TABLE OF CONTENTS

Title page

Approval

Declaration

Dedication

Acknowledgments

Abstract

List of table

Table of content

CHAPTER ONE

1.0 Introduction

1.1 Background of the Study

1.2 Statement of the Problem

1.3 Research Questions

1.4 Objectives of the Study

1.5 Significance of the Study

1.6 Scope of the Study

1.7 Summary of the chapter

CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1 Introduction

2.2 Conceptual definitions

2.3 History of the study area

2.4 Similar Studies Conducted on Internal Audit in Nigeria

2.5 Similar Studies Conducted on Internal Audit in Other Countries

2.6 Conclusion

CHAPTER THREE

METHODOLOGY

3.1 Introduction

3.2 Research Design

3.3 Population of the Study

3.4 Sample and Sampling Techniques

3.5 Sources of Data

3.6 Instrument of Data Collection

3.7 Methods of Data analysis

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.1 Introduction

4.2 Data Presentation and Analysis

4.3 Summary of the Findings

4.4 Conclusion

CHAPTER FIVE

SUMMARY CONCLUSION AND RECOMMENDATIONS

5.1 Introduction

5.2 Summary

5.3 Conclusion
5.4 Recommendations

5.5 Limitation of the study

Reference

Appendix
 CHAPTER ONE

1.1 BACKGROUND OF THE STUDY

According to Institute of Chartered Accountant in England and Wales; Internal

audit is an over acting that has been neglected for long. Most accounting writers
are on accounting theory and the external audit function.

This has been a great deal of justice to a tool which according to the institute of
chartered accountant of England and Wales has major concern of assuring that
internal check and accounting system are effective in design and operation.

With the growth in sign and complicity of many companies today the importance
of internal audit has according increased so the at it is dually a major factor in
establishing the quality of an company's internal control and development has
made considerable contribution for today's practice on of the important function of
any internal audit department is to objectively report its findings to management
and recommend corrective action where necessary.

If an internal auditor cannot objectively report communicate and follow up his

recommendation, then he is not assisting the management in promoting the
effectives.

Internal audit is qualitatively new brand of the profession and as it involves the
role of the internal audit department is constantly changing. Initially the internal
audit department devoted a substance proportion of its time to accounting and
financial matters but today the may be a considerable amount of time devoted to
other areas like operational auditing. Often in practice, the internal auditors are
responsible to the head of the finance department or section such a situation can
course problems in achievement of the audit objective owing to the trivial between
the different sections of the organization.

However to the extent that all area are financially oriented it might be beneficial to
make the auditors responsible to the head of finance department of the
organization. Historical internal auditor have been an accountants and the majority
of those engaged in this field are still accountant, a qualitative accountant is
considered to have a through training in business generally and the initial stages of
setting up on professional qualification can help to win the respect of the members
of management term whilst the department provides itself.

Accountancy training by self does not necessary produce a good internal auditors
and few large business have derived most benefit from internal audit by
employing main disciplinary team.

Internal audit requires a highly professional approach which is objectively

detected and honest. Independence is a fundamental concept of auditing and this
applies just as much to the internal auditors as to the external auditor. The internal
auditors should not install new procedures or system neither should be engage in
any activity which he will normally appraise as this night compromise this
independence, it is essential that an internal auditor be as independence as possible
and achieve this, he should be report directly to top level management if the
company has set up an audit committee then ideally this is the body to whom the
internal auditor report to were share is no each committee, reports should report to
the board chairman or managing director, report it is not drillable that the internal
auditor report to the head of finance or accounting functions excepts on purely
routine and procedural matters.
It is against the background that the study intends to evaluate on internal audit as a
system of organizational control with particular reference to Kebbi Agricultural
Supply Company Limited (KASCOM), Birnin Kebbi.

1.2 STATEMENT OF THE PROBLEM

The internal audit department of Kebbi State Agricultural Supply Company
Limited (KASCOM) has been dormant or not functioning for a long time, this has
resulted to a continual mismanagement of funds in the company over the
engagements of differences.

The organization has not been given the necessary attention it deserves from the
management. Some of the problems militating against the internal audit
department includes among others: lack of effective and efficient internal control
audit functions, there is no established or authorized maximum cash balance to be
held at any time, as well as staff rotation makes occurrence of fraud and
embezzlement possibly easy and lack of adequate provision for training of internal
audit staff.

