ABSTRACT

 Over the years and specifically from the last two decades to date, there have been high clamour by different organizations both governmental and non-governmental organizations for introduction of auditing into their organizations.

Auditing which is an indispensable aspect of accounting is as vital as breath itself, for it has greatly improved the efficiency of many organizations through the birth of efficient accountability.

Thus, some organization are reaping the good fruit of auditing as a result of enhancing accountability I their organizations while others are wallowing in the doldrums.

Inside this project the researcher goes ahead to clearly define and explain what auditing is all about, the principles, sections of companies and allied matter act 1990 (CAMA) regulation.  Its operations and in the best way it can ensure accountability of any organization.

The first chapter is the introductory part of the project and brief history of (CIDJAP) Catholic Institute for Development Justice and Peace and Caritas.  In the second chapter we have literature review which highlight on the numerous diversified views of other authors on the subject matter of this project.  The third chapter deals with the method use in this project.  Then the fourth chapter deals with data presentation and analysis.

The last chapter is all about the discussion of result, conclusion, implication, suggestion for further research and limitations of the study.

CHAPTER ONE

 This chapter is concerned with the introductory part of the research work.  It deals with the following:

• Background to study
• Statement of problem
• Objective of study
• Scope of study
• Research question
• Significance of study
• Definition of term

• BACKGROUND OF STUDY

In the origin auditing was not used to cross check accounts by the management or owners’ of the business.  Auditing was      introduced when the capital used for running the business was large and the fund was entrusted in the hands of few who are managing the business. Under this condition the need to have an auditor becomes apparent to the owners of the business.

Auditing is one of the management instrument for efficiency and effectiveness, control and monitoring exercise towards accomplishing organizational goal. Auditing improves the information available for parties interest in the activities of an organization usually by commenting on the quality of management report, thus enhancing their credibility.

Theoretical rationalization for organization audit review focuses on two main themes. They are accountability and economic incentive. Accountability means that the recognition that responsibility or duty is owned by one party to one or more other parties and the idea that it should be possible to monitor the way, the responsibility has been discharged through the provision of some information, explanation report on its performance.

On the other hand, economic incentive means that the realization that in the absence of statutory requirement there are economic motivation of both parties to the audit. The relationship between members of a company and managers are seen as a contract between a principal and an agent, both of whom act to maximize their economic self-interest. In the absence of monitoring by the principal, the agent will not maximize the principal’s objective at the expense of his own self-interest. This is the reason section 357 of companies and Allied matter act 1990 (CAMA) stipulates that “every company shall at each Annual general Meeting appoint an auditor or auditors to audit the financial statement of the company and to hold office from the conclusion of that until the conclusion of the next Annual General Meeting”. The statutory auditor will audit the financial statement of the company and report to the members of the company, expressing in his report, whether the financial statement show true and fair view. As a result this will redress the imbalance between the principal and the agent. So the management will be willing to have an auditor because auditing is seen as a control mechanism, which aids the process of monitoring performance and promote accountability.

In recent years the number and monetary value of some organizations activities have increased substantially. This increased in activities have brought with it an added demand for accountability. The directors, managers and employees, who are running these activities need to render adequate account of those activities to the public and members of the company. The members of the company need to receive a report in order to assess the performance of the company. The members of the company need to receive a report in order to assess the performance of the company. Accountability concept is inherent in the management and governing process of any organization. Auditing is one of the elements of accountability and management of the company is responsible to ensure that appropriate audit are made.

The need for accountability has cause demand for more information about some organization’s programme, projects and services. In Nigeria, the companies and Allied Matter Act 1990 (CAMA) section 342 stipulate that report should be prepared in respect of each year by the directors. The members of the company are entitled to know whether the financial statements are handled in compliance with accounting principle and statutory requirements. They are also entitled to know whether the programmes, projects, services and other activities of the company are operating economically, efficiently and effectively towards achieving the objective set to achieve. Therefore auditing is the best practice and procedure that will ensure accountability and assist directors, managers and employees in carrying out their responsibility.

In conducting financial audit by an auditor, test should be made to ensure compliance with applicable laws. The auditor will design the test in such away to provide reasonable assurance of detecting errors, irregularities, illegal act and mis-statement, which could have material effect on the financial statements. During the preparation of accounts, the accountant will just prepare the financial statement with any available information given to him by the company officials, but the auditor during the cause of his duty will consider each entry in financial statement by reviewing it with the one in book keeping. Auditor also works with receipt, vouchers and other documents in reviewing the financial statement. Even when the original document or if all the document is not given to him, the document will assist him in his duty, he will do so because he has the right. These documents will satisfy, the auditor that the transactions are authorized by the management and too within the aim and objectives of the organization.

