ABSTRACT
Auditors have a role to play in the economic development of Nigeria, but
this is not achieved because of the problems are uncompromising attitude on the
part of their client’s staff, conflict during report writing, absence of
accounting manuals in the organisations, the ambiguous nature of the Nigeria
companies, decree and other acts.
The project investigates the causes
and solutions to the problems. Form the findings, the true position is that,
the problems of auditors range from the uniformed members of the public who do
not know much about the profession and their right to the attitudes of company
directors. The suggestions for the improvement of the conditions of services
include. Removal of the power to appoint auditors from the directors and
shareholders and to vest it on ministry responsible for trade.
TABLE OF CONTENT
TITLE PAGE II
APPROVAL
PAGE III
DEDICATION IV
ACKNOWLEDGEMENT V
ABSTRACT VI
TABLE OF
CONTENT VII
CHAPTER ONE
1.1
BACKGROUND OF THE STUDY 1
1.2
STATEMENT OF THE STUDY 4
1.3
OBJECTIVE OF THE STUDY 5
1.4
SIGNIFICANCE OF THE STUDY 6
1.5
SCOPE AND LIMITATION OF THE STUDY 6
CHAPTER TWO
2.0
DEFINITION 8
2.1 TYPES OF AUDITORS AND THEIR RELATIONSHIPS10
2.2
DIFFERENCES BETWEEN INTERNAL AND EXTERNAL AUDITOR 11
2.3
RESPONSIBILITY OF INTERNAL AND EXTERNAL AUDITORS 16
2.4
INDEPENDENCE OF
INTERNAL AND EXTERNAL
AUDITORS 17
2.5
STATUTORY ROLES OF INDEPENDENT AUDITORS. 19
CHAPTER THREE
3.0
SUMMARY OF FINDINGS 21
3.1 CONCLUSION 23
3.2 RECOMMENDATION 25
3.3
BIBLIOGRAPHY 27
3.4
APPENDIX 28
CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY.
In the early days of auditing
the prince qualification of the position of auditor was reputation. A manufacturing known for his integrity and
independence of mind would be sought for this honoured position, the matter of
technical ability being entirely secondary; consequently has function, in those
days, was never confused with that of accountant. However, as accountancy
gradually became more complex and concerned with technicalities, auditors found
themselves out of their depth and in turn, became increasingly dependent upon
the expertise provided by accountants. Eventually the audit function itself
became totally dominated by the accountancy profession. It is for this reason
that the description “auditing profession†and “accountancy profession†are
today used synonymously. Herein lies the root of many of the problems which the
profession now faces. Auditing in some forum has existed for a long as men have
been required to account for their transactions, but auditing, as we understand
it now, has its roots some three hundred years ago, in the first division of
interests between those engaged in a business undertaking (the entrepreneurs)
and those who made the finance available without necessarily becoming directly
involved in day-to day management.
The sixteenth and seventeenth
centuries witnesses a great exploration and international trade, involving
Surope in dealings with East and the Americans. The adventurers who understook
these exploits rarely possessed the necessary financial means, and they
consequently depended heavily on outside backing from earthy merchants, bankers and even royalty, as in
the case of Christopher columbas. In England, Queen Elizabeth I . gave
active assistance to a number of such foreign ventures.
The practice of auditing had
its origin in the necessity for the institution of some system of check upon
persons who had the responsibility to record the receipt and disbursement of
money on behalf of others. The ancient states and empires applied some systems
of checks to their public accounts. Evidence abounds that the ancient
Egyptians, the Greeks and the Romans utilized system of check and counter check
as between the various financial officials.
The person whose duty is to
carry out such an examination of accounts become unknown as the auditor, the
word being derived from the latin word “audire†to hear†originally the
accounting parties were required to appear before the auditor who heard their
statement of accounts.
The increase in the volume of
commerce requiring the use of more capital than an individual trader could
raise, compelled him to combine in the partnership with other traders to raise
the requisite frauds, and this tendency was a powerful factor in the evolution
of a more perfect system of accounts. Undoubtedly the employment of large
capital in business had a material effect on the practice of audition. However,
the audit of business accounts became common in the 19th century and
20th century. With the formation of limited liability companies and
the divorce of management from ownership of corporate undertakings, involving
the use of huge sums of capital, the advantages to be gained from utilizing the
services of auditors became apparent to the commercial public generally, and
this resulted in great increase in the practice of auditing. To protect the
interests of the investing public audit that accounts of limited companies
virtually in all economics, is statutorily compulsory.
In Nigeria, we have two major laws
governing the operations of limited companies and these laws make the audit of
accounts of limited companies compulsory.
These laws are:
1. The
companies act, 1968
2. The
companies and allied matters decree 1990.
However, in this case of public
section organisation the constitution of the federal republic of Nigeria
provides their audit.
1.2
STATEMENT OF THE STUDY
This study entitled “The role of independent auditors in Nigeriaâ€
which attempts to study the roles played by the auditors in the development of
our Nigerian economy in the recent past.
THE SUB-PROBLEMS ARE:
1.1
knowing the history and development of audit
1.2
The problems encountered by the auditors in the course
of their work
1.3
Whether their external auditors reports are taken as
seriously as they should.
1.4
Whether the incident of frauds and irregularities have
reduced considerably in the past few years.
1.5
To make recommendation on how to improve on any set
back suffered by the auditors.
1.6 Verification of
accounts and statements prepared by a client or his staff.
1.3
OBJECTIVE OF THE STUDY
The study intends to
enlighten people on the appointment, duties, rights, liabilities, remuneration
and removal of auditors among other things. This will enable them to engage the
services of auditors at all times. Most people do not know the difference
between the functions of an auditor, which is to check and report upon the
completed work of others, and those of the accountants which is to prepare
accounts from a set of book that is agreeing the trial balance and there after
preparing the profit and loss account and balance sheet. This project work will
enable them to know that for an auditor to prepare accounts as well as perform
an audit, he will charge separately for his accounting work.
1.4
SIGNIFICANCE OF THE STUDY
This work
will enable any student who intends to study the course in feature to make use
of this work both in their academic and research programmes. The
recommendations in this research work will help to solve some of the problems
encountered by the auditors since this work will be kept in the library for
reference purposes, through there is always room for improvement on the work by
other researchers. It will also be useful to research students both from this
school and others.
1.5 SCOPE
AND LIMITATION
Independent
auditors are found all over the country. Researcher was unable to cover the
country as a whole because of its vastness, as a result, the researcher wishes
to limit his work within Kaduna, Abuja and Enugu State with their main office in Lagos. The researcher has tried as much as
possible to carryout an elaborate research programme but this was not done due
to some limitations. This project work is limited by lack of enough fund needed
to cover all involve, like transport fare etc, and also inadequacy of time due
to lectures and other school activities, which hindered the carrying out of an
elaborate research.
Since one
of the methods of collecting data is by interview and most of this people
interviewed were lecturers, independent auditors (in practicing firms) and
audit staff, the project writer had the problem of not meeting these people at
the appropriate places and most of them are not found on seat. Some of the
interviews held were interrupted by official assignment.
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