ABSTRACT

Management audit is an audit that evaluates the efficiency of management at all levels throughout an organization with a view to recommend improvement in areas where effectiveness is not assured. The study sought to examine Management audit as a tool for achieving organizational objective, a study of Ebonyi State Transport Corporation (EBOTRANS), Abakaliki.Here in this study, focusing on 95 filled up survey questionnaires by both Management and Staff drawn from various Departments of Ebonyi Transport Corporation, Abakaliki Metropolis, in determining the following specific objectives,Management audit on the level of fraud and misuse of funds,income level and efficiency and transparency on accounts record keepingEbonyi State Transport Corporation (EBOTRANS). From the chi-square test conducted it has found that; Management audit significantly affects the level of fraud and misuse of funds, income leveland efficiency and transparency on account records, which was proven by the calculated values of 81.1, 188.7 and 182.7 being greater than the critical value of 9.488. the study The only sure way to ascertain whether the management is managing well, is by using the relevant tools for effective management in carrying out functions. The ascertainment of the degree of effective performance by management is not just through internal audit.  Statutory audit should as well include the use of management audit process as a tool for improving managerial efficiency, this will go a long way to ensuring the achievement of the company’s overall or corporate objectives. And the following recommendations were made, that the organization controlling functions of management should be properly recognized and regularly appraised to detect the bottlenecks and remove the coy in the wheel of progress of the company and the powers and duties of the company’s internal audit department and external observers should be reinforced to facilitate its being more effective.

 

 

 

TABLE OF CONTENT

APPROVAL   ii

CERTIFICATION   iii

DEDICATION   iv

ACKNOWLEDGEMENTS  v

ABSTRACT   vi

TABLE OF CONTENT   vii

LIST OF TABLES  x

 

CHAPTER ONE: INTRODUCTION    1

1.1              Background of Study   1

1.2              Statement of the Problem    4

1.3              Objective of Study   5

1.4              Research Question   6

1.5              Research Hypotheses  6

1.6              Significance of the Study   7

1.7              Scope of the Study   8

1.8              Limitation of the Study   8

1.9              Definition of Operational Terms  9

 

CHAPTER TWO: REVIEW OF RELATED LITERATURE    11

2.1              Conceptual Review    11

2.1.1          Concept of Auditing   11

2.1.2          The Need for Audit  13

2.1.3          Roles of Auditing in Organizations  13

2.1.4          Definition of Management Audit  14

2.1.5          Management Audit Variations  15

2.1.6          Scope of Management Audit  18

2.1.7          Audit Personnel/Audit Standards  18

2.1.8          Purpose of Management Audit  19

2.1.9          Functions of Management Audit  20

2.1.10       Planning and Controlling Audit  21

2.1.11       Management Techniques  22

2.1.12       The Need for Effectiveness and Efficiency in Management Audit of Ebonyi State Transport Corporation (EBOTRANS)  24

2.2              Theoretical Framework   26

2.2.1          The Agency Theory   26

 

CHAPTER THREE: RESEARCH METHODOLOGY    28

3.1              Research Design   28

3.2              Area of the Study   28

3.3              Sources of Data   29

3.3.1          Primary Source of Data   29

3.3.2          Secondary Source of Data   29

3.4              Population of the Study   29

3.5              Sample Size Determination   29

3.6              Instrument of Data Collection   31

3.7              Methods of data collection   31

3.8              Validity of the Study Instrument  31

3.9              Reliability of Instrument  32

3.10           Data Presentation and Analysis  33

 

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS   34

4.1              Response Rate   34

4.3              Response Analyses  36

4.4.1          Test of Hypotheses  42

 

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS   48

5.1              Summary of Findings  48

5.2              Conclusion   49

5.3           Recommendations  50

REFERENCE   51

APENDIX 52

 

 

 

LIST OF TABLES

Table 4.1:        Respondent Rates Table  34

Table 4.2.1:     Gender Distribution of Respondents  35

Table 4.2.2:     Age Distribution Table  35

Table 4.2.3:     Level of Education  35

Table 4.2.4:     Years of Working Experience  36

Table 4.3.1:     Management Auditing has significant influence on the level of                 fraud and misuse of funds in an organization. 36

Table 4.3.2:     There has been a reduction on frauds by staff in EBOTRANS                           because of the use of management Audit by the Management of EBOTRANS. 37

Table 4.3.3:     There has been a reduction on the misuse of funds in EBOTRANS because of use of management audit by the management. 37

Table 4.3.4:     EBOTRANS, Abakaliki has been positively affected by the                        use of management audit for identifying and preventing fraud                    and the misuse of funds. 38

Table 4.3.5:     EBOTRANS has significantly reduced their cost of operations                      due to use of management audit as a tool in the corporation. 38

Table 4.3.6:     Management Audit significantly affects the level of income of EBOTRANS in Abakaliki. 39

