CO- OPERATIVE AUDIT AND CONTROL IN NIGERIA
MEANING OF CO-OPERATIVE AUDIT
Co-operative audit is the independence examination of the financial statement of co-operative society by an auditor to form an opinion on whether the statement show a true and fair view of the state affairs the enterprise and whether it companies with the provision of the status establishing it.
It financial record of the financial secretary of co-operative society shall from time be examined by an auditor to ensure prudence’s on the part of the check on him.
Auditors audit statement of accounts of an enterprise prepared by the enterprise to report on the reliability of the information contained there in. They audit the items in the financial profit and loss account.
Auditors also audit the record of finances and the book –keeping of an enterprise to ensure their reliability for the preparation of financial statement. To ensure internal control of the enterprise etc.
METHOD OF COLLECTION
Data collection were decoded, grouped into frequencies and arranged in tables for easy reference. To lease the hypothesis the researcher would apply the simple statistical method of quantitative analysis of frequency distribution and parentage.
DETECTION OF ERRORS
Errors of any types have been haunting the proper and adequate auditing of various organizations especially co-operative society. These are therefore, various types of errors moded to be examined in the auditing of co-operative society. They include the followings:
These arise when transaction are incorrectly recorded either wholly or partially. They include errors of casting posting and calculations. For instance, posting of debt of A instead of B. posting to Mr.Nweke’s account instead of Mr Nwike’s account.
ERRORS OF OMISSION:
These means when transaction are left either wholly or partially recorded. The errors will not effect the final balance.
ERRORS OF PRINCIPLES:
These arise when an account is fraudulently or wrongly recorded. This may be due to the following:
- Lack of knowledge of the principles of account. For instance, a clerk, not knowing whether an item should be treated as a revenue or capital expenditure of a revenue item may be posted to the wrong class of revenue accounts.
- International omission of the transfer or registered account of capitalized loss, example defected expenses.
- Revenue item may be treated as an asset of liability instead of as an expense, a felly paid to Mr A. debited, to Mr.A’s account instead of salary account.
COMPENSATION ERRORS:
This is one which is counter balance by the trial balance, for instance, the under casting of an expenditure by N100. the profit and asset are here by increased improperly.
2.3 DETECTION OF FRAUDULENT ACTS:
Frauds are dishonest activities performed with a view to cheat or give take impression of the act of criminal deception to obtain an illegal or undue benefits.
Act of Fraud: Defalcation: This mean making some enterprise in order to misappropriate some goods or money. This can be done through:
- Omission of receipt.
CASH BOOK
| Dr. | Cr |
| Bal B/D 100.00 | `postage 20.00 |
| Loan interest 50.00 | Loan issued 40.00 |
| Entrance fess 10.00 | Bal.c/d 100.00 |
| 160.00 | 160.00 |
If a fraudulent secretary wants to embezzle some fund be may loan interest of N50.00. thus the balance carried down will now be N50.00 from a member and ask him to come back later for a receipt. He may also issue a receipt but letter cancel the duplicate copy because the customer must have gone with the original receipt. A care free auditor may not care to check this but goes on the tick the duplicate. Here, the auditors has to ask the secretary about original if the duplicate is cancelled.
Defalcation can also arise through fictions payments in the cash book or stock records in the cash of goods. This is really difficult to discover, but the auditor can defeat this nature
Again, fraudulent manipulation of accounts can be committed not necessary with intention to misappropriate but with other hidden motives. This is equally very difficult to discover as it is generally perpetrated by directors of managers. This is where the management wishes to boaster up the concern by showing fiction assets. They occur by the following means;
- To boast a business which is not fairly well. This is giving the business a good image by manipulating the accounts in order to show that the business is doing well, but in reality the business is not doing well. This is fraudulent.
- Also board of directors that wants to earn the commendation of the members. The chief executive the secretary or the manager can manipulate the accounts in order to give a fake view of the business either to the shareholders or members of public.
- If the management wants to raise a loan for the business it can falsify the accounts in such a way that the assets indicate a successful and lucrative business. The Banks may on the basis of this, grant the loan.
- In there to have a higher bid on the sale of a business concern, the value of the assets may be inflated.
