CHAPTER ONE

1.0   INTRODUCTION

The origin of auditing is as a result of the separation of ownership from control. It is instituted to protect the interest of the owners by ensuring that financial statements are justifiable. Because of the separation of the ownership from control, it becomes necessary of those managers entrusted with owner's financial reports (stewardship reports) to be accountable to their employers.

Auditing to some certain extent has been in existence for a long time as far as man is required to account for transaction. The term "AUDIT" comes from a Latin word, "Audirea" which means "To Hear". It derived this name when in ancient times, the accounts of an estate are checked by having them called out by those who are compared with those authority and owners. That is, the king and his representatives who listen.

The need for auditing over the years has gained acceptance due to the increasing volume of work and business activities and because the business are not being run by the owners (shareholders) but by managers, this usually create credibility gap that must be filled by an independent third party usually referred to as AUDITOR.

It is pertinent to note that the inspection division of bank is functionally synonymous to the Internal Audit Department of any organization or company. As such, the two words, "Internal auditing and Inspection" will be used interchangeably. A definition of an understanding of the meaning of internal auditing will serve as a good starting point for the discussion.

It is practically difficult for an internal auditor to possess any reasonable degree of independence in mind and attitude because of the management influences on the terms, reference and scope of work. Infact, one area of interest to the external auditor is assessing the degree of independence enjoyed by the internal auditor. To achieve this independence, the following must be put into consideration:

1. They should have an unrestricted access to records, assets and personnel.
2. Freedom to report to higher management and where it exists in audit committee.
3. They should have non-audit work.
4. They should work with an objective frame of mind.
5. There should be no conflicts of interest or any restriction placed on their work

1. 1. This material content is developed to serve as a GUIDE for students to conduct academic research work
2. 2. As a source for additional understanding of the subject.
3. 3. As a source for ideas for your own research work (if properly referenced).
4. 4. For PROPER paraphrasing (see your university definition of plagiarism and acceptable paraphrase)
5. 5. Direct citing (if referenced properly)
Thank you so much for your respect to the authors copyright.