AN ASSESSMENT OF INTERNAL AUDIT PRACTICE AND CORPORATE GOAL ACHIEVEMENT IN THE MANUFACTURING INDUSTRY IN CAMEROON: A CASE STUDY OF SELECTED FIRMS IN YAOUNDE

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Internal auditing is an essential and widely used approach that improves the financial performance of manufacturing firms. As per Maxwell's (2021) definition, the phrase is characterised as... Internal auditing is a procedure in which an organization's financial records and procedures are examined by an independent party to evaluate their effectiveness. The objective of this review is to offer management with both safeguarding and beneficial services. Internal audit is crucial for a firm to accomplish its objectives by utilising a structured and tailored approach to evaluate and enhance the effectiveness of risk management and control (Charles et al., 2019). 

An internal auditor can be recruited either internally or externally, with the objective of attaining superior services through outsourcing. The internal audit function assesses systems to verify adherence to policies, plans, processes, rules, and regulations (Itimekop et al., 2021). The unit is expected to provide a report on a company's compliance with legislation. The internal audit is a crucial part of the internal control system implemented by management to examine and verify the accounting activities of a company. It is supervised by a professional known as the "internal auditor". The main responsibility of the internal auditor is to assess the functionality of a company's accounting system and evaluate its efficiency and effectiveness (Khan, 2019).

The effectiveness and efficiency of the internal audit should be assessed separately, as there is a possibility for the audit to be effective but not efficient, and vice versa. The internal audit function assesses the effectiveness and efficiency of additional controls imposed by management to streamline administration, reduce costs, optimise resource utilisation, and optimise benefits. (Khan, 2019). The internal audit department is vital in manufacturing industries as it is responsible for supervising and administering the internal control system or organisation. The importance of internal audit in the use of accounting systems is well acknowledged, as it assists to evaluate the operations of the industry (Asher et al., 2021). The internal audit department is essential to the corporate governance structure since it conducts comprehensive examinations of the company's financial statements, accounting records, and adherence to government regulations and appropriate professional standards. The internal audit department must exhibit professional expertise in managing the quality of accounting information (Khan, 2019). Competence encompasses the precise knowledge and skills required for an individual to effectively carry out the responsibilities related with their job. The internal audit department's efficacy enhances the company's operations by ensuring that the financial reports accurately reflect the department's high standards (Khan, 2019).

The manufacturing sector is of utmost importance in Cameroon's economy, since it significantly contributes to employment, economic growth, and general progress. Maximising the efficiency and effectiveness of actions in this sector is crucial for achieving company goals (Ngolo et al., 2022). Internal audit practices are essential in this context since they provide unbiased evaluations of an organization's internal controls, risk management, and governance systems. Internal auditing is essential for maintaining operational integrity and achieving strategic objectives in the manufacturing business (John et al., 2019). It involves systematic and rigorous approaches to evaluate and improve the effectiveness of risk management, control, and governance processes. Internal auditing in industrial organisations is essential for enhancing performance and attaining business objectives. It accomplishes this by identifying inefficiencies, ensuring adherence to rules and regulations, and protecting assets (Khan, 2019).

The manufacturing industry in Cameroon faces numerous challenges, including inadequate infrastructure, volatile market needs, and regulatory constraints. Despite these challenges, the industry persistently contributes significantly to the nation's Gross Domestic Product (Ngolo et al., 2022). Yaounde, the capital city, is home to a diverse range of manufacturing industries, ranging from small operations to large global corporations. These organisations require robust internal audit operations to properly navigate the complexities of their operational environments (Abdul, 2023). Despite the industry's importance, there is a lack of research that precisely investigates how internal audit systems affect the achievement of firm objectives in this specific context. While many firms have established internal audit functions, there is limited study on the efficacy of these procedures and their influence on attaining strategic objectives. The aim of this study is to assess the influence of internal auditing on the achievement of corporate goals in the manufacturing industry of Cameroon, specifically focussing on selected enterprises in Yaoundé. The study seeks to examine the effectiveness of internal audit procedures and their impact on achieving goals in order to acquire a deeper understanding of how internal auditing can improve operational performance and align with strategic objectives in the manufacturing industry.