- To earn commission on the part of the employees, by manager of secretary. The accounts may be manipulated to show high surplus and the commission payable will be high.
As this is committed by responsible and trusted officers of the co-operative society, the auditor must be particularly vigilant if he is to discover it is as probably he will be given false information and explanations.
2.4 EXTENT AND CONSEQUENCES OF NON ORGANISATIONAL AUDIT:
ECONOMIC PREDICAMENT:
From time to time, an auditing programme needs to be carried out in a co-operative organisation. Failure to execute this very vital role would amount to a lot of economic political, socio and international problems confronting the organisation. This will go a long way to affect the economic standard of the every organisation to maximize profit and establish a reasonable economic standard. But, where such standard fails to be established smooth running and management of such organisation will be in jeopardy. For instance, when a co-operative society is not well audited for detection of some draw backs such as fraud, its continuous and smooth administration will be at negative sight.
As a result of these factors the aim of such society would not be achieved. This very misconception could leads of result into economic problems management problems and social problems. Once our respective societies are not adequately audited for better and future planning, the resultant effect will be a state of economic predicament. This is because, each and every co operative society condition of the people concerned.
Again an audited account can be need for financial and other in negotiations with the third parties. That is, if a society wants to engage in trade relationship or credit transactions, the business partners will like to know the financial state of the society and this is possible through the audited accounts of the society. But, where the accounts of the society is not audited, such a trade relationship or international transaction would not be implemented. This is because the business partners would aim and see such a transaction as risk loose such a transaction which would have been beneficial to it for both economic and social values.
All in all, a co – operative society established in a country helps for the national economic standards. This is because each co-operative society is being taxed by either revenue. When a co –operative society is talked and it is able to pay the tax due to it, it will definitely mean that the society is being well managed, this, it is annually being audited.
Finally, it is a natural phenomenon, that a well audited co-operative society which is well or adequately audited is a risk venture and as well a failure. It is, there fore, a condition. Sine qua non that a co –operative society needs to be well audited. If, our respective co-operative societies are not audited or not properly and adequately audited the economic situation of the state of predicament. But the earlier our respective co-operative societies are audited the better for us.
- LACK OF JOB OPPORTUNITIES
Again, it is well known that inadequate job opportunities confronts a society, nation or people who are not able or determined to manage an organisation well. This is observed when a co-operative society is not well audited or not entering audited. It is a thing of reality that audit programme aims at detection of errors, frauds and irregularities in an establishment. But, where this very important programme fails to take place all the above mentioned evil motives will take place. Take for instance, where a co-operative society fails to carry out audit programme for three to four consecutive years, the obvious thing that will be fail such a co-operative society is out rightly wounding up why? Because the accounts of the society might have been totally exhausted. Definitely, frauds, errors, irregularities and inflation of stocks would be the other of the day. When the society winds up or goes into liquidation, it will amount to loose their source of revenue, secondly the employees and other top officials of the society will also lose their jobs respectively. All in all, if this important auditing programme fails to take place in about three quarter of our respective co-operative societies, lack of job opportunities will spread throughout the entire nation. This could then result into social, evil and criminal disorder in our country, for instance, as a result of mass liquidation or winding up of our co-operative societies. Those employees of the cooperative societies would definitely become jobless, and the next view that readily comes to their mind would be of evil and criminal deception. That is, in order to make ends meet, they will take to evil things such as jobless, looking killing and so on. The feminine among them will take to prostitution; thus giving birth to an unwanted pregnancy. Some of the babies are being thrown away; thus a great deal of human waste in our country.
Summarily, audit programme is viewed as a very important task awaiting any co-operative society or any establishment really meant to achieve its objectives and goals. An edge says that, justice denied is justice delayed. This very statement points to the fact that once we fails to audit and control effectively our respective co-operative societies we are actually cultivating a land for our own regret and failure.
Finally, an organisation, society, nation, state or even community needs adequate control. Because with controlling and planning future activities are foreseen and are made to appear simple. To plan and control a co-operative society effectively, the unforeseen contingencies would be detected and put out of place in order to facilitate smooth administration, and management. And earlier this is done, the better for us.
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