AN INVESTGATION OF INTERNAL AUDIT PRACTICE AND CORPORATE GOAL ATTAINMENT IN THE MANUFACTURING INDUSTRY

AN INVESTGATION OF INTERNAL AUDIT PRACTICE AND CORPORATE GOAL ATTAINMENT IN THE MANUFACTURING INDUSTRY

 Background of the Study

The capacity of a manufacturing industry's or, more broadly, an organization's members to operate reliably and efficiently to fulfill the industry's objectives is a necessary condition for the industry's sustainability (Daniel, 2000). A significant level of behavior coordination can be achieved in a variety of ways. Managerial and employee supervision in the industrial business is becoming ineffective. However, it may be desirable to keep these regulatory mechanisms in place, but just for a portion of the sector (Brown, 1999). As a result, management must put in place procedures to replace the vacuum in oversight.

A manufacturing industry's financial and corporate goals are underpinned by effective internal systems, in which internal audit practices play an important role in increasing the reliability of the internal control system, which is always aimed at improving the risk management process and, above all, satisfying the needs of internal users (Fama, 2008). Internal auditing is also a good way to assist and improve the system of accountability that executives and employees in the manufacturing business have to their owners and other stakeholders. While stakeholders are interested in return on investments, sustainable growth, strong leadership, and reliable reporting on the financial performance and business practices of a manufacturing industry, the Internal Audit Department provides a reliable, objective, and impartial service to the management, board of directors, and audit committee.

One of the prerequisites for successful strategy execution and achievement of company goals in the manufacturing business is a thorough awareness of the function and value of internal audit. However, the purpose of this study is to look at the impact of internal auditing on the achievement of corporate goals by a group of manufacturing companies in Port Harcourt, Rivers State.

Due to the importance of worldwide competitiveness, achieving corporate goals by manufacturing industries is a big worry these days. The ethical and responsible behavior of its management and staff is one component in achieving company goals. However, the Enron and WorldCom crises at the close of the twentieth century demonstrate a lack of corporate governance (Bertin, 2007). Actions were taken in the aftermath of these financial scandals. In order to overcome the inadequacies of economic and legal support, it has become necessary to give ethical control in the purpose of leading to a deeper understanding of the substance of internal control practice. Ways to quantify the influence of moral actions have been discovered in the public interest, and the manufacturing business must be able to explain its operations (Ethical standards and values), which may be done via internal audit (Mercier 2000).

Manufacturing industry corporate goal achievement may alternatively be defined as "an organization's capacity to design and implement acceptable strategies within the framework of the goals it pursues in order to retain a good reputation" (Bouquin, 1997). A manufacturing business's corporate aim may differ from one manufacturing industry to the next. For example, a manufacturing company may desire to become the world's biggest industry, stay a successful specialized firm, or even be the greatest at achieving the goals it has set. Success in achieving these business goals depends on the capacity to create and implement effective strategies after the purposes have been determined. Internal control is the combination of such technologies that ensures a high level of openness and accountability in both economic and strategic scopes. It is crucial to verify the efficacy and applicability of a certain feature of internal control, most notably the manner of practice, on a regular basis. Internal control auditing is the study and evaluation of internal control and some of its features, as well as the desired outcome. The outcome may aid in determining the industry's effectiveness. It's significant since the manufacturing sectors' daily struggles are to remain competitive in order to avoid being driven out of the market.

1.2   Statement of the Problem

Internal auditing is a function that allows a company to check and evaluate the correct operation, consistency, and effectiveness of its internal controls. Internal auditors should analyze the industry's numerous activities, assess the risks and the controls in place to mitigate them, monitor performance in carrying out assigned obligations, and offer recommendations to enhance security and efficiency (IFACI, 1998).

One of the most important mechanisms of the internal control system is internal auditing. No industrial business can ignore it, even partially, without losing control of a critical survival factor. The internal auditor is an important component of the firm's management team, and he is bound by an audit charter that defines his independence. When the internal audit department fails to satisfy senior management's expectations, appropriate actions should be taken to modernize it (IFACI, 1998).

In any case, the firm must maintain control over the internal audit implementation process. As the manufacturing industry strives to achieve its goals in a challenging economic climate, the business serves as a gathering place for a diverse group of stakeholders who are invested in its success. Because of this complicated circumstance, the researcher set out to learn more about the role of internal auditing in achieving company objectives.

1.3   Purpose/objectives of the Study  

The following are the objectives of this study:

1.  To examine the effectiveness of the internal audit in selected manufacturing firms in Rivers state.

2.  To ascertain the relationship between internal audit practice and corporate goal attainment in the manufacturing industry.

3.  To determine the factors militating against corporate goal attainment in manufacturing companies.

1.4   Research Questions      

1.  What is the effectiveness of the internal audit in selected manufacturing firms in Rivers state?

2.  What is the relationship between internal audit practice and corporate goal attainment in the manufacturing industry?

3.  What are the factors militating against corporate goal attainment in manufacturing companies?

1.5   Research Hypothesis

HO: There is no significant relationship between internal audit practice and corporate goal attainment in the selected manufacturing industry in River State

HA: There is significant relationship between internal audit practice and corporate goal attainment in the selected manufacturing industry in River State

1.6   Significance of the Study     

Considering the importance of the internal audit practice towards the attainment of the corporate goal of the manufacturing industry, this study is coming at the right time as the outcome will educate the management and decision makers of manufacturing industry on how proper practice of internal audit can be used as a tool for the corporate goal attainment. This will also help in the realization of the industry’s long term objectives.

This research will also serve as a resource base to other scholars and researchers interested in carrying out further research in this field subsequently, if applied will go to an extent to provide new explanation to the topic.

1.7   Scope of the Study

This study will cover the activities of the internal audit department in the selected manufacturing industries in Port Harcourt, River State with a view of ascertaining the effectiveness of the internal control mechanism

1.8   Limitation of the study

1.        Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

2.        Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

3.        Due to confidential reasons we did not received the manufacturing industries internal audit reports on time.

4.        The internal audit departments of the selected manufacturing industries were small in size and therefore various types of interviews were not collected.

1.9   Definition of Terms       

Corporate goal: are statements that outline an overall company vision that includes an operating philosophy and specific objectives

Audit: an official inspection of an individual's or organization's accounts, typically by an independent body

Ethics: moral principles that govern a person's or group's or industry’s behavior.

Accountability: The obligation of an individual or organization to account for its activities, accept responsibility for them, and to disclose the results in a transparent manner.

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