1.3 RESEARCH QUESTIONS

From the above statements, the following research questions are put forward as
follows:

1. Does the organization have an effective and efficient internal control audit
functions?

2. Is there an established or authorized maximum cash balance to be held at

any time in the organization?

3. Does staff rotation makes the occurrence of fraud and embezzlement

possibly easy?
1.4 OBJECTIVES OF THE STUDY

The main objective of the study is to evaluate on internal audit as a system of

organizational control with particular reference to Kebbi Agricultural Supply
Company Limited (KASCOM). Other objectives are:

1. To find out whether there is an effective and efficient internal control audit
department

2. To identify whether there is any established or authorized cash balance to

be held at any time in the organisation.

3. To identify whether staff rotation is established.

1.5 SIGNIFICANCE OF THE STUDY

The significance of the study to the researcher, the internal audit department of the
company, further researchers and the nation as a whole can't be over emphasized.

It will point out the problems and proper solutions to enhance the functionality
and performance of the internal audit department of Kebbi Agricultural Supply
Company Limited.

The internal audit department has link to every other departments, its
improvement will have positive impact on Kebbi Agricultural Supply Company
Limited as whole and the state as well.

Finally, it will stand as bases for further studies by other researchers.

1.6 SCOPE OF THE STUDY
This study is restricted to Kebbi State Agricultural Supply Company Ltd Birnin
Kebbi. The scope of this research work covers only KASCOM internal audit
department, its functional activities and the importance of the company. The
research work will not cover all the system of control available to the company
due to lack time. However, comparism will made with other system of control,
available to the company.

1.7 SUMMARY OF THE CHAPTER

This study is organized into five distinct chapters. Chapter one (1) introduces the
study by looking at the background through to the significance of the study and its
limitations. Chapter two (2) deals with a critical analysis of prior related literature,
however, chapter three (3) looks at the methodology of the research under study.
Chapter four (4) deals with the presentation of the findings and the analysis of the
data collected. Finally, chapter five (5) deals with the summary, conclusion &
recommendations.
 CHAPTER TWO
2.1 INTRODUCTION

This chapter reviews related literature under the following subheadings:

Conceptual Definitions, The concept of Organization control, History of the Study
Area, Similar Studies Conducted in Nigeria, Similar Studies Conducted in other
Countries and Conclusion

2.2 CONCEPTUAL DEFINITION

Concept of Audit
The word audit is derived from a Latin word "audire" which means "to hear".
During the medieval times when manual book-keeping was prevalent, auditors in
Britain used to hear the accounts read out for them and checked that the
organization’s personnel were not negligent or fraudulent (Derek Mathew, 1890).
Moyer (1951) identified that the most important duty of the auditor was to detect
fraud. Chatfield (1974) documented that early United States auditing was viewed
mainly as verification of bookkeeping detail.

An audit is a systematic and independent examination of books, accounts, statutory

records, documents and vouchers of an organization to ascertain how far the
financial statements as well as non-financial disclosures present a true and fair
view of the concern (Power Michael, 1999). It also attempts to ensure that the
books of accounts are properly maintained by the concern as required by law.
Auditing has become such a ubiquitous phenomenon in the corporate and the
public sector that academics started identifying an "Audit Society" (Power
Michael, 1999). The auditor perceives and recognizes the propositions before them
for examination, obtains evidence, evaluates the same and formulates an opinion
on the basis of his judgment which is communicated through their audit report.
Any subject matter may be audited. Auditing is a safeguard measure since ancient
times (Loeb & Shamoo, 1989). Audits provide third party assurance to various
stakeholders that the subject matter is free from material misstatement. The term is
most frequently applied to audits of the financial information relating to a legal
person. Other areas which are commonly audited include: secretarial & compliance
audit, internal controls, quality management, project management, water
management, and energy conservation.

As a result of an audit, stakeholders may effectively evaluate and improve the

effectiveness of risk management, control, and the governance process over the
subject matter.