It is difficult to place a high degree of reliability on the financial statement prepared by the management of a company due to the fact that the present day Nigeria citizens are passing through a moment of dishonesty and lack of trust in all political, religious, social and business activities. This has given rise to increasing need and claim for internal auditing, but this is not to say that auditors main objective is to detect fraud but it is one of his secondary objectives of which if he detect fraud during the course of his duty he will pass the information to the management.

Harcourt 1969 said “management should give considerable attention to internal reporting or managerial at the expense of external reporting. Any significant at the expense of external reporting. Any significant different between expectation of investors and actual result will trigger some responses which is his decision to retain investment in the company.” If the management take note of this, it will make the financial statement may:

(a)     Fail to disclose relevant information

• Contain error
• Fail to conform to regulations
• Not to disclose misleading
• Be deliberately misleading
• Be inadvertently misleading

Besides, the financial statement may fail to comply with fundamental accounting concept. They are explained below.

(i)      GIVING CONCERN CONCEPT:

This means that a business will continue in operation for unforeseeable future. The profit and loss account and balance sheet will not liquidate.

• ACCURAL CONCEPT:
•  
• This means that out standing expenses should be recognized as liabilities of an organization when preparing profit and loss account.

(iii)    CONCEPT OF PRUDENCE:

This means that revenue and profit are not anticipating but are recognized for inclusion in profit and loss account only when realized in form of assets or cash.

(iv)    CONSISTENCY CONCEPT:

There is consistency of accounting treatment of like items within each accounting period and from one accounting period to the next.

Some accountants when preparing financial statements do not take note of the above principles and accounting concept and cannot detect fraud. Shall we continue folding hands while things are falling apart my interest in this research?

1.2     CATHOLIC INSTITUTE FOR DEVELOPEMNT JUSTICE AND PEACE AND CARITAS (CIDJAP)

This organization was established on 4^th October, 1986. CIDJAP is a non-governmental organization (NGO) and Non profit making organization. CIDJAP is a company limited by guarantee because, the organization does not have share capital and members of the company do not participate in divisible income of the company. Rather the income is used for charity purpose. Such as poverty alleviation, rural and community development, human right, education and action, democracy, advocacy and government, prisoners and detainee welfare, adult / child education, gender issues, micro-credit and loan revolving, orphanages, youth development, child right, sponsorship programme, anticorruption campaign.

CIDJAP objective are empowerment of people, promotion of integral development, challenging structure of injustice, creating hope and working for peace.

CIDJAP is involved in many activities from where money is realized for helping press, bookshop, and computer service. CIDJAP also receive donations from foreign non-governmental organization which they are in partnership with, like Misereor Aachen Germany, Deutshorden Wohnstift Cologne (DOW) Germany. Papal Missionary Works (PMK) Germany and the rest of them.

The charity organization that 18 out there to help the poor is CIDJAP. CIDJAP fight and win the battle on behalf of the poor, with the help of CIDJAP prisoners that were locked up unjustly were released and some are serving a definite term instead of dying there. CIDJAP look forward to a world in which:

(i)      the good things of creation are cherished, developed and shared by all.

(ii)     the right and dignity of persons are respected, discrimination ended, and all are gathered into a single human family from which no one is excluded.

(iii)    the voice of the poor is heard and lives are no longer dominated by greed.

(iv)    all have access to quality food, health, education, shelter and clean water.

The researcher is a living witness towards the good work of CIDJAP. All the expenses the researcher incurred on this project was taken care of by the organization. Ranging from transportation cost to the publication cost.

CIDJAP has many department such as community health care, library, printing press, research / education / sponsorship, caritas, small project, fund, micro-credit, Agriculture, information technology, human right, media / publicity. But I will only emphasize only on caritas department.

Caritas department is specially meant for the needy. Severally pathetic applications were received from the needy and deprived persons, from all nooks and cranny. Ranging from need for food, accommodation, education, disability, health care, the sick, the hungry, the abandoned, handicapped persons, some students in real need, the homeless and failed business. All these people trooped to caritas as their only last source of hope.

The biblical quotation “Give them something to eat yourself” (Jn 6:21)

These words of our Lord Jesus Christ have been there as the bases of challenge and inspiration to the caritas department as it struggles to make life meaningful to the growing number of destitute and disabled by provision of basic amenities like water education, food, clothing, medicare, and shelther. Specifically the poor are assisted in the following ways:

(a)     To acquire health care services.

