The system of controls adopted in any economy greatly determines the development and growth of that economy. To ensure optimization in money, materials machine, time, resource and management of men, controls are essentials.These controls are installed by many organizations including banks to check how effective and efficient they maximize their resource. One of such controls commonly used to minimize wastage and guide plans to their eventual accomplishment is internal auditing. Auditing has been in existence for many years, it was in ancient Egypt and the great mercantile establishment of the middle ages. This shows that internal auditing can neither be neglected nor under rated in our modern economy for it was borne out of the complexities of modern business climate and transaction involved. In that other management of various large business organizations and government concern recognized internal auditing as a valuable machinery in achieving and objective deemed accurate at a given point in time.

The term “Audit” is from a Latin word “Audire” which means hr hears. This is because the account of an estate domain were checked by having them called out of those who complied them to those in authority. With the growth of trade and commerce the need for more accurate method of recording business activities arose. This, auditing is more a question of he hears but a whole process where by the books of account and vouchers of business entities (including charities, trusts) are subjected to critical examinations by professionally qualified and independent account (Auditors) on such a detail as will enable them from an option as to their truth and fairness. The Auditing is the bridge across the creditability gap created by the separation of management from ownership. The complexity of the art of management extents to increasing aware of business fraud, embezzlement and the cash squeeze which oen cripple many companies. The management has to look inward in order to uphold the space of activities and keep abreast with the changes in their immediate and external environment, and this can only be achieved a good and effective internal control system of which internal auditing is a major section. A writer maintained that the existence of an efficient and effective system of internal control both in design and operation which is the responsibility of management with best to prevent fraud or at worst help to detect such fraud at the earliest opportunity. It is a function carried out by an independent staff in audit department with the sole aim of reporting on the fairness and truly of financial statements. However since the internal auditors are employee of the firm or the establishment concern, independence is not always achieved. The comprehensive coverage of an internal audit upon several factors.

A general rule is that department should of course have as much freedom as possible without interference from the management. In such circumstances the internal auditor will have a greatly enhanced share in recommending a new and conducting investigations where appropriate. The terms of references should be defined as lack of this may lead the department and those in another. To avert this ugly incident and ensure greater coverage during investigations, management issues guidelines to heads of division to always make necessary documents/records/files available to audit staff as may be demanded by them while performing their duties. A proper audit work should be able to: 1. Review the accounting systems as related to internal control. 2. Examine financial and operating information for management. 3. Review the economy efficiency and effectiveness of operation. 4. Review the implementation of corporate policy plans and procedures. 5. Assist in implementation of new accounting system. 6. Providing a training ground for both financial and general management personnel. Internal Audit functions can help to spot out deficiencies in the systems so as to evolve corrective measure at the earliest opportunity. Internal auditor appraise, analyses and report upon the policies and methods employed in the bank. The duties of internal Auditor to the general performance of the whole organizations can not qualified which makes it very importance for all organization to maintain a good internal control system maintained by qualified chartered accountants.


Internal control system may be insufficient based on some predicaments. These may include lack of segregation and assignment of duties to accounting staff. Also the scope of duties of internal audit unit are so wide and their scales of operations so low as well as the shortage of qualified staff to carry out internal auditing and accounting duties. Independence of Accounting officer can easily be maneuvered by management which can affect the internal audit system of an organization clearly defined as a result of two or more dishonest staff can collide to override the efficiency of the internal control system. The criticisms of the internal control system have been extended to the banking industry hence this study of internal audit as a tool for effective management.

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