Concept of Internal Audit

Internal audit has been defined by the Auditor Practices Committee (APC) as “an
element of internal control system set up by the management of an enterprise to
examine evaluate and report on accounting and other control on operations. It
exists either voluntarily or on certain circumstance because of statutory
requirement”. Furthermore, internal audit as “an independent appraised activity
within an organisation for the review of operation as a service to management. It is
am managerial control which functions by measuring and evaluating the
effectiveness of other control”.

It has also been defined by the Chattered Institute of Public Finance and
Accounting (CIPFA) as an independent appraisal function establish within an
organisation for the review as a service to all levels of management.

2.2.1 Auditors' responsibilities in fraud detection

The role of auditors has not been well defined from inception (Alleyne & Howard
2005). Porter (1997) reviews the historical development of the auditors' duty to
detect and report fraud over the centuries. Her study shows that there is an
evaluation of auditing practices and shift in auditing paradigm through a number of
stages. Poter study reveals that the primary objective of an audit in the pre-1920's
phase was to uncover fraud. However, by the 1930's, the primary objective of an
audit had changed to verification of accounts. This is most likely due to the
increase in size and volume of companies' transactions which in turn made it
unlikely that auditors could examine all transactions .During this period, the
auditing profession began to management. In addition, management should also
have implemented appropriate internal control systems to prevent fraud in their
companies.

In the 1960's, the media and public were generally unhappy that auditors were
refusing to accept the duties of fraud detection. The usefulness of an audit was
frequently called into question as they generally failed to uncover fraud. However,
despite the criticism, auditors continued to minimize the importance of their role in
detecting fraud by stressing that such duty rested with the management. Due to the
advancement of technology in the 80's, the complexity and volume of fraud have
posed severe problems for businesses. Poter (1997) asserts that, even though the
case law has determined that in some circumstances auditors have a duty to detect
fraud, the courts have attempted to maintain the auditors' duties within reasonable
limits. In contrast, Boynton et al (2005) argue that since the fall of Enron, auditing
standards have been revamped to re- emphasize the auditors' responsibilities to
detect fraud. Their assertion is based on ISA Understanding the Entity and its
Environment and Assessing the Risks of Material Misstatement' and Internal Audit
Standards (IAS) 240 'The Auditor's Responsibilities to consider Fraud in an Audit
of Financial Statement (Revised). ISA 240 deals with auditor's responsibilities
relating to fraud in an audit of financial statements, Identifying and assessing the
risks of material misstatement due to fraud. It have been effective on or 15
December 2009 ISA 240 objectives are; To identify and assess the risks of material
misstatement of the financial statements due to fraud, To obtain sufficient
appropriate audit evidence regarding the assessed risks of material misstatement
due to fraud, through designing and implementing appropriate responses and to
respond appropriately to fraud or suspected fraud identified during the audit.