• To pay hospital bill for accident victims.
• To pay hospital bill

These organization are:

• Umuchinemere community Bank
• Oluaka di mkpa vocational and industrial training center (VITT)
• Nazareth skills and women development and training center
• Nwannedinamba low cost housing
• Umuchinedu community Bank
• Ntasi obi ndi nona ajuju specialist hospital etc.

These organizations see to the development of the society, mentally socially, physically, academically good health and otherwise.

Action they said speaks louder than work. CIDJAP has been in action for the past 19 years to alleviate poverty practically. If other charity organization will perform up to ¼ of what CIDJPA has done poverty will rapidly be eradicated entirely will rapidly be eradicated entirely in our country Nigeria.

1.2     STATEMENT OF PROBLEM

The functions of catholic institute for development Justice and Peace and Caritas CIDJAP. Cannot be carried on efficiently and effectively without auditing the financial statements periodically. This is done in order to investigate problems like failure to adopt accounting principles and other problems like fraud and lack of accountability. Finally what mechanism to adopt to promote over all company efficiency and profitability.

• OBJECTIVE OF THE STUDY

The main purpose of this study is to find out whether auditing is an instrument for ensuring accountability in catholic institute for Development Justice and Peace and Caritas (CIDJAP).

Other purpose of this study are:

To find out whether an auditing system exist within the organization in question to determine the functions, which an auditing department can perform in the organization.

To find out how the organization’s accountability is enhanced as a result of the involvement of auditing.

To find out a mechanism to adopt in order to promote overall company efficiency and profitability.

 1.4     SCOPE OF STUDY

This scope of this study is specifically, to examine auditing as an instrument for enduring accountability in catholic institute for development justice and peace and caritas. (CIDJAP)

1.5       RESEARCH QUESTION

1. Does the existence of audit unit has a tremendous impact in the activities of the organization by enhancing effective management control?
2. Does the activities of audit unit enhance accountability in the organization?
3. Does the availability of Audit department encourage efficiency management of fund and other material amongst the employees of the organization?
4. Does independent of auditor help in ensuring accountability?
5. How can a mechanism which will promote overall organization efficiency and profit ability and enhance accountability be adopted?

1.6     SIGNIFICANCE OF STUDY

This study will make it clear to all that auditing has tremendous impact in effectiveness of internal control and achievement of financial accountability of the staff of the organization in question. Moreover, the activities of auditing department encompasses all segments of the organization, hence a colluded act between the auditors and management will have a devastating effect on the generality of the programme and entire organization in general.

It will also enable people to understand the consequences that arise from inefficient auditing in the organization. It is equally expected that the result and recommendations will go along way in providing organizations both governmental and non governmental, with measures on how best to carry out audit work. To ensure accountability in the organization through the use of the auditing as an instrument, is not only benefit to the organization but also to all those who benefited from the projects executed by the establishment.

Finally the research is not great importance because it forms the standard which will be useful to other students in carrying out their research in future.

1.7     DEFINITION OF TERM

AUDITING:

this is the independent examination of and expression of opinion on financial statement of enterprise by an appointed auditor in pursuance of that appointment and in compliance with any relevant law and regulations.

INSTRUMENT:

It is a tool use in producing result especially such that requires accuracy.

ACCOUNTABILITY:

This means answerable or responsible for an action or able to be explained some actions.

CIDJAP:

This means Catholic Institute for Development Justice and Peace and Caritas (CIJAP)

CREDIBILITY:

This means trustworthy

GOAL:

This means objective of an individual or organization.

ANTICIPATION:

This means expecting something to occur in future.

ECONOMIC INCENTIVE:

This means benefit to derive in doing work.

FINANCIAL STATEMENT:

This is an accountability report to shareholders or members of the company.

AUDIT:   

   this is an investigation by an auditor into the evidence from which the final revenue accounts and balance sheet or other financial statement of an organization have seen prepared in order to ascertain that they present a true and fair view of the summarized transaction for the period under review.

AUDITOR:

An auditor should be an accountant in the context of professional status and study. He should possess a valid license to practice accountancy and registered with the appropriate authority for this business.

CAMA:

Companies and Allied Matter Act 1990. it is a book that contain all the statue that is governing companies from the date of incorporation to winding up a company.

IRREGULARITY:

This is intentional distortion of financial statement.

FRAUD:

This is the use of criminal deception to obtain an unjust illegal advantage.

TRUE AND FAIR:

This concept can be explained to mean the financial statement contain nothing that can mislead people.