Auditing could be seen as an indispensable tool in the management of any business venture or organization. The management of business and organization, provided systems of checks and counter chocks. The users of financial statements i.e. (Bankers, Customers, Shareholders, public government and creditors) repose their unflinching confidence and high credibility on who will show them the true picture of companies profitability and liquidity they are investing their funds.Effective auditing and investigation of any establishment provides means of appraising a company’s performance at any given period. It will as well bring to light the company’s weakness in terms of adequate internal control.
This research is intended to highlight the effectiveness of Auditing in banking sector and other sectors of the economy. This research will also conduct indebt study on how and why a service oriented bank like Obollo community bank  Nigeria limited sees auditing as inevitable tools for managements effective operation.
Also attempts will be made in this work to show why some banks built without adequate checks and controls in their operations and policy objectives are swept into a state of oblivion.
1.0         Introduction                                                              
1.1       Background of the study                           
1.2         Functions and objective of community bank     
1.3         Statement of the problem  
1.4         Objectives of the study                                           
1.5         Significance of the study                          
1.6         Research questions                                               
1.7         Hypothesis formulation                                         
1.8         Scope and limitations of the study                                  
2.0       Review of the literature                                          
2.1         Internal audit                                                                       
2.2         The compliance audit and efficiency audit        
2.3         The system of approach to audit                          
2.4         The objective of auditing                                       
2.5         Appointment of auditors                                        
3.0       Research design and methodology        
3.1         Sources of data                                                       
3.2         Procedure used                                                      
3.3         Research questions                                               
3.4         Population of study                                    
3.5         Sample used                                                           
3.6         Data collection instruments                                  
3.7         Method of instruments                                           
3.8         Data analysis technique                           
4.0         Data presentation and analysis               
4.1       Presentation of data                                                           
5.0         Finding recommendations and conclusions     
5.1       Findings                                                                   
5.2         Recommendations                                     
5.3         Conclusion                                                              
the question of how to increase the efficiency and positive result in audit work in the bank is perennial problem in  Nigeria and one that is increasingly bother some to the generality of the people of this country.
The response has been to up grade the quality of audit staff and increasing the powers conferred on the audit institutions in the banks. The need for training of audit staff in modern techniques of auditing which is more effective and result – oriented rather than restricting themselves to the traditional methods “tricks and turnover” which recent development have proved inadequate have been stressed.
The specific objectives of auditing in the banks are to ensure the proper and efficient use of public funds the development of sand financial management, the orderly executive of administrative activities and the communication of information to the public authorities and the publication of objectives reports. Since these are necessary for the stability and the development of the nation, there is need for making the machinery’s and the method of carrying out these functions effectively so as to produce the desired results.
According to Stelter (1977:24) in the past the emphasis of an audit was in the traditional methods of auditing which has been mainly compliance audit seeming that all books and records comply with the laid dawn procedures and regulations but not there is the need for shift of emphasis to the modern concepts of effectiveness and efficiency. It is essential however, to take a look into these two concepts. Compliance and efficiency, and determine whether to sacrifice compliance totally for efficiency as to modify it and in what precise way, may then criterion of efficiency be pursued.
In other words, what administration legal or constitutional adjustments are necessary only to effect the desired change and to what extent may the change be brought about if there is not going to be any adjustment in the constitution, laws or administrative regulation.
1.1       background of study
Early practices of Auditing as discovered by Archaeologists stated some 3000 BC ago. The Egyptians and Persians used tiny dots aides or sometimes ticking to indicate figures that have been checked against another. Furthermore, the Greeks and Romans were highly interested in public finances. In doing this, the Greeks, who were always suspicious preferred to use slaves as Auditors rather than freeman.
   They did this believing that the salves were more trustworthy since they were continuously placed under torture. Nonetheless, it was argued that in some quarters the freeman who undertook to carry out the job under oath may sometimes be influenced by powerful men in the society.
However, the true principles of auditing as practiced today was first done by Williams of Normandy when they conquered England in 1066 no.
He therefore, took England as his personal property which he retained under his direct control. At other times he leased their properties to his servants who return rendered services to him.
As time progressed, he wanted to know the worth of his kingdom. He carried out one of the most comprehensive audits in history. This he referred to as some stay survey.
This involved the recording of every land holding in England. The authority by which the tenant held it and what the land was capable of producing. This principles of checks and controls finally gave rise to the modern day auditing.
Obollo community bank Ltd was incorporated in 1995 and started operated that year. The bank is owned by about three hundred share holders.
