AN ASSESSMENT OF THE EFFICIENCY AND EFFECTIVENESS OF INTERNAL AUDIT FUNCTION OF GHANA WATER COMPANY, CAPE COAST

ABSTRACT
This research assesses the effectiveness of the internal auditors by assessing the factors which determine the Ghana Water Company internal audit effectiveness. The research design selected for this study was exploratory-descriptive and Cross-sectional design. This design was selected because it is flexible and a lot of information could be gathered in the course of the research. The purpose of this study was to carry out an investigation the efficiency and effectiveness of audit unit of the Ghana Water Company.

The researcher used exploratory study design to describe the independent and dependent variable at the Ghana Water Company offices in Central Region. The researcher administered questionnaire to 25 purposively selected respondents’ which included accountants, internal auditors, and other category of staff working in various branches of Ghana Water Company in Central Region. The findings showed audit committee existed in the organization the overall rating on Improvement of control system, risk management and corporate governance was high meaning that they tend to agree that Improvement of control system, risk management and corporate governance was done based on internal auditors recommendations. We can conclude that both stakeholders and internal auditors themselves recognize the critical focus of management under internal audit is analyzed, which require the fundamental rethinking of the internal audit strategy. Therefore internal audit unit of the Ghana Water Company functions effectively and efficiently.


CHAPTER ONE 
INTRODUCTION 
Background to the Study
The management of the public institutions is entrusted with public resources and saddled with the responsibility of managing these resources effectively and efficiently. It is expected that, the public servants entrustedwith the management of public resources at public institutions will give account of how these resources are being managed under their care. In order to ensure proper utilization of these resources entrusted to the local government officials, laws are enacted to control the local government revenues and expenditures.

However, the process of accountability is not complete without auditing, which presently remains one of the most neglected and misunderstood area of the financial management cycle, especially in the public sector (Maru, 2002).Therefore, for an audit to be meaningful the audit unit must be seen to be truly independent and the report produced by internal auditor will assist in providing information for planning, decision making and performance evaluation as well as control of activities especially if such information has certain attributes such as relevance, completeness, timeliness, understanding and comparability.

In global view internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. Globally, it is reasoned that understanding the concept of internal audit is essential for developing an understanding of its impact on the performance of an organization. Internal audit of an entity is strictly interrelated to the structure used by management to oversee the activities of the organization (Chartered Institute of Management and Accountancy, 2008).

Millichamp (2000) defined internal auditing as “An independent appraisal function within an organization for the view of system of control and the quality of performance as a service to the organization. The objective of auditingis to review and evaluate the activities of the organization with a view to express an opinion on the efficiency and effectiveness of management, as well as the adequacy of internal control within an organization.

According to Dandago and Suleiman (2005), both external and internal auditors are expected, based on their terms of engagement and the accounting and internal control system in place, to express professional opinion on the financial statement(s) vouched or examined and be guided by statutory regulations and professional requirement indischarging their duties. Therefore, an auditor should not be seen as a mere watchdog, he/she should learn to ‘bark and bite’, where necessary.
In every country that is administered in a democratic policy, there is the need to be accountable in the use ofpublic resources and in providing effective, efficient and economical (3e’s) service delivery so as to prevent misappropriation and mismanagement of state resources. Toachieve those government objectives, applying internal audit function were the major mechanism forcontrolling and using of all scarce resources available in the corporate organization. Ever morelarger and complex systems require greater competitiveness, thus internal audit has had to becomeever more professional (Van Gansberghe, 2003).

The government of Ghana has launched much initiative to ensure a major change from the old dispensation to one of a democracy, openness, transparency and accountability. As part of these initiatives, series of discussions has been held by the government, the Audit General Department, Controller Accountant General as well as other civil societies to ensure that the maladministration and negligence were highlighted and curbed. The Public Account Committee among others has been formed to check irregularities, non-compliance to regulations and general lack of accountability. Internal auditing is an integral part of the corporate governance mosaic inboth the public and the private sectors (Cohen, 2002).

It is a fact that public sector has a significant role in improving the wellbeing of thecommunities in any nation. In Tanzania, local government authorities fall in the categoryof public sector institutions. These local governments are the ones whose management hasa direct impact on people’s lives in their respective localities (Chacha,2006). In thisway, improving the manner in which these local institutions are managed is likely to besignificance not only on the way they delivery goods and services to the population butalso provide a good image of the public sector institutions within and outside Ghana.

Given this importance of public sector institutions, in the current moment the governmentin Ghana has put much attention on developing and strengthening the audit department/function in the local government authorities. The logic behind this initiative isthat in so doing there is a likelihood of improving the management of these institutionsand hence being able to serve better the people in this era of decentralization. Therefore this research is set to look at the current development in the management of the publicsector, especially the initiative to strengthen the internal audit function in the publicsector.