1.2 Statement of the problem

The manufacturing industry in Cameroon is vital for driving economic development through its significant contributions to employment generation, industrial growth, and economic diversification. In Yaoundé, the capital city and a prominent industrial hub, manufacturing companies must focus on achieving corporate goals like as operational efficiency, financial stability, and strategic expansion to guarantee their success and long-term sustainability.

While auditing is universally recognised as essential, many industrial companies in Cameroon encounter difficulties associated with inefficiencies in their auditing procedures. The utilisation of conventional auditing techniques, combined with a dearth of technological assimilation, a paucity of skilled auditors, and inadequate resources, sometimes leads to audits that are postponed and less effective (Ngolo et al., 2022). These inefficiencies can result in undetected financial imbalances, increased operational risks, and potential non-compliance with regulations, ultimately impacting the financial health and performance of these companies. 

Furthermore, Momo (2021) argues that maintaining independence and objectivity might pose challenges, especially when auditing departments or persons with whom auditors have built professional relationships. The main duty of the internal auditor is to provide an unbiased assessment, and any possible conflicts of interest must be carefully managed. He suggests that the business should adopt defined norms and processes to ensure the independence and fairness of internal auditors. These steps may include the periodic assignment of auditors to different departments, providing training on ethical standards, and implementing a transparent reporting system that encourages the reporting of misconduct without fear of retaliation (Momo, 2021).

In addition, internal auditors may have constraints in terms of limited financial resources, staff, or technology skills, which could impede their ability to carry out thorough audits or effectively handle all elements of the company. Mane (2020) states that the manufacturing industry in Cameroon lacks modern auditing tools and procedures, such as data analytics and computerised auditing software. These technologies possess the capability to enhance the accuracy and efficiency of audits. Organisations must recognise the importance of giving enough resources to internal audit operations. This involves allocating a sufficient money for training, hiring more auditors as necessary, and leveraging technology to streamline audit processes and improve efficiency (Moses, 2018).

In order to achieve corporate objectives in the manufacturing sector of Cameroon, it is crucial to effectively manage and supervise operations, finances, and strategic initiatives. The primary objective of internal auditing is to ensure effective management and adherence to regulatory standards (Wright, 202). However, there is a lack of factual information about how much internal audit methods impact the accomplishment of corporate goals in this specific industry. It is imperative to assess the effectiveness of internal audit systems in Yaoundé, a prominent industrial hub in Cameroon, in contributing to the achievement of company goals. The lack of comprehensive studies investigating the relationship between internal auditing and goal attainment in this specific context impedes our understanding of how these practices contribute to the success and effectiveness of manufacturing organizations. This study aims to address this gap by evaluating the effectiveness of internal audit techniques in certain industrial enterprises in Yaoundé and their impact on achieving corporate goals.

Objectives of the study

The primary objective of this study is to critically assess internal audit practice and Corporate goal achievement in the manufacturing industry in Cameroon. Specific objectives of this study are to:

To find out whether there is a relationship between internal audit practice and corporate goal achievement in the manufacturing industry in Yaoundé

To assess the current internal audit practices employed by manufacturing firms in Yaoundé

To identify the challenges faced by manufacturing firms in implementing effective internal audit practices

To offer recommendations for enhancing internal audit practices to better support corporate goal achievement in the manufacturing sector.

1.4 Research Questions

The following research questions which are in line with the objectives of this study will be answered in this study:

Is there a significant relationship between internal audit practice and corporate goal achievement in the manufacturing industry in Yaoundé?

What is the current internal audit practices employed by manufacturing firms in Yaoundé?

What are the challenges faced by manufacturing firms in implementing effective internal audit practices?

What are the recommendations for enhancing internal audit practices to better support corporate goal achievement in the manufacturing sector?

1.5 Research Hypotheses

To determine the effectiveness of this study, the following research null hypotheses will be formulated to guide the study and it will be tested at 0.05% levels of significance.:

Ho: There is no significant relationship between internal audit practice and corporate goal achievement in the manufacturing industry in Yaoundé.