2.2.2 Auditors' Responsibilities in Fraud Prevention

The internal audit according to Boulescu, (2003) refers to a permanent review of
the economic activity of an entity; an independent activity of assessing on
behalf of the economic entity's management that involves examining the financial,
accounting, and other kind of operations concerning the services as a whole; an
evaluation of tasks and conformity of the accounting entries, reports, assets,
capitals, and results; or an attestation or certification of financial accounting
documents. The responsibilities concerning fraud prevention within an
organisation are divided between the executive board, the audit committee, and the
internal audit (Munteanu, Zuca&Zuca, 2010). Firstly, the executive board has the
final responsibility for implementing the mechanisms of detecting and preventing a
fraud early on. The members of the executive board are those who should offer
explanations in case of discovering certain cases of fraud. According to the
National Standard on Audit 240 'Fraud and Error' (NSA 240), the executive board
is responsible for the prevention and detection of fraud and error by applying and
maintaining appropriate accounting and internal control systems. These systems
can also reduce the possibility that fraud and error occur, but they cannot
completely eliminate them. Secondly, the audit committee has the role of
supervising the management of fraud risks and actively monitoring the efforts of
the executive board against fraud committing. Thirdly, the internal audit represents
an efficient line of defense against fraud, having a role both in monitoring risks, as
well as in fraud prevention and detection. The internal audit constitutes a tool at
the disposal of the audit committee, the only one able to independently assess fraud
risks and anti-fraud measures implemented by the executive board. In their current
activities, the internal auditors must: have enough knowledge in order to identify
the signs of a possible fraud; be attentive of the cases that involve a risk of fraud;
and appreciate the necessity to further investigate a case, inform the responsible
persons from an organization and take actions to eliminate or reduce the possibility
of fraud occurrence. According to the National Standard on Audit 240 'Fraud and
Error' (NSA 240), the auditor is not responsible and cannot be held accountable of
fraud and error prevention. Furthermore, conducting an annual audit can serve as a
means to reduce the possibility for fraud and error to occur. In practice, it often
happens that when the audit points out a case of possible fraud or error, the
responsible entity does not expose the situation and tries to 'clean up' using their
own means, usually by removing from within the entity the persons responsible for
the possible fraud or covering the losses from internal resources (rarely recovered
from the guilty parties), all in order to not tarnish their market prestige and
reliability. There were quite a considerable number of cases when following a
scandal in the press, the managers of entities where frauds occurred were forced to
admit in front of the public opinion that they had knowledge (at least partially) of
the respective fraud discovered after an internal audit and that they acted to remove
the losses and the wrongdoers, preferring to keep quiet precisely for protecting
their entity.
There is a clear distinction between internal auditors and specialists in fraud
investigation, both from the point of view of their roles and responsibilities, as well
as in the case of their professional training and specialty. The role of the internal
auditor depends, of course, on his professional training and practical abilities, as
well. In practice, the role of the internal audit can include a varied set of
responsibilities: supporting the management in establishing auditable anti-fraud
mechanisms; facilitating the assessment of fraud and reputational risks at the level
of an organization and its business process; assessing the connections between
fraud risks and internal controls; auditing frauds; supporting the specialists in fraud
investigation; supporting the efforts to rectify deficiencies; and reporting to the
audit committee the problems regarding anti-fraud mechanisms, fraud and
reputational risks assessment, or fraud cases and suspicions (Petracu, 2012).

The internal audit cannot completely prevent fraud, but it can adapt its work
method and procedures so that it can increase the chances to identify and correctly
interpret the signs of fraud (Munteanu, Zuca & Zuca, 2010).

The internal auditors must have a superior level of theoretical knowledge and
practical experience in order to successfully accomplish their role. They must
know the possible fraud schemes and scenarios that are specific to an
organization’s field of work (for example insurances, retail, telecommunications,
etc.) and be able to recognize the signs of a possible fraud scheme.

For the implementation of all these above-mentioned, there is a considerable need

to invest in the specialization of the internal auditors by financing courses in
certain fields. Other organisations contact external specialists (on the basis of a
service contract) in order to conduct the task of auditing, thinking that in this way
they receive high-level specialists at a relative modest price.

2.2.3 Auditors' responsibilities in fraud Remediation

Auditors can perform their fraud remediation responsibilities by; Ensuring that
senior management is taking necessary corrective actions to address the findings
and recommendations of internal auditors and external auditors in a timely
manner; addressing control weaknesses, non-compliance with policies, laws and
regulations and other problems identified by internal auditors and external
auditors, and ensuring that deficiencies identified by supervisory authorities
related to the internal audit function are remedied within an appropriate time
frame and that progress of necessary corrective actions are reported to the board
of directors.

According to Internal Audit Standard (IAS) 240 requirements are;

1. The auditor shall maintain professional skepticism throughout the audit.

Where responses to inquiries of management or those charged with

governance are inconsistent, the auditor shall investigate the inconsistencies.

2. Discuss among team members; How and where the entity's financial statements
may be susceptible to material misstatement due to fraud including how fraud
might occur.

