Accounting Information in Organization

CHAPTER ONE

1.1 INTRODUCTION AND BACKGROUND OF THE PROBLEM

Accounting Information at an organization is used by a number of users both internally and Externally. Management of organizations is responsible for preparation of the accounting Information, through the accounting department and internal audit unit for assurance of their reliability and integrity of accounting information. Users of accounting information consist of managers, creditors, suppliers, Government Institutions, TRA and many others. These users have different needs for the Information. Decisions are made by these users basing on information produced. The decisions made have a lot of economic impact to the users. Thus integrity and reliability of accounting information is an important issue for these users. In practical situation, there are users of accounting information such as manager and investors have been the victims of unreliable information which cause a loss to them, although the organizations which produce those information have internal audit units. These circumstances lead to a need for understanding the role and scope of internal audit firm in preparation and presentation of accounting information. The study needs to show also some challenges if present faced by internal audit unit within an organization. On the other side, there are external auditors who mostly rely on the work of internal auditor in fulfilling their statutory duties of forming an opinion of the truth and fairness of financial Statements.

Internal audit unit also have to play a role to ensure reliance placed by external audit is worth of it. Because if external audit rely on internal auditors who are not effective will have adverse effects on the users of accounting information. Thus external audit must ensure that the auditor’s consideration of the internal audit function is adhered to (ISA 610). Thus, the purpose of this study is to assess the contribution by the internal audit unit in providing assurance on the reliability and integrity of accounting information and the impact it has on the economic decision made by management and external users.

1.2 STATEMENT OF THE PROBLEM

Accounting information are tools used by management and other external users in making their economic decisions. The information produced is expected to be free of material misstatements so that it may not affect the decisions made by users of those information. Internal audit unit in organizations are assigned many role and duties of financial and non-financial in nature. They are also involved in ensuring reliability and integrity of accounting information. But the events where users are affected by materially misstated accounting information raised a question on the effectiveness of internal audit in achieving integrity and reliability of accounting information. The aim of the research