Statement of the Problem
Internal auditors have the right and ability to access all information in every part of the organizationand their function lies in every activities of the corporate governance system. All the stakeholderswill therefore benefit from having a strong Internal Audit Function which will provide valueto the other cornerstones of corporate governance (Smet& Mention, 2011) because internal auditors can make line managers aware of their responsibility; can act as a consultant in monitoring risk, identifies weakness in internal control system, and facilitates the implementation of risk management as well as contributes to the appropriateness of procedures and operations of the audited body (Cohen and Sayag, 2010; Arena &Azzone, 2009; Dittenhofer, 2001).

Internal audit is an integral part for managing the finance of public organizations. Aconstant complaint in the sector is that internal audit department is too understaffed andgenerally under resourced to make it be fully effective. There is a claim that internal auditis challenged by the inadequate knowledge of Electronic Data Processing (EDP) andhence complicates the efficiency in auditing the computerized systems. The reliance onpaper working has been the order of the day in the auditing function whereas working onpapers does not make the auditing function seem to ruin its efficacy as a crucial management tool for effectiveness of the public sector institutions. Despite these challenges, still the auditing function stands at the centre in the management of institutions. Thus understanding how its effectiveness can be maintained is likely to improve their sustainability and enable them realize their goals and objectives (Adeniyi2004).

However, the 2008-2009 global economic crises (Credit crunch) has undermined the very roles and purposes of the internal audit and above all, reduced the integrity of the internal audit units in promoting good corporate governance. Misappropriation of funds and corruption are now the order of the day in the public sector in all countries due to weak internal control systems (Van Gansberghe, 2005). Centre for Democracy and Development (CDD) of Ghana (2000), reported that government officials misappropriate public funds especially at the local government level and this has resulted to huge government budget deficit, low standard of living, and poor economic performance. Thequestion that everybody will ask is, are the internal audit units effective in this present situation since they are the key element of the internal control systems of every organization? This has motivated the researcher to investigate into the effectiveness of the internal audit units audit as an instrument for improving the management of localgovernment authorities.
Objective of the Study

General Objective
The general objective of this study is to investigate how effective and efficient Internal Auditors at Ghana Water Company is. Specific Objective

Specifically, the researcher tried to achieve the following objectives;

To examine the effectiveness of the Internal Audit at Ghana Water Company.


To assess how efficient Internal Audit at Ghana Water Company is.

To examine the challenges facing the efficient delivery of services by the Internal Auditors of Ghana Water Company.

Research Questions
The research has proposed to answer the following research questions;

How effective are Internal Auditors at Ghana Water Company?

Are Internal Auditorat Ghana Water Company efficient?

What are the challenges facing the efficient delivery of services by the Internal Auditors of Ghana Water Company?

Significance of the Study
Through this study, internal auditors could unearth new approaches to effectively execute their functions as it will discover practical challenges hindering the effective service delivery of internal auditors and offer solution to it. Therefore, this research is very essential to show the effectiveness of the internal auditors byassessing the factors which determines the Ghana Water Company internal audit effectiveness. In addition, this research is important for the empirical evidences for the public sector offices and their implementation of work duties and procedures. Moreover, the study would assist the management of the institution to strengthen its internal control mechanism if there happens to be some weaknesses. Finally, the study will serve as a contribution of knowledge to help future researchers on the same topic. Researchers may fall on this study as a secondary source of literature on their research work.The research will also add up to the stock of knowledge that the future researchers will use in their literature review.

Scope of the Study
The study focuses on the influence of the internal audit functions on the successful conduct in all public sector officesbut due to time, logistical and financial constraints it is out of the touch of the individual researcher, the study is limited to Ghana Water Company, Central Regional Office only. In addition the intent of this study is to investigate the selected determinants of the effectiveness of staff; such as management perception, management support, organizational independence, adequate competent internal audit staff, work done within a given time and presence of internal audit charter in the selected public sector offices.

Limitation
The researcher would have liked to conduct this research on all public institutions but for financial, logistics and time constraints so the research was limited to only Ghana Water, Company Cape Coast. Further, the research was limited by some respondents delay in responding to the questionnaire and given all data needed. The researcher had to go back to respondents to complete or seek further clarification on the data given.

Organisation of the Study
This research paper would consist of five chapters. The first chapter with its sub topics would be introductory parts incorporating the introduction, statement of the problem, research objectives, research questions, significant of conducting the study, scope and limitation of the study, and the methodologies used to conduct this study. The second chapter describes the detail review of related literatures with regard to the internal audit effectiveness and the variables which affect the internal audit effectiveness.

The third chapter expresses the information regarding the sampling techniques used to conduct the research. The fourth chapter is the analysis, discussions and presentation part of the research findings and finally, the last chapter describe about the conclusions and recommendations of the case study followed by the references and appendixes.

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Item Type: Ghanaian Project Material  |  Attribute: 72 pages  |  Chapters: 1-5
Format: MS Word  |  Price: GH50  |  Delivery: Within 30Mins.
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