3. Make inquiries of management about;

 Management assessment of risk of that the financial statements may be
materially misstated due to fraud, including the nature, extent and frequency
of such assessments.
 Management's process for identifying and responding to the risks of fraud in
the entity, including any specific risks of fraud that management has
identified or that have been brought to its attention, or classes of transactions,
account balances, or disclosures for which a risk of fraud is likely to exist.
 Management's communication, if any, to those charged with governance
regarding its processes for identifying and responding to the risks of fraud in
the entity.
 Management's communication, if any, to employees regarding its views on
business practices and ethical behavior. Management, internal audit and
others within the entity as appropriate, to determine whether they have
knowledge of any actual, suspected or alleged fraud affecting the entity.
 Unless all of those charged with governance are involved in managing the
entity, the auditor shall make inquiries of those charged with governance to
determine whether they have knowledge of any actual, suspected or alleged
fraud affecting the entity. These inquiries are made in part to corroborate the
responses to the inquiries of management.
 The auditor shall obtain an understanding of how those charged with
governance exercise oversight of management's processes for identifying and
responding to the risks of fraud in the entity and the internal control that
management has established to mitigate these risks.
 Auditor shall evaluate whether unusual or unexpected relationships that have
been identified in performing analytical procedures, including those related to
revenue accounts, may indicate risks of material misstatement due to fraud.
 The auditor shall evaluate whether the information obtained from the other risk
assessment procedures and related activities performed indicates that one or
more fraud risk factors are present.
 When identifying and assessing the risks of material misstatement due to fraud,
the auditor shall, based on a presumption that there are risks of fraud in revenue
recognition, evaluate which types of revenue, revenue transactions or assertions
give rise to such risks.
 In determining overall responses to address the assessed risks of material
misstatement due to fraud at the financial statement level, the auditor shall;
 Assign and supervise personnel.
 Evaluate whether the selection and application of accounting policies by the
entity, particularly those related to subjective measurements and complex
transactions, may be indicative of fraudulent financial reporting resulting from
management's effort to manage earnings.
 Incorporate an element of unpredictability in the selection of the nature, timing
and extent of audit procedures.

2.3 HISTORY OF KEBBI AGRICULTURAL SUPPLY COMPANY

LIMITED (KASCOM)
Kebbi State of Nigeria is one of the new stated created in 1991 by the federal
government.

Therefore, the Kebbi State Agricultural and Rural Development Authority

(KASCOM) was curved out from the former Sokoto state Agricultural and rural
Development authority (KARDA) the state is not one of the agricultural producing
area in the country through the backbone of the economy of the state Agriculture.

This explains why the federal and Kebbi state government established the Kebbi
state agricultural and rural development authority (KARDA) with a view to boost
agricultural production in the state through its four 4 zonal office strategically
located throughout the state.
2.4 SIMILAR STUDIES CONDUCTED ON INTERNAL AUDIT IN
NIGERIA
Prior to this study a lot of research works have been conducted by other
researchers related to this topic; some of such works have been reviewed below

Adeniji (2004), examined the impact of internal audit on fraud detection and
prevention with power Holding Company of Nigeria as a case study. Information
and data were collected through the use of research questionnaires and company's
financial statement. The research questionnaires distributed were 30 of which 23
were completed and returned by the respondents. The hypotheses formulated were
tested using chi-square statistical tool. The study reveals that internal audit plays
an important role in public sectors.

Onyinlola (2010) investigated the role of auditors in the detection, prevention and
reporting of fraud. Data were obtained from 184 respondents in Nigeria. The
findings revealed that the respondents are very concerned about the problem of
fraud. In addition, the respondents placed very high expectation on auditors' duties
on fraud prevention and detection. This perception is in contrast with the stated
primary objective of an audit, as stipulated in IAS 200, which required auditors to
form an opinion on the financial statements, but not of fraud detection.

Olowolaju (2013) examined the role of internal audit in controlling errors,

irregularities and fraud in corporate organizations. The various types of errors,
irregularities, frauds as well as the problems of internal audit were discussed.
Questionnaires were used to collect data from respondents. Questionnaires were
distributed to 150 organisations in South West of Nigeria of which 106 returned
the questionnaires. 5-Point Likert Rating was used to analyze the findings. The
study revealed that the existence of internal audit department in a business
organization is a good tool of corporate control of errors, irregularities and fraud.

Sorunke (2016) conducted a research to evaluate the effectiveness of the internal

audit unit on fraud control in local government administration in Osun State. In the
research, two hypotheses were formulated and tested. The primary data was
obtained through the administration of questionnaires, interview and actual
observation. It was supplemented with secondary data. The findings of the research
indicate that the Internal Audit unit did not fulfill and in reality does not contribute
significantly to fraud prevention and control in local government administration in
Osun State. The study thus recommends total overhauling of the internal audit unit
in the local government administration in Osun State.

