THE EFFECT OF AUDITING IN THE DEVELOPMENT OF NIGERIAN ECONOMY

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✎: THE EFFECT OF AUDITING IN THE DEVELOPMENT OF NIGERIAN ECONOMY

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Keywords: THE EFFECT OF AUDITING IN THE DEVELOPMENT OF NIGERIAN ECONOMY

 

RESEARCH BODY

ABSTRACT

The primary objective of carrying out this research was to have an overview of “The Effect of Auditing in the development of Nigeria Economy”. Fifty subjects were used as the population for the research. This research work has been logically divided into five chapters. The first chapter entails the aims and objective of the study, scope of the study, statement of research problem, statement of hypothesis and research questions and definition of terms. Chapter two emphasizes on literature review. Under this, opinion of different writers in journals, magazines and texts in relation to the issues at hand are considered. Chapter three will focus on Data Research Methodology which includes Research Design, Data Collection method, Research problems, Reliability and Validity. Chapter four is on Data Analysis and interpretation of data. This covers how the researcher collected the data recorded and analyzed to put right the issue at hand. Chapter five highlights the summary of the researchers, conclusion and recommendation.

CHAPTER ONE

1.0    INTRODUCTION

Auditing is derived from a Latin word “Audire” which means “To Hear”. In the olden days, owners of business used to hear the report of how their business progresses from the manager of the business. But due to the fact that the primitive ways of keeping financial records which include making signs on board, keeping figures off hand without documentation and lack of mechanical aids for calculation had a lot of problems associated with it. Also, the manager may deliberately decide to hide vital information for the owner of the business or even make fraud. Then the need to employ another worker to act as a watch dog to the manager arises. The new employee is known as “THE AUDITOR”. The process by which the auditor gives the report of the position of the financial statement of a business in a true and fair manner to the owner of the business is known as “AUDITING”. The development of auditing could be traced to the importance of scrutinizing the financial statement of an organisation. To that effect, auditing is regarded as one of the most recently established profession born out of complexity of modern business world. However, it can be traced to an ancient time. Indeed, since men have entered into contractual relationship with one another, thereby establishing a master-servant relationship, the quest to ensure the accuracy and reliability of the resulting information has always existed. The emergence of auditing from a historical perspective was necessitated to protect, the shareholder’s capital investment from dubious promoters. Auditing has been revolutionary and ethical in nature right from the beginning. In the Nigerian perspective, the entire society is so worried about rising waves of theft, robbery, smuggling, corruption abuse of office, nepotism and deculturisation which hinder the country’s economic development. This breakdown in our society discipline which can be said to have accelerated in the last decade has now assumed an alarming dimension; in fact, so alarming that the future destiny of this country is bleak. And if nothing is done to check this ugly and stupendous shameful trend, then the end product of it will better be ignored than experienced. The issue of some act of individuals having some idle funds and some others not being financially buoyant, but have the technicalities to manage business entities led to the operation of limited liability company which are owned by their shareholders and managed by directors appointed by the shareholders. Similarly, public corporation and parastatals are owned and managed by the government. In Nigeria, individuals of course are appointed to occupy various positions and consequently constitutes the management. But one problem which has always existed in this master –servant relationship is, the shareholders or owner of the business being suspicious of the credibility of the reports, tend to have the feeling of the reports containing some errors which may have occurred either unintentionally or fraudulently so the apparent solution to this credibility in both the private and public sectors is to appoint an unbiased and independent person(s) called “AUDITOR” to investigate the financial report prevented by the management and express a professional opinion of the truthfulness of the report to the shareholders or those that appointed him. Auditing the public corporation follows the same procedures are auditing any other form of business. Though public corporation are not profit –oriented organisation, still there is need to audit their books of account to enable the government to know how its subvention are being used and how the income generated from some of the corporation are acted for. However, irrespective of the vital position maintained by auditors, some illiterate members of the society do to see anything good, or the usefulness of auditing. Therefore, this project will highlight on the importance, need and effectiveness of auditing and also enlighten on whoever comes across it about the importance and objectives of auditing in order to form the reliability and credibility of financial statement. Thus bringing about a more economically developed Nigeria. so this project is a token contribution to the work of auditing profession as a vanguard of ethical revolution in Nigeria. It sees financial corruption as a focal point of almost all our ethical problems and as springboard for all other forms of corruption. Therefore, if a determent can be found for financial corruption in our society, then the solution to other problems will follow naturally. The bone of contention on in this write up therefore is that as an ethical function and with its code of conduct, the auditing profession is the natural leader in the current national crusade to reawaken people’s social conscience and to completely eliminate corrupt tendencies for the development of Nigerian economy.