Table 4.3.7:     There is a positive relationship between management audit                         and income level of EBOTRANS in Abakaliki. 39

Table 4.3.8:     High income generation can be said to be one of the benefits                    of applying for management audit to the affairs of EBOTRANS. 40

Table 4.3.9:     Since the adoption of management audit tool in EBOTRANS,                   financial records can be said to be transparent and delivered with accuracy and good timing. 40

Table 4.3.10:   Management Audit has led to the training and retraining of staff                      for careful and proper handling of financial records/transactions           of the firm. 41

Table 4.3.11:   Transparency on accounts records has been a problem affecting EBOTRANS from its inception. 41

Table 4.3.12:   Management Audit if continued will aid the management in                  imbibing the culture of efficiency and transparency on account record                   handling in EBOTRANS. 42

CHAPTER ONE

INTRODUCTION

1.1     Background of Study

Management audit aids the management of an Organization by providing it with information and analysis, useful for the process of control. According to Eze, (2001) Management audit is an audit that evaluates the efficiency of management at all levels throughout an organization with a view to recommend improvement in areas where effectiveness is not assured. Management audit can also be significant in financial accounting area. For many years now, stockholders, financial analysts, potential investors and other interested parties have been concerned with the annual reports of major co-operations and the attached letter from the president of the corporation. The concern has been that though a financial audit of records of the company has been performed and opinion had been rendered. There is no additional method which the outsider could use to evaluate the performance of management in addition to evaluating the performance of the company. The theory of management audit parallels that of financial audit. 

The purpose of the audit is being the attestation of Management’s representations by an independent examiner.By attestation, it refers to the reliability of management statement regarding its own decisions as proven by an independent third party. The auditor’s financial statement examines the performance of the company accountable to the stockholders of its decisions. On the basis of the financial statement, the shareholders or potential investors, evaluate the performance of the company in financial terms, net profit, earning per share etc. Likewise, the management audit is a way of evaluating the performance of management in regard to the decisions made, the efficiency of its operating and the attainment of corporate goals.

A major challenge in implementing a management audit, therefore, is related to the selection of audit personnel. The auditors, of course, must be competent in background, experience, and professional ability. But in addition, they must demonstrate an ability to deal successfully with human relations problems. In other words, they must be able to objectively appraise the actions of others without generating undue suspicions and, thereby, adding to a set of already strained conditions. As already noted, the natural feeling of someone being audited is one of defensiveness; i.e., the auditors are working for the boss who is “out to get me.” This attitude must be avoided. To do so, the better auditors will establish a pre-audit condition expressing their willingness to discuss their evaluation with the affected personnel before it is reported to higher management. In many cases this will evolve into a negotiation-discussion process whereby those concerned begin to view the audit as a way in which weaknesses may be pinpointed and their performances (and rewards) improved.

Most management decisions are based on financial quantitative and qualitative information obtained from the record of the business for best decision, therefore, the information must be relevant, timely and accurate. Hence, in order to prevent friction and ensure the smooth running of the organization, there should a clear structure of authority defining the responsibilities of each official or department special duties should be assigned to staff with the relevant skill and performance. To prevent bottleneck in the procedures a definite arrangement should be made for staff to take their annual vocation to replace those who are absent. It is in the process and context that management audit starts. With the implementation of the management audit, the management of organizations would openly become more accountable for their actions to outside observers. To this date, there has been little empirical research to determine the potential value of the management audit to users of the willingness of management audit process. However, the management audit concept, if carefully designed will prove to be a most important development in the management appraisal field, with a view to improving management efficiency.

This research is intended to investigate the extent to which management audit is applied by organizations in Nigeria for example, in management performance evaluation, with a view to achieve this, delve into discussing management audit as a specialize aspect of audit in general. It will go further to explain the important of management audit in an Organisation, the extent to which it is utilized by organization as a tool of improving management efficiency made. 

1.2     Statement of the Problem

In the system of Organizations, management audit is not only intended to maintain an adequate method of processing accounting data, but also to safe guard the company against possible financial loss due to fraud or errors.

Every management audit, no matter how badly needed or efficiently implemented, is likely to generate some human relations problems for the firm concerned. A generally receptive management attitude must exist throughout a firm if an audit is to prove effective. If an audit is imposed on the firm by a dictatorial management, the chances for success are small, indeed. Line management must not fear the audit nor look upon it as a threat to their job security. If such an attitude does exist, the audit is open to sabotage at numerous phases and the results, therefore, will be lacking in the needed credibility.

There is also the overriding need on the part of the management to ran the business in an orderly manner. There are so many problems which affect management Audit in the organizations in spite of other related problem of this study are those caused by poor internal control system, inadequate Training and Re-Training, Bad management, staff negligence, inadequate knowledge and experience of staff, security arrangement and use of sophisticated accounting machines and also poor remuneration. A part from these, when appropriate recognition is not recorded to the Internal Audit department the status of the head of the department is always lower and therefore inferior to the states of the Head of Department. Heads of other Department regard the head of internal audit department’s subordinate offer in power, authority and responsibility. 

