Abstract:
The above research project was created to examine and evaluate the role of audit in the appropriate accounting of a company’s funds, with a focus on the Department of Petroleum Resources. Prudent fund management necessitates a fair allocation of available resources to all activities or ideas, so that no one suffers from an overabundance of funds. The ability of a manager to account for cash entrusted to his care might determine how efficient he is. Administrators are obligated to adopt or apply accessible management tools for the goal of proper accountability in the fulfilment of their administrative tasks. Auditing, which is typically utilised as a last resort by company executives, must be implemented by each organisation in order to analyse performance and deviance. The study’s data was gathered from both primary and secondary sources. The data was gathered using the questionnaire method. Using layered random sample techniques were used to pick fifteen (15) respondents. The data was presented using the basic percentage, and the hypothesis was tested using the chi-square. The internal control mechanism is poor, according to the study. The accounting system is in need of improvement. Top management can have an impact on payments. The majority of the audits are focused on financial concerns. Finally, the study suggested a remedy by providing methods for organisations to meet their audit goals.
Keywords:(department of petroleum funds, administrators, questionnaire method, auditing).
INTRODUCTION:
The study’s main goal is to educate the public about the need of incorporating auditing into business operations. Internal auditing is lacking in many businesses, which is causing major problems. If greater attention is paid to it, it will make a significant contribution to the overall development of the company. It is critical to investigate the function of the audit committee in ensuring proper accountability of a company’s funds in Nigeria, as this provides management with a better understanding of how to work with auditors in order to achieve the organization’s or company’s goals. Another feature of this method to management/directors would be in terms of internal control and the prevention of fraud that may occur in the organisation. It would also demonstrate the relevance of auditors’ audited accounts to management and external users, demonstrating that they are financially healthy and meet the information’s requirements.
As long as the organization/company exists and makes a profit, management will understand that auditing is beneficial in terms of the financial statement provided by the auditor, which certifies that the account is genuine and fair.
Furthermore, it broadens the researcher’s expertise during the course of the study, and other researchers can consult it for additional information on acquiring pertinent facts. Because of the dynamic nature of the corporate environment’s expansion and rising complexity, management has been forced to seek out more avenues of control, resulting in internal audit, which is used as a control mechanism in both the public and private sectors.
It is currently extremely rare to come across a company of any size that does not have an internal auditing function. Internal management services have mostly surpassed outside management services in terms of efficiency, effectiveness, and affordability. Internal auditing in a company organisation is a necessity that cannot be avoided. As such a company grows and the number of transactions grows, there have been cases of fraud, cash misappropriation, and other irregularities that, if not checked, will obviously harm the organisation. That is why internal auditing should be implemented in every type of business organisation, large or small, to check for such irregularities.
Internal audit duties are carried out by workers of organisations who work as staff and report to a high-ranking executive in the company. Internal auditing is essentially an examination of accounting, financial, and other operations within an organisation as a basis for providing services to management.
The inspection of particular statements covering a company’s business transactions through time and the financial situation of an organisation on a specific date by a true auditor in order for the true auditor to issue a report on them is known as auditing. They also make certain that the final statement is accurate and unbiased. There are more detailed definitions, such as those published by the accountancy bodies’ consultative council (CCAB). This organisation defined auditing as “an appointed auditor’s independent assessment of an expression of opinion on an enterprise’s financial statement in accordance with that appointment and any related statutory duty. The statement goes on to say that the financial statement’s production and presentation of the information included in it is the responsibility of the company’s management (in the case of a company the director).
The auditor’s job is to report on the financial statements that the management has presented. Unless required by statute or the terms of his engagement, the auditor’s duties do not include specifically searching for fraud. However, the auditor should be aware of the risk of major irregularities or fraud, which, if not correctly revealed, could affect the financial statement’s state of affairs.
As a result, the auditor evaluates the financial transactions to ensure that they are in accordance with generally accepted accounting rules and those of the company. Establishing up an internal audit department can help ensure that operational operations follow management rules and other relevant standards to a considerable extent. There will be no room for any abnormalities in these.
Setting up an internal audit department can help ensure that operational operations follow management rules and other relevant standards to a considerable extent. There will be no room for any abnormalities in these. The goal of this research is to better understand the role of the audit committee in ensuring the correct accountability of a company’s funds.
KEYWORDS:
They’re called fictitious accounts because they’re accounts that don’t exist. There are a few different sorts of safes where stolen money is frequently kept.
Irregularities can be described as the act of doing something in a way that is different from the norm.
Forgery, according to the website definition, is the falsification or counterfeiting of a document, which involves the creation of a fraudulent document knowing it is false and acting on it as real.
According to the Webster business dictionary, accounting is the examination of accounting documents and accompanying evidence with the goal of achieving propriety, fairness, consistency, and conformance with established norms.
