THE NEED FOR AUDITING AND INVESTIGATION IN SMALL SCALE BUSINESS ORGANISATION (A CASE STUDY OF EASTERN SHOP OGUI ROAD ENUGU).
The researcher embarked upon this study to help small-scale business organization in pin-pointing some of the need for auditing and investigating. Kicking against the effective of small-scale business so recommendation can be made to offset the situation. Base on this finding, the researcher believes if those growth of small scale business will be a reality. In the process of carrying involved in this are money, time, information gathering etc. This research project is composed of five chapters. Chapter one is about the background of the study, statement of the problem, purpose of the study, the scope of the study and the significance of the study. Chapter two is review of related literature. Chapter three is about research design and methodology. Chapter four is findings. Chapter five is about the discussion of result, recommendation and limitation of the study.
1.1 BACKGROUND TO THE STUDY
The work of an auditor in any organization cannot be looked beyond or over emphasized. This is because in earlier years when there was no auditor to take proper care of the organizational financial statement, many organizations like small scale business organization, manufacturing companies and even private companies suffered frauds and errors in their business.
The enterprises that existed at the time were mostly joint ventures with a limited life. In such cases, the ascertainment of profit was simple. It was equal to the surplus of cash in hand at the end of the venture. One should also remember that where audits were conducted at this time, it was not because of any statutory provisions, and that responsibilities and duties of an auditor had not been clearly defined. Most of fraud is being committed by the staff of those organizations especially small-scale business organization because of this, there is need for auditing and investigation in small scale business organization.
Small scale business is a business that has little fund and materials. It is very crucial to employ the service of an auditor. The auditor is concern merely to ascertain the correctness of sums of money received and disbursed, checking the accuracy of individual entries in a cash record and verifying the balance of cash in hand at a particular point in time. In so doing, frauds, and errors can be easily detected and prevented.
An auditor is the only person authorized by law to conduct auditing and investigate on any financial matter concern organization (including small scale business).
It is the examination and verification of a company’s financial and accounting records and supporting document by a professional, such as certifies public accountant.
An auditor: In the person whose function is to prepare a formal documentary summary of his conclusion. Investigation is a special inquiry into the financial affairs of a business. An auditor needs proper investigation to help him carryout his auditing duties.
Finally, the major important need for auditing and investigation in small scale business organization is to make sure that the business grow with its little financial back up coupled with total minimum of frauds encountering. We had to assume that the task of the auditor would not be able to reply in any way on the explanations and information given to him by management. He was likely to be also and the audit process would become both costly Ural.
1.2 STATEMENT OF THE PROBLEM
1. In spite of the smallest of Eastern shop Ogui road Enugu. It is still saddled with the problem of bad image arising mostly fraud practices both management and some staff of the shop.
2. There is weakness in internal control system of the eastern shop.
3. They do not consider policy on fraud cases as strategies in its decision taking.
4. Eastern shop has not met with auditing and investigating of their shop as a small scale business since it was established.
1.3 OBJECTIVE OF THE STUDY:
These are objective of the study as follows:
a. To find out the extent of substantial documentation of the accounting financial management function by one person affect the organization’s internal control system.
b. To ascertain the extent of limitation on the effectiveness of internal control owing to the small number of employees.
c. To find if the auditors made proper auditing and investigation by all information and explanations obtained to the best of their knowledge and brief were necessary for the purpose of their audit.
d. To determine to audit extent the organization suffer from inadequate accounting records.
e. To ascertain the extent of inadequate management support for internal auditing.
1.4 RESEARCH QUESTION
1. To what extent are Auditing and investigation in small – scale business organization help in running of the business to achieve its corporate objectives.
2. To what extent would you agree that Auditing and investigation of small scale contributes to poor and ineffective lukewarm in internal control system in the Eastern shop Ogui Enugu.
3. What factor do you think has contributed to high level of Auditing and investigation in small scale business.
4. What extent are the laid down policies adequate in eastern shop Ogui Road Enugu.
1.5 THE SIGNIFICANCE OF THE STUDY
The relevance of the study cannot be over emphasized as a successful completion of this study.
The need for auditing and investigation in small scale business organization help the organization to employed a qualified auditor to enable the management staff of the organization to keep adequate accounting record. So that the financial statements prepared by the management can only be accurate and reasonable. If the organization employed a qualified auditors it will help the organization to detect and prevent errors and frauds easily.
Finally, the need for auditing and investigation will help for survival and substantial growth of the organization.
1.6 THE SCOPE OF THE STUDY
Considering the circumstance and predicaments of business, it is apparently obvious that there is no business that can survive without encountering one kind of problem especially in small-scale business organization.
According to James Baches, all firms’ faces risk but they are proportionally greater in the small firm. The failure of a production batch in small firms may spell disaster while a similar failure or problem in a large organization.
Causes of frauds and errors by the management staff are one of the major problems that the organization is encountering.
Financial problem is a major problem for small-scale business organization in Nigeria sources of fund for this category of business. Inability to borrow is difficult because of the small amount of asset they have.
The organization is also seriously suffering from marketing problems due to lack of experience in the field, poor human relations, unable to meet customer’s demand.
Since the organization is operating with small amount of fund and asset they are suffering from production problem due to lack of production facilities, insufficient of raw materials for production, poor product planning, lack of purchasing policy and sources of supply and also lack of ware housing.
The organization is seriously suffering from research problems such as illiteracy and human behaviour. Major weaknesses in the system of internal control is minor errors which is caused by the management staff of the organization by not keeping the appropriate financial statement due to false manner of entering accounting transaction.
1.7 LIMITATION OF THE STUDY
Inadequate fund due to the manager finance of the researcher, formed one of the most factors limitating this research work.
Times was the most serious constraints in that the researcher intermittently was shop work on the research.
The definition of terms are:
These are those things that helps or enable the realer to understanding terms.
It can be as follows:-
Auditing is not only special professional work performed by a certified or chareretal account or Auditor.
It will also be method of examination or verification nearly used every one at various terms consciously take instance. When a current or saving account holder need a statement or one examiners the cash register, type produced at the check out current of a super market.
Investigation can be defined as an special kind of examination of accounts or records council on by an investigator with a pre-defined purpose according to the necessity of the situation.