1.3     Objective of Study

The main aim of the research work is to critically examine the use Management audit as a tool for achieving organizational objective, a study of Ebonyi State Transport Corporation (EBOTRANS), Abakaliki. While the specific objectives are outline below;

1.     To ascertain the impact ofManagement audit on the level of fraud and misuse of funds in Ebonyi State Transport Corporation (EBOTRANS) in Ebonyi State.

2.     To find out if Management audit significantly improves the income level of Ebonyi State Transport Corporation (EBOTRANS) in Ebonyi State.

3.     To determine the impact of Management audit on efficiency and transparency on accounts record keeping in Ebonyi State Transport Corporation (EBOTRANS).

 

1.4     Research Question

1.     How does Management audit affect the level of fraud and misuse of funds in Ebonyi State Transport Corporation (EBOTRANS) in Ebonyi State?

2.     Does Management audit significantly improve the income level of Ebonyi State Transport Corporation (EBOTRANS) in Ebonyi State?

3.     How can Management audit be used to achieve efficiency and transparency on account records of Ebonyi State Transport Corporation (EBOTRANS)?

1.5     Research Hypotheses

H_o1: Management audit does not significantly affect the level of fraud and misuse of funds in Ebonyi State Transport Corporation (EBOTRANS) in Ebonyi State.

H_A1: Management audit significantly affects the level of fraud and misuse of funds in Ebonyi State Transport Corporation (EBOTRANS) in Ebonyi State.

H_o2: Management audit does not significantly improve the income level of Ebonyi State Transport Corporation (EBOTRANS) in Ebonyi State.

H_A2: Management audit significantly improves the income level of Ebonyi State Transport Corporation (EBOTRANS) in Ebonyi State.

H_o3: Management audit cannot be used to achieve efficiency and transparency on account records of Ebonyi State Transport Corporation (EBOTRANS) in Ebonyi State.

H_A3: Management audit can be used to achieve efficiency and transparency on account records of Ebonyi State Transport Corporation (EBOTRANS) in Ebonyi State.

1.6     Significance of the Study

The study explored management audit as a tool for achieving organizational objective, a case study of Ebonyi State Transport Corporation (EBOTRANS), Abakaliki. Therefore, this study will be of great benefit to the following groups;

Ø Government: It will be useful to the government of the people, to adopt and implement good economic policies that will boost the management of public corporations in Ebonyi State.

Ø THE MANAGEMENT: It will provide information for the apex policymakers and management boards in order to fashion out dynamic and reliable reforms and policies to accelerate the performance of firms through management audit, with respect to Ebonyi State Transport Corporation (EBOTRANS), Abakaliki, as a case study.

Ø Investors: This study will be an eye opener to foreign and local or private and public investors to properly ascertain what part of the economy is yielding more in order to maximize their returns on investment in Ebonyi state.

Ø Academic Field: This study will also contribute to the archive of literatures written on Management audit as a tool for achieving organizational objective.

1.7     Scope of the Study

The study is designed to examine the use of management audit as a tool for achieving organizational objective, a case study of Ebonyi State Transport Corporation (EBOTRANS), Abakaliki, Ebonyi State.

1.8     Limitation of the Study

The limitation of the study, like many others, is constrained by prohibitive cost and short-time available for the study. The mere fact that the study was carried out as a study research project suggests the numerous financial landscape of the study. In addition; the limitations of the study were observed in the areas of finance, time and data collection. In terms of finance, the cost of transportation in search of data was exorbitant.

On the part of time, the study was carried out concurrently with school activities. Moreover, the period given to carry out the research was relatively short; more comprehensive analysis was not possible. Meanwhile, notwithstanding the aforementioned limitation or prohibiting factors, the study remains a special compendium the study of Management audit as a tool for achieving organizational objective, a case study of Ebonyi State Transport Corporation (EBOTRANS), Abakaliki.

1.9     Definition of Operational Terms

ü Appraisal (often called performance appraisal): Is the process during which the progress performance, results (and sometimes personality) of an employee are reviewed and assessed by his immediate superior and in many instances by other senior managers.

ü Financial statement:The preparation of financial statement is a necessary part of every business no matter what the form of ownership or the type of business activity. Because these statement show the financial status and progress of company. They are of interest to managers, owners, the leaders, the employees and those are interested and have concern for the business.

ü Investment:This includes stock and bonds of other companies, or other property that the company has purchased with the expectation of a financial return.

ü Investors:They are prospective businessmen that are financially, balance with the intention to promote financial ability of a company.

ü Management Audit:A management audit is usually a subjective comparison of a rather detailed breakdown of the responsibilities of management with actual performance or with company policy in regard to each item.