Internal auditing: This is the systematic evaluation of an organization’s accounting practises.
The term “financial regulation” refers to the rules, regulations, and guidelines that govern the financial sector.
RESEARCH METHODOLOGY:
There are many problems faced by audit in company fund Failures in accounting and auditing bring to light a variety of issues in the sector, particularly in the auditing of large corporations. The following are some of the major issues:
The ‘Big Four’ accountancy companies dominate the market, and they are arguably ‘too few to fail.’
Conflicts of interest: Auditors may find themselves stuck between the interests of the company’s management, their own, their firm’s, and their responsibilities as auditors.
Too many audits are determined to be lacking in quality and purpose by the regulator, and fail to fulfil broader expectations.
Regulation and supervision are ineffective because the regulator lacks resources, authority, and independence.
Accountancy lacks prudence: accounting rules have evolved in a way that allows or encourages less careful accounting.
MY RESEARCH SHOWS PARTICULARLY MAJOR THREE PROBLEMS:
Expertise
This oil and gas business is a highly regulated and complex industry. Auditors conducting audits of profits from oil and gas extraction may require unique knowledge and skills. A team may require the assistance of a tax or data-mining professional, an IT specialist, a lawyer, or an engineer, depending on the audit’s focus.Finding an expert for an audit engagement, on the other hand, can be difficult, especially if the subject of knowledge is highly technical and the sector is seeing rapid expansion. Because most active experts have ties to the sector, the requirement for experts to be independent from oil and gas businesses is difficult to meet. As a result, auditors may choose to hire a retired expert. .
Another alternative is for an audit office to hire one or more people who are well-versed in oil and gas industry operations (or to train an individual to become a specialist in this field). The problem with this approach is that these professionals can often find better-paying work in the oil and gas business. As a result, an audit firm’s ability to retain sufficient knowledge in the oil and gas business may be limited. Visits to the Site
Conducting site visits to see relevant business activities firsthand and meet knowledgeable staff and managers on the ground is a common way for performance auditors to expand their knowledge of a new area’s business. Because oil and gas deposits are generally located in remote places, far from towns and transportation centres, oil and gas extraction may be prohibitively expensive or demand complex logistics. There could also be security issues or seasons when the weather makes travel even more worse.
Information Availability
There may be times when auditors have trouble getting the information they need to draw a decision on an audit criterion.
External auditors will not usually need access to private oil and gas companies’ records and data to conduct their audits, but if they do (for example, if they need to assess the transfer pricing risk), they should not assume that private companies will cooperate with their audit, especially if the audit office does not have a clear legal mandate to do so. When audits decide to analyse whether the choice to implement a certain revenue framework or royalty regime was evidence-based, another potential access to information difficulty arises.
In this instance, it’s likely that the requested material will be withheld because it’s considered confidential by the Cabinet (meaning information for the members of the governing council of ministers only).
Finally, if auditors attempt to compare their jurisdiction’s practises to those of other jurisdictions, they may have difficulty obtaining information from other countries. Indeed, it’s likely that the information they can get in their own jurisdiction due to their office’s legal mandate will be unavailable in areas where their mandate does not apply. Because a fair benchmarking method necessitates comparing equivalent data from all selected jurisdictions, disparities in data quality and quantity may prevent the exercise from yielding valuable conclusions.
REVIEW OF LITERATURE:
Choosing an overarching audit approach and designing an audit plan are both part of the audit planning process. The Public Company Accounting Oversight Board’s (PCAOB) Auditing Standard No. 9 outlines the responsibilities of an external auditor as well as the standards for audit planning.
An audit plan is required to define the planned nature, extended timeline, and tests to be performed on controls and substantive procedures, as well as a description of other audit procedures planned to ensure the audit fulfils PCAOB criteria, according to standard No. 9. The Institute of Internal Auditors offers audit planning recommendations for internal auditing. The scope and objectives of the audit are the first steps in planning. Internal auditors must be familiar with the company’s business, operations, and distinctive features. . Internal auditors must comprehend the department/unit being audited’s business, operations, and distinctive characteristics, as well as prepare an audit plan that outlines the procedures required to conduct an efficient and effective audit.
Establishing the overall audit strategy for the engagement and producing an audit plan are both part of the planning process for an audit. The audit of financial accounts benefits from adequate planning in various ways, including the following:
• Assisting the auditor in identifying and devoting adequate attention to critical areas of the audit • Assisting the auditor in identifying and resolving potential problems on a timely basis • Assisting the auditor in properly organising and managing the audit engagement so that it is completed effectively and efficiently. • Assisting in the selection of engagement team members with the necessary competencies and expertise to respond to expected risks, as well as allocating team member duties • Assisting with the guidance, supervision, and evaluation of engagement team members’ work.