Njoki (2016), conducted a study aimed at establishing the effect of internal audit
functions on fraud detection among insurance companies operating in Kenya. The
objective of the study was to establish the effect of Proactive Fraud Audit,
Compliance to Policies, Risk Management, Control of Operation and Financial
Reporting on fraud detection among insurance companies in Kenya. The study
adopted a descriptive research designs to establish the statistical relationship
between variables of the study. The study adopted a census approach where
information was collected from all the 41 Insurance companies in Kenya. The
primary data was collected using a structured questionnaire consisting of close-
ended and open-ended questions. The analysis was done with the aid of Statistical
Packages for Social Sciences (SPSS Version21). Data was analyzed using
descriptive statistics and t-test was used in testing the significance of the effect
between dependent variables and independent variables at 5% level of
significance. The analyzed data was presented in tables. Multiple regression
analysis was used to determine the statistical relationship between variables. It was
established that there was a statistical relationship between Proactive Fraud Audit,
Compliance to Policies, Risk Management, Control of Operation and Financial
Reporting and fraud detection among insurance companies in Kenya. It was
concluded that insurance companies were likely to gain competitive edge in the
changing business environment if only they developed proactive fraud audit
systems, compliance systems, risk management systems, internal control systems
and financial reporting systems. It was recommended by the study that insurance
companies in Kenya should recognize the need of sensitizing employees and
customers on the consequences of fraud, train employees on fraud detection in
systems, develop risk management systems and review internal control systems to
promote the spirit of transparency and accountability.

Onoja (2015), analyzed the Internal Audit Techniques and Fraud Prevention in
Bauchi State Local Government Councils. The data for the study were collected
from both the primary and secondary sources. The primary sources data were
collected from the thirteen (13) local governments internal audit units through self-
administered questionnaires to the sample size of the study. The secondary sources
were documents from Bauchi state ministry for local government affairs. Several
statistical tools were used including tables, simple percentages, Chi- square and
Pearson Product Moment Correlation Coefficient to analyze the data and test the
null hypotheses formulated. The study revealed that the internal audit unit at local
government put necessary measures to prevent fraud but lack total independent
freedom to carry out their function effectively. The paper concludes that The
internal audit units at local government level in Bauchi state are performing the
function of fraud prevention and the internal audit techniques/procedures capable
to prevent any type of fraud was effective. It was discovered that internal audit unit
at local governments' level in Bauchi state are not independent, and this affected
their functions. The study recommends among other things that, Bauchi state
government through House of Assembly should enact laws/legislation that will
grant internal audit unit autonomy to discharge their functions. Effective internal
audit techniques/procedures capable of preventing fraud should be installed by the
councils and that adequate measures and control should be put in place.

Aramide & Bashir (2015) examines the effectiveness of internal control system
and financial accountability at local government level in Nigeria. Data were
gathered through the distribution of one hundred and fifty (150) copies of
questionnaire; the responses were analyzed and were tested using chi-square
statistics. Findings from this study show that internal control system is positively
significant for the good financial accountability in the local government area
council in Nigeria. The study recommends that local government authority should
increase an effort to ensure proper and highly effective internal controls system is
put in place within local government to enhance their financial accountability.

2.5 SIMILAR STUDIES CONDUCTED ON INTERNAL AUDIT IN

OTHER COUNTRIES
Prior studies have also shown a mixed result about the decision to dismiss the
chief internal auditor. For example, Goodwin and Yeo (2001) study the association
between IAF and the audit committee influence on the independence and
objectivity of the internal auditors. Their result indicated that 72 percent of the
audit committee members were involved in the dismissal of the chief internal
auditor. In a similar situation, Goodwin (2003) reported that 52 percent of the
Australian and New Zealand audit committee members are involved in the
decision to dismiss the chief internal auditor.

Outsourcing of internal audit services has become prevalent in recent years. Prior
studies have recognized several incentives for outsourcing internal audit services,
for example, Caplan and Kirschenheiter (2002) and Abbott et al. (2007). A study
of Selim and Yannakas (2002) investigates the manner, and the impact of
outsourcing the IAF in the United Kingdom (UK) private and public sector
organizations and the impact of outsourcing decision may likely have on auditor
independence and quality of audit service. The result of the study indicated that
most of the organizations prefer an in-house IAF and that not all respondents are
of the opinion that independence may be compromised when internal audit
services are outsourced to an external.

