Abstract

This research was undertaken to ascertain the role which an internal audit can play in public organizations like the Buea Regional Hospital.

The purpose of the study was to find out the functions of internal audit departments and how far their functions have contributed to the overall performance of these organizations.

From the investigation, we discovered that the internal audit department performs various functions which consist mainly of ensuring the production of the accurate and reliable report, limitation of operational inefficiency on the part of the workers, and the prevention of misappropriation of funds.

The researcher is of the view that if the internal audit is established in public organizations, it will contribute immensely towards the overall performance of these organizations through minimizing fraud and extravagant use of funds and inducing workers to give complete and accurate information.

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Over the past years in Cameroon, internal audit has continually and substantially gained rounds in the country’s companies, in private institutions as well as government departments.

This is due to the important necessity which internal audit possesses in the management and control of affairs of the institutions. It is by virtue of this therefore that this research is focused on assessing the benefits of internal audits, specifically in the Buea Regional Hospital.

Flesher (1996:10) suggests that, although the modern work of the internal auditor involves acting at times as a management consultant and auditing for efficiency and effectiveness as much as for financial property, such activity has not always been among the internal auditor’s duties.

The profession of internal auditing has changed considerably over the past half-century. Before 1941, internal auditing was essentially a clerical function with no organization and no particular standards of conduct.

The internal auditing function was essentially an arm of the accounting function because much of the record-keeping at that time was performed manually; auditors were needed to check the accounting work after it was completed in order to locate errors in postings and footings.

Internal audit is an independent appraisal activity within an organization for the review of operations as a service for management. Internal audit is part of internal control and a concept mostly misunderstood by many.

Most of the internal audit activities are aimed at attaining the objectives of an organization. Due to its importance and its overriding role of protecting stockholders’ entries, internal audit is highly demanded into the public corporation by international and national bodies. Thus, this aspect is of prime importance and should therefore be a part of the primary concern (Stettler, 1977).

With the growing recognition by management of the benefits of good internal control and the complexity of an adequate internal control, large organizations have led to the development of internal audit as a form of control over all other forms of control.

A great deal of enterprises in Buea is involved in the use of internal audit as a means of achieving their expected goals (objectives). Although the process has been growing in implementation, a critical study has proven that the impairment of independence of an internal auditor still remains a measure impediment to the success of the system.

Notwithstanding, due care and ethical values still guide the internal auditor in the performance of his duties and functions as a professional.

Enterprises have been known to be operated upon by management who exercise their stewardship capabilities so as to manage the cooperation to the best interest of their shareholders.

Keeping in mind this, management does not do what is always expected of them and as a result, the top management gives an independent body the authority or power to appraise the function of an organization and to report the results thereon to top management to whom they are responsible.

1.2 Problem Statement        

For an economy to grow, there needs to be a high degree of accountability. Accountability for the scarce resources made available by the state at the disposal of managers of state funds.

Corruption has been attributed to embezzlement and is mismanagement of state resources. This then is a high need for auditors which will either guide management (internal auditors) or give an independent appraisal of the truth and fair view of the statements presented by the stewards of the state and shareholders (external auditors).

Therefore, there appears to be a problem of evaluating the performance of public organizations where there are qualified internal auditors.

In this respect, Buea Regional Hospital has a major focus on the controls of its activities so as to obtain the expected results. Thus, internal audits have been identified as a helpful tool to the progress and growth of the Buea hospital though it imposes some costs on the organization.

Hence, to obtain the said benefits, some costs must be inquired about in the process of implementing the system. Such costs are encountered by the management, the internal audits as well as the top management.

The justification of this study is to aid the hospital in the identification and evaluation of the cost and benefits of internal audit activities of the management and control of the organization.

In 2002, Cameroon was admitted into the heavily indebted poor countries initiatives (HIPC) by the World Bank. This indicates that the malaise called poverty is present in our nation (The Herald Newspaper, 2002).

This is contradictory or paradoxical as Cameroon is one of the most endowed countries in terms of natural resources in Africa.

The second rationale is to bring out the importance of the hospital most especially in the milieu of keeping cash services rendered and the disbursement of state funds and broaden our understanding, knowledge in internal audit, and help to develop a professional ground for a career to be pursued.

Finally, to aid propose possible ways by which the problems associated with the problem statement could be resolved bearing in mind the issue of corruption, errors, favoritism, and tribalism.

This will go a long way to access the effectiveness and efficiency of the system as well as the government’s efforts to satisfy the interest of its citizens.

1.3 Objectives of the Study

The main objective is to evaluate the benefits of internal auditing in public organizations in Cameroon and most especially the Buea Regional Hospital. These objectives could be achieved through the following specific objectives:

1. To evaluate the effectiveness of internal auditing in the Buea Regional Hospital
2. To examine the role of internal auditors as advisers to management
3. To show how the implementation of good internal audit activities within the Buea Regional Hospital will lead to the treatment of files and detection of frauds and errors.
4. To make recommendations towards improving the financial position of public organizations in Cameroon

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