AIMS AND OBJECTIVES OF THE STUDY                                       

Having a clearly defined aims and objectives plays a significant role in any research work. Owing to that, the following are the aims and objectives of this project.

(a)          To assess the effects of auditors in the development of Nigerian economy;

(b)         To assess the auditors efficiency despite the legal restriction here and there;

(c)          Functions or roles of auditors – the societal view point, since it is now obvious that auditors play a very significant role in the development of the country economy as regards the effective management of available resources.

(d)         To highlight the significance and indispensability of auditing and auditors to any economically progressive aspirant nation;

(e)          To kick against the misconception that auditor collude with fraudsters to defraud. And that company’s spending on auditors is a necessary evil thereby wasteful.

1.2    SCOPE OF THE STUDY

Considering the vastness of the subject matter of this project, and the limited time and resources available to carry out this necessary research therefore, this project will not only focus itself on the objective role of auditors but also on their effectiveness; and consequently the impact or effect of auditing in the country’s development. Also, the role of an auditor in the investigation when the need arises and representing their clients in various aspect, and their legal responsibilities in performing their duties. And finally, what the Nigeria economy need for its development.

1.3    STATEMENT OF RESEARCH PROBLEM

The importance of examining the financial statement of an organisation gave rise to early development of auditing. Meanwhile auditing is regarded as one of the most recently established profession, which was necessitated by the nature of modern business world. Since the contractual relationship exists between the management and the shareholders, there has always been the desire to ensure the accuracy and reliability of the resulting information. And how far the auditors have gone in placing confidence on the audited financial statement of an organisation is what I intend to determine in this study. It has also been rumoured that a host of auditors collude with the bad eggs of the management crew to defraud the organisation, which they found themselves. If left for me to decide, I strongly believe there is no atom of truth in that, but since my personal opinion is not enough to determine the genuiness of such critical issue, the determination of he basic answer to such allegation will form a major part of this study.

1.4       STATEMENT OF HYPOTHESIS AND RESEARCH QUESTIONS 

In this study, there are certain questions, which a comprehensive answers is required, viz;

Who is an auditor?

What necessitated Auditing?

What are the basic qualifications of an auditor?

What impact has auditing in an organisation’s financial statement.

Has auditor played a significant role in checking fraud?

Do auditors collude with fraudsters?

Are these rules governing the conduct of auditing?

What are the effects of auditing in the development of Nigeria economy?

1.5    DEFINITIONS OF TERMS 

The following are definition of terms relevant in this study.

(1)         AUDITOR DEFINED

It is a legal requirement that a suitable qualified professional accountant subject accounts of limited liability comparies to an audit at least once in a year called be used auditor. So an audit may be defined as “the independent examination and investigation of books, accounts and vouchers of a business with a view to enabling the auditor to report whether the balance sheet and profit and loss account are property drawn up so as to show a true and fair view of the state of affairs and the profit and loss of the business according to the best of the information and explanation obtained by “the auditor”. It can also be defined as an independent examination of and the expression of an opinion on the financial statement of an organisation by an appointed auditor in accordance with its terms of engagement and the observance of statutory regulations and professional requirement.

(2)         INTERNAL CONTROL

This refers to a whole system of control, be it financial or otherwise established by the management in order to carry on the business of an organisation in an orderly manner; safeguard its assets and secure as far as possible the accuracy and reliability of its records. It is also established to ensure the judicious application of the organizational resources.

(3)         INDEPENDENCE DEFINED

The concept of auditors independence has generated a lot of argument, and different interpretations have been given to it. As regards this study, the concept relates to the ‘INDEPENDENCE OF MIND” of the auditor to independently perform his duties without fear or favour of anybody.

(4)         INTERNAL AUDITING

This can be defined as an independent appraisal of activity within an organisation for the review of operation as a service to management. It is a managerial control which functions by measuring and evaluating the effectiveness of other controls.

(5)         EXTERNAL AUDITING

External Auditing could also be referred to as independent auditing. It is the examination and review of accounts, financial statements and bound of organisation by an interdependent (external) auditor who will after the review express a professional opinion on the truth and fairness of the statement presented to him; and the state of affairs of the organisation. The auditor, who is an employee of an organisation, is normally appointed for a period of one year.

 

Keywords: THE EFFECT OF AUDITING IN THE DEVELOPMENT OF NIGERIAN ECONOMY

 


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Keywords: THE EFFECT OF AUDITING IN THE DEVELOPMENT OF NIGERIAN ECONOMY

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