• Assisting, if needed, in the coordination of work done by component auditors and specialists. Audit plans have always been and will continue to be an important academic topic. Many academics have recently examined various features of audit plans. According to Etheridge (2011), who emphasises the importance of an audit plan, appropriate auditing planning is essential for an effective audit plan. “Planning identifies key audit areas such as material account balances and high-risk situations and guides the auditor’s approach and responses to these areas,” Etheridge (2011) says (p. 83). [2] Furthermore, according to the same source, preparation takes place prior to fieldwork and normally begins with an assessment of the auditing plan in order to identify the scope of the audit.
Audit planning, according to Mock and Wright (1999), is a two-stage process: [3] risk assessment and evidential planning.
Both stages, according to the authors, are critical for building an audit plan, because even if the auditor is successful in assessing the client risks, he will need to develop an acceptable evidential plan to respond to those risks. The opinions of scholars regarding audit plans have their specifics. However their common opinion is that audit plans should be risk adjusted (e.g. Bechara and Kapoor, 2012: Hammersley, 2011: Fukukava, Mock and Right, 2006: Vandervelde, 2006:). Hammersley (2011) emphasizes the need of dynamic modification of the audit plan. [4] The mentioned author claims that because of the fraud risks identified during the auditing process the audit plan prepared in preliminary phase need to be object of modification. Vandervelde (2006) also suggests that adaptation of audit plans should be in direct proportion with the associated risk, claiming that an auditor should response to any change of the risk factor when compiling an audit plan. [5] Bechara and Kapoor (2012) light the issue of risk-based audit plans, claiming that traditional audit plans are based on suspicion and usually directed from senior management. [6] The traditional auditing approach according to the above mentioned authors did not show to be effective during and before the recent financial crisis. Therefore, Bechara and Kapoor (2012) insist for a comprehensive risk based audit plan, enabling detection of the risks in the prism of strategic objectives. Noel and Patterson (2003) suggest that formulating an audit plan is a complex task especially when the auditee has a multiple way of frauds. [7] These frauds according to the author may be defalcation, fraudulent financial reporting, and a combination of these two. In addition the authors explain that which of these frauds would occur depends on1. The relative differences in rewards and penalties for each sort of fraud, 2. The effectiveness of audit systems, and 3. The company’s current industry conditions. Some financial risk categories, such as liquidity, profitability, and flow from operations, have a substantial impact on audit planning decisions, according to Fukukava, Mock, and Right (2006), whereas governance-related risks have a modest impact on audit plans. [8] Meinhardt, Moraglio, and Steinberg (1987) indicate that there are difficulties to be addressed in government audits, such as auditing standard violations connected to non-compliance with electricity rules and regulations. According to Cohen, et al. (2011), even if rules, laws, and standards are in place, senior management’s influence and pressure on auditors may reduce the odds of a trustworthy and impartial presentation of financial statements in particular, or of the entire auditing process in general.
METHODS:
However, aside from the time issue and associated planning needs, evidence, context, and facilitation all play a role in successful action item execution. The reasons for the partial or non-implementation of the action items were reviewed at the follow-up meeting, and the patient safety office gave additional help to the work settings. More follow-up meetings are suggested here to define an acceptable time frame for WR implementation with in-person observations in the future.
SUGGESTIONS:
The global effect of the coronavirus COVID-19 is changing stakeholder demands andexpectations, requiring enterprises to think, prepare, and operate in profoundly different ways. And, as firms adapt to the “new normal,” so must the governance structures and processes that support them.
The role of audit committees in governance is especially vital during times of increased and protracted uncertainty. Where necessary, audit committees are formed as an extension of governing bodies’ scrutiny to ensure integrity, openness, and accountability. The audit committee improves its ability to produce credible and accurate information used as the foundation for decision-making by providing independent inspection of internal and external audit, as well as the finance and accounting function. This provides objective assurance and insight to senior management, the governing body, and external stakeholders on vital areas of organisational activity, such as risk management, performance, reporting risks and related controls, and other key management activities.
CONCLUSION:
The auditor’s responsibility to form an opinion on the financial statements. It also addresses the form and content of the auditor’s report issued as a result of an audit of financial statements. Section 810, Engagements to Report on Summary Financial Statements, applies when an auditor is engaged to report separately on summary financial statements derived from financial statements audited in accordance with generally accepted auditing standards (GAAS) by the same auditor. The auditor should form an opinion on whether the financial statements are presented fairly, in all material respects, in accordance with the applicable financial reporting framework. The auditor should evaluate whether the financial statements are prepared, in all material respects, in accordance with the requirements of the applicable financial reporting framework. This evaluation should include consideration of the qualitative aspects of the entity’s accounting practices, including indicators of possible bias in management’s judgments.
BIBILOGRAPHY:
NAME:
M.JAYAKANTH
COLLAGE:
IFIM LAW SCHOOL