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1.1. Background of the Study
Internal audit is a management tool used in ensuring transparency in
conduct of business. Auditing took the entire stage after the industrial
revolution since before this period, transactions increased,
precipitated by the development of large corporations, limited liability
companies, there became the need for divorce of ownership from
control. Hence mangers and shareholders became two different
partners. Then it became apparent for mangers to render accounts of
their stewardship to those who has pooled their resources together
for the business .it is noteworthy that an independent person be
appointed to represent the interest of the shareholders in reviewing
the report of mangers to ensure accuracy and transparency. This is
how auditing started.
We have two types of sectors. Public and Private sectors. Public
sector is the governments initiate and control in economic activities
with the aim of rendering services at a breakeven point.
The private sector is the private initiative aimed at profit/wealth
maximization for the owners Mill champ (1996) defines internal audit
as an independent appraisal function within an organization for the
review of system of control and the quality of review of systems of
control and the quality of performance as a service to the
The papers seek to empirical and statistically ascertain the impact of
the internal audit in the private sector of the Nigerian economy, while
the private sector of the economy is studied at large; the case study
MB ANAMCO Ltd, Emene, Enugu is particularized.
1.2. Statement of the Problem
The private sector according to Anyanwu (1993; 25) is that part of
the economy not under direct government control. It entails
production and distribution that is in private hands. It serves as a
complement to the public sector since increased public sector
efficiency results from improvements and places government in a
better position to focus on the objectives, conduct and performance
of those enterprises that remain in the public sector (Hamming and
Despite this enormous role, the sector has been beclouded with
problems such as:
(i) Financial impropriety
(ii) Lack of auditing control
(iii) Lack of independence of the internal control
(iv) Incomplete recording of business transactions
(v) Over blow expenses to reckless spending
(vi) Non compliance and adherence to accounting standard and
(vii) Mismanagement of scarce funds
1.3 Statement of Objectives
The broad objective of the study is:
1. To determine if internal audit ascertain the correctness of
2. To determine the extent to which internal audit helps in
enforcing compliance to rules and regulations regulating private
sector accounting and auditing.
3. To find out if internal audit inspect and verifies organizational
assets and liabilities.
4. To know the factors hammering pa ring audit procedures in the
1.4 Research Hypothesis
To address the above mentioned problems the following hypothesis
(i) Ho: internal audit has not significantly affected Private sector
(ii) Ho: There is no relationship between achieving corporate
objective and efficient internal auditing in the private sector.
(iii) Ho: Inefficient internal audit and internal control has hampered
1.5. Significance of the Study
(I) The study will be of immense benefit to the shareholders who
have contributed the funds for the business and needs a reward
in form of dividends.
ii) This can be achieved if ineffectiveness and corrupt practices
such as fraud, loss of revenue, sharp practices, and lack of
transparency etc .associated with the private sector are
minimized or even eradicated.
iii) Since a virile private sector is noted for the economy will be of
great benefit from the findings of the study
iv) Equally, future researches on auditing will find the study
interesting in their research.
1.6. Scope of the Study
As the study is centered on the effect of the internal audit in M.B
ANAMCO LTD, Emene Enugu State, the research covers all
department under the firm in other to ascertain whether auditing has
an effect in the private firm and if not what is the cause.
1.7 Limitation of the Study
The researcher in the course of carrying out the research was faced
with the following problems and constraints.
(a) Time factor: Time shortage posed serious challenges, since it
was indeed very short considering the enormity of the research work.
(b) Lack of information and data due to unavailability of materials
and other vital information. Libraries are either out of stock or scanty
in their content of relevant materials.
(c) Financial problem was also a deterrent in carrying out the
research since the available fund was not enough to sustain the vast
research proposals, it was also a challenge in that regard.
1.8 Definition of Term:
Audit can be define as the independent examination of a financial
statement and expression of opinion on the financial statement of
enterprise by an appointed auditor in pursuance of that appointed and
in compliance with any relevant statutory obligation.
Auditor is a qualified accountant who also passed a professional
examination. Such a person must be of good conduct and have a
vast knowledge and able to understand a practical business,
endeavor always to grasp the technicalities and business, methods of
any concern whose account he undertakes to audit.
(C) Internal Auditing
According to Bright (1964) “Internal auditing has to do with the
independent examination of the books of account so as to ascertain
whether the books of accounts are in agreement with the organization
(D) Private sector:
Private sector includes the part of the economy that is fully controlled
and managed and financed by private individuals.
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