THE ROLE OF INTERNAL AUDITORS IN STOCK TAKING (A CASE STUDY OF TOTAL NIGERIA LIMITED)

ABSTRACT   This research work is designed for the study of the role of internal auditors in stock taking as it affect Total Nigeria Limited. Internal auditors may be defined as in house approval activity which provide services to management by examining the application and effectiveness of system and controls within the organization in a manner that is independent of those operations, systems and controls. In embarking on this project work, efforts should be made to limit the research to the areas of study which is hinged on their roles in stock taking activity in business organization.  In chapter one, this work deals with the general introduction of the work by describing both auditing and stock taking.  It also entails statement of problem, purpose of the study, significance, scope, limitation and statement of hypothesis and most of the terms used were defined in this chapter. Chapter two gives the review of the related literature and studies. Also, the role of internal auditor under the law, internal auditing, stock taking, structure of Total Nigeria Limited and its operation, position of the internal audit department in Total Nigeria Limited, functions of the department, an example of internal auditors report, importance of effective communication among and with the internal audit unit, and stock taking of black and white products were reviewed also in this chapter. Chapter three of this work deals with the research design and methodology. It also showed the sources of data and the sample used. Chapter four showed how the data collected was presented and analyzed using a simple or percentage analysis on the hypothesis. Finally, chapter five which is the last chapter of this work contains the summary of findings, conclusion and recommendations.    

TABLE OF CONTENTS   PAGE Title page                                                                 i Approval page                                                          ii Dedication page                                                iii Acknowledgement                                                     iv Abstract                                                                   v Table of content                                                        vi   CHAPTER ONE 1.0.  INTRODUCTION 1.1.  Statement of problem 1.1       Purpose of the study 1.2       Significance of the study 1.3       Statement of hypothesis 1.4       Scope of the study 1.5       Limitations of the study 1.6       Definition of terms CHAPTER TWO 2.0   REVIEW OF RELATED LITERATURE 2.1   The role of Internal Auditing under the law (statue) 2.2   Internal Auditing 2.3   Stock Taking 2.4   Structure of Total Nigeria Limited and its operation 2.5   Position of the Internal Audit Department in Total Nigeria Ltd. 2.6   Functions of the Internal Audit Department 2.7   An example of the internal auditors report 2.8   importance of effective communication among and with the internal audits 1.9       the role of internal auditors in total Nigeria Limited 1.10   Presentation of the role of internal auditors in total Nigeria Ltd. 1.11   Reporting and its effect 2.12  Stock taking of black and white products   CHAPTER THREE 1.0       RESEARCH DESIGN AND METHODOLOGY 1.1       Source of data Primary data Secondary data 1.2       Sample used 1.3       Method of investigation   CHAPTER FOUR 1.0       DATE PRESENTATION AND ANALYSIS 1.1       Data presentation and Analysis 1.2       Test of hypothesis   CHAPTER FIVE 5.0   SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION 5.1   Findings 5.2   Conclusion 5.3   Recommendations   BIBLIOGRAPHY REFERENCES                 CHAPTER ONE

1.0   INTRODUCTION

People tend to erroneously think that auditing is a sub-division of accounting probably because that is how it was introduced to them and every auditor as we know is also an accountant.  But, every accountant is not an auditor.  Auditing has its roots elsewhere.  The relationship of auditing and accounting is close but they are not the same.

Accounting is concerned with the collection, classification, summarization and communication of financial information.  It involves the measurement and communication of business events and conditions as they affect the particular enterprise.  The task of accounting is to provide a detailed financial information that will be manageable and understandable about an enterprise.  Auditing does more of these things.

Auditing is the independent examination and expression of opinion on the financial statements of an enterprise by an appointed or employed auditor in pursuance of that appointment and in compliance with the relevant statutory obligation, hence the role of internal auditors in stock taking.  It involves critical and thorough investigation of the financial books prepared by the accountants as to whether those financial statement show a discipline department on logic and accounting is part of its utilities.

An auditor must exercise reasonable care and skill in carrying out his audit work of stock taking.

This was fully stated in the case of RE KINGSTON COTTON MILL (1896). This case considered the degree of care and skill required of an auditor.  It stipulated than an auditor is a watch dog and not a blood bound.  That, it is the duty of an auditor appointed to carry out the work of stock taking to ensure that skill, care and caution which a reasonable, competent, careful and cautious auditor will use has been applied in stock taking.  The auditor has to ensure in stock taking or physical verification of stock either by full count or measurement as incase of bulky stock taking that the stock taking with the bin card record.

Stocktaking could be done in three ways namely:

a.           Counting of stock at the end of the year, before the end of the year or after the end of the year