Community bank which is a form of specialized unit banking was introduced in  Nigeria in 1990 National Budget to periodic grassroots financial services to any defined local community whether in the urban and rural areas. The bank extended credit facilities to individuals, societies, corporation, industrialists, etc.
The bank organized mass transit programme particularly Obollo community mass transit programme where some individuals will benefit from the programme. It was through this programme that some of them can now boast of making a living.
Community Banking which is a form of specialized unit banking was introduced in the 1990 National Budget to provide grass roots financial services to any defined local community whether in the urban or rural areas.
The objectives includes the following:-
1.            The facilitation of productive activities in response to the identified needs of the community especially in the rural areas.
2.            The promotion of a national financial services that will integrate all actors at the financial needs of the local community, the guiding principles are self help and community participation.
3.            The provision of financial services to the communities lacking them, which imply the social banking habit and bridging the credit gap of its communities.
4.            The promotion of sense of ability and capability to own and manage a financial institution at the grass roots level;.
5.            The provision of owner for the development of leadership qualities for the management of their own enterprises.
There is a wide misconception in auditors all over the world their work is often misconstrued as fault finding and detective some see them as prospectors and judges and people to be avoided. But in other words the auditor’s job to result on the financial statement prepared by managers and directors of an organization, whether it shows true and fair view. He detects errors and ensures that proper treatment is given to it. He is neither a prosecutor nor a judge. He audits the financial statements and reports its correctiveness and fairness to the users (public). Since the last eight years the ever-sick national economy has been with distress syndrome in the banking industry. this effect eroded the public confidence in banks as custodian of fund. Many financial institutions had gone into oblivion and many others feared sick.
This research work is designed to highlight the essence of effective Auditing in community Banks. There is glaring evidence that Banks do not institute effective Auditing to bring out the fraud that they perpetrate. This work tends to portray the need of effective Auditing in Community Banks.
The objectives of the study includes the following:
1.            To give critical appraisal of auditors work in a going concern.
2.            To disprove the erroneous view that auditors are fault finders and judges.
3.            To bring to bare why auditors are duties are likened to that of dedicated watchdog who barks loudly at the sight of a stranger in its master’s place of abode.
This barking is of two purpose:
i.              To awaken and inform the master of a strangers presence.
ii.            To alert the stranger of any possible attack or – reprisal from the house owner. Both the house owner and the stranger/visitor should keep to the dogs warning – books. An auditor is a watchdog and not a blood hound/fault finder.
4.            To show the extent to which lack of auditors in an organization can cause untold havoc to the organization.
5.            To emphasize the need for proper investigation and auditing in any establishment.
6.            To determine the importance of auditors independence and indispensable nature of his job in a financial institution in a particular area and all other business outfit in general. It is pertinent to state dearly here that auditors, as fax as this research work is concerned, means the external auditor who is hired to audit except where otherwise stated. But internal auditors is taken as an employee of the Bank and equal with others, he is a staff of the bank on establishment, and does not always employ the type of absolute independence enjoyed by his external counterpart.
7.            It intends to be of assistance to all internal auditors in carrying out their duties effectively.
This work reviews the essence of effective auditing in community banks, with a view to highlighting the indispensable position of an auditor’s work in an enviable industry like bank. This piece of work will be of immense help to other establishment and organization both in public and private sector. The need to install a viable internal audit check as a means of internal control should not be over – emphasized.
The prospective investors, promoters, shareholders would find this study very useful. It will serve as an eye opener to item on what it takes to invest in banks. This will also help researchers and those who may wish to make reference to the topic of study may be while undertaking a similar research work.
Government, agencies can install adequate internal control measures to avert the incessant colossal frauds and embezzlement rampant in ministries and parastatals today. For prospective auditors and accountants it is a material of readings. They should be able to understand what auditing is, where to audit, how and why auditing and investigation are inevitable in the business world.
a.            To what extent do you partake in decisions that affect yours bank and your career?
b.            Is it possible for one staff to prepare and pay vouchers in a bank?
c.            How regular have the external auditors visited your bank to audit?
d.            Has there been any case of fraud or misappropriation of banks fund and property?
e.            What type of result does your bank obtain usually after carrying out audit work?
f.             Does the internal audit department issue reports to the management?
g.            To whom does the internal audit department report to in your banks?
h.            How regular is cash count and stock takings done by the internal auditors?
HO:     Management of Community Banks do not use Audit report for effective decision making.
HI:       Management do us Audit report for effective decision making.


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