of both efficient and effective performance.
3. Evaluates information security and associated risk exposures.
4. Evaluate the regulatory compliance program with consultation from legal counsel.
5. Evaluates the organization's readiness in case of business interpretation.
6. Maintains open communication with management and the audit committee.
7. Teams with other internal and external resources as appropriate.
8. Engages in continuous education and staff development.
9. Provides support to the company's anti-fraud programs.

2.4 ROLE AND RISK MANAGEMENT

Internal auditing professional standards requires the function to evaluate the effectiveness of the organization's risk management
activities. Risk management is the process by which an organization identifies, analyses, responds, gathers information about and
monitor strategic risk that could actually potentially impact the organization's ability to achieve its mission and objectives.
Management assesses risk as part of the ordinary course of business risk as part of the ordinary course of business activities such
as strategic planning, incentive payout structure, credit/leading practice, mergers and acquisitions, strategic partnerships, legislative
changes, conducting business abroad etc. SARBANES OXLEY regulations require extensive risk assessment of financial report
processes.corporate legal counsel often prepares comprehensive assessments of the current and potential litigation a company
faces. Internal auditors may evaluate each of these activities or focus on the theatre-arching process used to manage risk
entity-wide.
In larger organizations major strategic initiatives are implemented to achieve objectives and drive changes. As a member of senior
management the Chief Audit Executive (CAE) may participate in CAE in status updates on these major initiatives. This places the
CAE in the position to report the major risks the organization faces to the audit committee, or ensure that management reporting is
effective for that purpose.
2.5 ROLE IN CORPORATE GOVERNANCE
Internal auditing activity as it relates to corporate governance has in the past been generally informal, accomplished primarily through
participation in meetings and discussions with members of the Board of Directors. The internal auditor is often considered as one of
the "four pillars" of corporate governance, the other pillars being the Board of Directors management and the external auditor. A
primary focus area of internal auditing as it relates to corporate governance is helping the audit committee of the Board of Directors
(for equivalent) perform its responsibilities effectively. This may include reporting critical management control issues, suggesting
questions or topics for the audit committee's meeting agenda and coordinating with the external auditor and management to ensure
that the committee receives effective information. In recent years the I.I.A (Institute of Internal Audit) advocated more formal
evaluation of corporate governance particularly in the areas of board oversight of enterprise risk, corporate ethics and fraud.
2.6 ROLE IN INTERNAL CONTROL Internal auditing activity is primarily directed at evaluating internal control under the Coso (The
committee of sponsoring organizations of the treasury commission) framework internal control is broadly defined as a process
affected by an entity's board of director's management and other personal, designed to provide reasonable assurance regarding the
achievement of the following core objectives for which all business strives.
I. Effectiveness and efficiency of operations
II. Reliability of financial and management reporting.
III. Compliance with laws and regulations
IV. Safeguarding of assets.
Management is responsible for internal control which comprises five critical components; the control environment risk assessment;
risk focused control activities; information and communication; and monitoring activities, managers established policies, processes
and practices in these five components of management control to help the organization achieve the four specific objectives listed
above. Internal auditors perform audits to evaluate whether the five components of management control are present and operating
effectively, and if not provide recommendations of improvement.

2.7 MEASURING THE INTERNAL AUDIT FUNCTION

The measurement of the internal audit function can involve a balanced scorecard approach. Internal audit functions are primarily
evaluated based on the quality of counsel and information provided to the audit committee and top management. However, this is
primarily qualitative and therefore difficult to measure.
A Customer Survey sent to key managers after each audit engagement report can be used to measure performance, and an annual
survey to the audit committee. Scoring on dimensions such as professionalism, quality of counsel, timeline of work product, utility of
meetings and quality of state updates are typical with surveys, understanding the expectations of senior management and the audit
committee represent important steps in developing such measures to help assign the audit function with organization properties.

2.8 AUDIT PROJECT SELECTION OR ANNUAL PLANNING

Based on risk assessment of the organization, internal auditors, management and oversight boards determine where to focus internal
auditing efforts. This focus or prioritization is part of the annual/multi year audit planning; the audit plan is typically proposed by the
"CAE" (Chief Audit Executive), (sometimes with several options or alternatives) for the review and approval of the audit committee or
Board of directors. Internal auditing activity is generally conducted as one or more discrete assignments. A typical internal audit
assignment involves the following steps;
1. Establishing and communicating the scope and objectives for the audit to appropriate management.
2. Develop an understanding of the business area under review. This includes objectives, measurements and key transaction types.
This involves review of documents and interviews, flowcharts and narratives may be created if necessary.
3. Describe the key risk facing the business activities within the scope of the audit.
4. Identify management practices in the five components of controlled and monitored.
5. Develop and execute a risk-based sampling and testing approach to determine whether the most important management controls
are operating as intended.
6. Report issues and challenges identified and negotiate action plans with management to address the problems.
7. Follow-up on reported finding at appropriate intervals. Internal audit department maintains a follow-up data base for this purpose.
Audit assignment length varies based on the complexity of the activity being audited and internal audit resources available.
Many of the above steps are interactive and may not all occur in the sequence indicated. In addition to assessing business
processes, special technology (I.T) Auditors review TECHNOLOGY CONTROLS. called information INFORMATION

2.9 REPORTING OF CRITICAL FINDINGS

The Chief Audit Executive (CAE) typically reports the most critical issues to the audit committee quarterly, along with the
management's progress towards resolving them. Critical issues typically have a reasonable likelihood of causing substantial financial
or reputational damage to the company; for particularly complex issues, the responsible manager can participate in the discussion.
Such reporting is critical to ensure the function is respected, that the proper "tone at the top" exists in the organization, and to
expedite resolution of such issues. It is a matter of considerable judgement to select appropriate issues for the audit committee's
attention and to describe them in the proper context.

2.10 INTERNAL AUDIT REPORTS Internal auditors typically issue reports at the end of each audit that summarize their findings,
recommendations and any responses or action taken from management.
An audit report may have an executive summary; a body that includes the specific issues or findings, identified and related
recommendations or action plans; and appendix information such as detected graphs and charts or process information. Each audit
finding within the body of the report may contain five elements sometimes the "5c' s"
1. CONDITION: What is the particular problem identified?
2. CRITERIA: What is the standard that was not net? the standard may be a company policy or other benchmark.
3. CAUSE: Why did the problem occur?
4. CONSEQUENCE: What is the risk/negative outcome (or opportunity foregone) because of the finding?
5. CORRECTIVE ACTION: What should management do about the finding? What have they agreed to do and by when?
The recommendation is an internal audit report designed to help the organization achieve effective and efficient governance, risk and
Control processes associated with operation objectives, financial and management reporting objectives and legal regulatory
compliance objectives. Auditing findings and recommendations may also relate to particular assertions about transactions, such as
whether the transactions audited were valid or authorized, completely processed, accurately valued, processed in the correct period
of time, properly disclosed in financial or operational reporting, among other elements. Under the IIA standards, a critical component
of the audit process is the board with the opportunity to evaluate and weigh the issue being reported in the proper context and
perspective analysis and workable recommendations for business improvement in critical areas, auditors help the organization meet
its objectives.