Carey & Arena (2006) examine the causes of internal audit outsourcing in
Australian listed firms. The result of the study advocated that internal audit
outsourcing is related to perceived cost serving and the technical skills of the
external service supplier. Abbott et al. (2007) examine the consequence of SOX as
it relates the restriction on outsourcing internal audit services to the external
auditor using a sample of 219 responses from 1,000 fortune chief internal auditors.
The result of the study indicated that firms with independent, active and expert
audit committee are less likely to outsource routine internal audit services to the
external auditor.

Munene (2013) investigated the effects of internal controls on financial

performance in Kenya. Internal controls were looked at from the perspective of
control environment, internal audit and control activities whereas financial
performance focused on liquidity, accountability and reporting as its measures. The
research was conducted using survey, correlation and case study as research
designs. Data was collected using Questionnaires as well as review of available
documents and records from a population of 37 government training institutions in
Kenya. Data was analyzed using the Statistical Package for Social Sciences. The
study found that management of the institutions is committed to the control
systems, actively participates in monitoring and supervision of the activities of the
government training institutions in Kenya. It was further revealed that there is a
clear separation of roles, weaknesses in the system are addressed. The
investigation recommends competence profiling in the internal audit department
and that the institutions establishes and manages knowledge/information
management system to enable all parties within the institution to freely access and
utilize the official information.

In another study, Morelo (2011) examined the importance of internal control in the
Brazilian public administration. Using a content analytical method, the study
reveals that there is existence of records of bribes payments from suppliers to an
employee of the organization, existence of an off-the-books payroll scheme;
service providers hired without the proper selection procedures or execution of a
formal contract, and staffed with significant numbers of family members of
institution personnel; overbilling and overcharging of civil construction projects;
uncompleted projects and continued illicit payments to third parties for advantages
not authorized in the legislation governing the execution of contracts. The study
recommends, among others, that proper internal controls should be enacted to
ensure accountability in terms of administration and service delivery.

Moses (2007) examines the effectiveness of internal control systems in achieving

value for money in local governments. Using the regression analysis, it was
revealed that internal control systems have a significant positive effect in achieving
Value for Money. The study further reveals that there a significant positive
relationship between the control environment, control activities, risk assessment,
information and communication and monitoring and value for money in local
governments.

Cuomo (2005) examined internal control and financial accountability for not-for-
profit boards using charities organisations in America. The study uses discussion
based model. The study reviews that carrying out fiduciary responsibilities by
board of directors and officers such as being financially accountable to the
organization is essential to the survival of the organisation. A failure to meet these
obligations is a breach of fiduciary duty and can result in financial and other
liability for the board of directors and the officers. Therefore, the study concludes
that effective internal controls will help to protect an organization's assets and
assist in their proper management.

Karapetrovic S. & Willborn (2000) examined on Quality assurance and

effectiveness of audit systems. The research founds that, in order to provide
confidence in quality externally, audit systems must be managed for internal
effectiveness.

Past studies provide proof of the influence of IAF on audit fees and reliance of
external auditors on IAF work (Schneider 1984; AICPA 1990; Felix et al. 2001;
Gramling et al. 2004; PCAOB 2007; IF AC 2009; Prawitt et al. 2011; Messier Jr et
al. 2011). Felix et al. (2001) and Gramling et al. (2004) reported that increased
dependence on the work of the IAF by the external auditor could translate into
lower external audit fees. Messier Jr et al. (2011) find that the use of IAF as a
management training ground is positively associated with external audit fees.
However, Beneish et al. (2006) and Hogan and Wilkins reported an increased in
external audit fees as a result of internal control reporting requirements of SOX.

2.7 CONCLUSION

So far, the chapter discussed on the reviews of related literature by quoting

different authors point of views related to the topic under study. Also, conceptual
issue were raised and viewed as well.

Moreover, the history of microfinance and women empowerment in Nigeria was

enunciated followed by reviewing similar studies conducted in Nigeria and other
countries worldwide to facilitate the necessary requirements for the chapter.