Ha: There is significant relationship between internal audit practice and corporate goal achievement in the manufacturing industry in Yaoundé.

1.6 Significance of the study

The study is important due to its potential to improve internal audit processes, support the achievement of business objectives, provide valuable insights into the manufacturing industry in Cameroon, contribute to academic research, and offer practical recommendations for companies and policymakers. 

The study seeks to obtain a thorough understanding of how internal audit processes affect the achievement of firm goals in the manufacturing industry. This observation will enhance comprehension of the role of internal auditing in enhancing operational efficiency, financial performance, and strategy alignment. The study will assess the current internal audit processes and their effectiveness in order to identify their strengths and areas requiring improvement. Manufacturing companies in Yaoundé could use this information to enhance their audit procedures and maximise their overall audit operations.

Furthermore, the study will examine the function of internal auditing in achieving organisational objectives and offer practical recommendations for improving the alignment of internal audits with strategic goals. This can lead to improved managerial effectiveness and heightened production within the industrial sector.

Furthermore, the study will focus on the challenges and barriers faced by industrial firms in implementing effective internal audit techniques. Acquiring a thorough comprehension of these challenges can provide valuable discernment into how firms may efficiently address and overcome concerns related to resources, talents, and compliance.

Furthermore, the study provides unique perspectives on the manufacturing industry in Cameroon by focusing specifically on firms located in Yaoundé. This is crucial since this industry may encounter unique challenges and opportunities that are distinct from those in other areas. The findings have the potential to offer useful insights to local policymakers and industry regulators regarding the present condition of internal auditing and its impact on corporate governance and economic development.

This study has the potential to augment the present comprehension of internal auditing in emerging markets, particularly within the setting of Cameroon, which has garnered less scrutiny in the extant literature. It can offer actual evidence to either corroborate or challenge existing concepts and frameworks of internal audit methodologies and their impact on business performance.

1.7 Scope of the study

Broadly, this study focus is to critically assess internal audit practice and Corporate goal achievement in the manufacturing industry in Cameroon. Specifically, this study seeks to find out whether there is a relationship between internal audit practice and corporate goal achievement in the manufacturing industry in Cameroon and assess the current internal audit practices employed by manufacturing firms in Cameroon. 

Further, this study will focus on identifying the challenges faced by manufacturing firms in implementing effective internal audit practices and it also seeks to offer recommendations for enhancing internal audit practices to better support corporate goal achievement in the manufacturing sector.

 The study is carried out in Yaoundé, Cameroon. The respondents of this study will include management and staff of selected manufacturing firms in Yaoundé.

1.8 Limitations of the study

As with any human endeavour, the researchers experienced many minor constraints during the investigation. The main limitation was the lack of extensive literature on the subject, due to the limited availability of data about the evaluation of internal audit practice and the attainment of corporate goals in the manufacturing business in Cameroon. Hence, a significant allocation of time and exertion was necessary to ascertain the appropriate materials, books, or information and gather data. 

Furthermore, this study is constrained by its small sample size and narrow geographical scope, focusing solely on Yaounde, Cameroon. Therefore, the conclusions of this study cannot be extended to other situations, thus requiring further investigation. 

Moreover, the limits faced by the researcher were primarily due to financial constraints, as they are a student without any source of income to sustain themselves. The exorbitant transportation charges at the research location posed a challenge in meeting the expenses for transportation fees.

Furthermore, the researcher faced a time constraint due to the need to conduct this study while still fulfilling the obligations of attending lectures and participating in other educational activities.

1.9 Definition of terms

Audit: Audit is the examination or inspection of various books of accounts by an auditor followed by physical checking of inventory to make sure that all departments are following documented system of recording transactions. It is done to ascertain the accuracy of financial statements provided by the organization.

Corporate governance: Corporate governance is the structure of rules, practices, and processes used to direct and manage a company. A company's board of directors is the primary force influencing corporate governance.

Accountability: Accountability is the practice of being held to a certain standard of excellence. It is the idea that an individual is responsible for their actions and, if that individual chooses unfavorable actions, they will face consequences.

---

---