In an attempt to analysis the importance attached to auditing as a tool for certifying the financial statement of business enterprise, the researcher had to be very briefly re-cap the origin of auditing and above all those factors that in the first instance necessitated it. Auditing, it was noted became very prominent in the business cycle the world over precisely in the 17th century following the inception of company form of business. The birth of this form of business arrangement allowed for the severance of this severances the need for accountability arose, and auditing has to be employed to give credibility to such stewardship reports.
Furthermore, the concept of auditing was defined and subsequently classified under two board groups namely according to the nature of work. Also, audit objectives were identified and analysed into primary and secondary objectives respectively. More so, light was shed on elements and content of every audit report, type of audit reports and opinion as well as the meaning significance and those factors.
1:1 BACKGROUND OF STUDY
The concept of auditing data back to antgenty, the earliest traces of its existence was found in Italy and Egypt amongst great landowners of the middle ages.
However, according to afounka (1993), statutory audit which incidentally forms the main thrust of the research “arose sequel to the inception of company form of business in the 17th century for trading and other purpose”.
This development made it possible for investor to commit their resources in a business without necessarily getting involved in the administration and management of such business. With the passage of time, this practice was further modified such that there was a total split between the ownership and management thus, while share holders retained ownership, the board of director took change of management . under this arrangement it is required that the management should report back to predetermined intervals to the owners of the business they hold in trust. But there are chances that such stewardship report might contain errors, misleading by deliberately or failure to disclose relevant. Information, it then follows that these possibilities will naturally give management periodic report insufficient credibility.
Therefore, it is such probability that under scores the essence of auditing and exercise carried out in accordance with the law to give
’´a stamp approval on the stewardship report” the need for auditing is heavily on the fact that by giving justification to he accounts of stewardship, users off accounting information namely:. Shareholder, investors, employee, government agencies such as accountants, economists e.t.c. can conveniently rely on such reports for sound economic decision making. It is this understanding that necessitated the making of auditing very imperative to all corporate bodies on annual basis by such government legislations as company and allied matter degree 1990. to ensure that auditor discharge this responsibility efficiently and satisfactorily, they are given unimagination powers and rights.
1:2 HISTORICAL BACKGROUND OF NIGER GAS LIMITED
niger gas ltd. Commenced operation in 1962 following it official commissioning by government of the then fastern Nigeria.
However due to change in the political structure of Nigeria occasioned via states creation, Enugu state government at present holds controlling shareholding interest with others S.O ALINTA, E.M MICHILLETLE, AND CENTRAL INVESTMENT COMPANY LIMITED (C.I.C) ENUGU CONSTITUTING THE MINORITY SHAREHOLDERS.
The company was established to manufacture and at the same time market industrial and medical oxygen. Thus staff strength of the company, presently is put at one hundred and eight (180) employees. Twelve (12) of them belonged to senior management staff with the rest forming the junior and medium level manpower.
1:3 OBJECTIVE OF THE STUDY
the objective of this research are not for fetched especially when the provisions of section 359 (2) of the companies and allied matter decree 1990 which made it compulsory that auditors, is brought to bear.
Among other things, therefore, the main focus of this research will include the following:-
1 ascertaining whether there has indeed become the need to reorder the priority of auditing as is being propounded by owo (1992) in the following words:
considering the emergent business environment in this country, it has become extremely unavoidable now to re-order the audit objective is that of establishing the truth and fairness of which the books and accounts for the company have reflected its transactions within a give period, the society’s objective is that the audit objective should be concerned with establishing whether a fraud have accrued or not.
(2) To determine if auditing has been serving its principal objective of re-enforcing public confidence in the stewardship reports of management.
1:4 STATEMENT OF PROBLEM
primarily, all categories of investors (individuals and government) make capital budgeting decisions chiefly for the profits they expect will accrue from such venture that is to say that, “investments are not taken for the simple reason of investing but in anticipation of a return”
However, the extent to which the above principle is maintained in our own context, especially since the re-regulation of the economy in 1986 appear not to be stares factory.
Consequently breaking even to most business enterprises have become an illusion not to talk of satisfying the clientele effect of most investors.
This prevailing though, abnormal situation necessitated calls to rally together and deliberate on how to salvage the dwindling fortune of this once very vibrant. Really “in a period of economic crisis, need for accountability become more pronounced. The question of effective audit is therefore, worth examining in the Nigeria context.
Though, in the business cycle, the appointment of auditors is assumed to fully quadrants and protest the interest of shareholders and other third parties, there are ever increasing doubt as to how well these presume watchdog of the investing public have fared.
Credence is given to these fears as management keeps complaining of low capacity utilization, poor turnover or high turnover but with ridiculously high cost of sales-all depicting no returns on investment and yet auditors keep repeating their jargon in our opinion, the financial statements as examined by us present a true and fair view of the state of affairs and the profit and the source and application of funds as the year needed 31ST DECEMBER 19XX.
The aftermath of the forgiving is accusations that auditors are colliding with management to hold back form investors knowledge that they should have. This explains the basis for the intensified litigations in law courts against auditors.
It has also lead to gross loss of confidence in such body corporate, it management and above all auditors by all and Sunday, little won 1BB (1990) carried out saying.
“However upon all these enumerated scared requirements of your (auditors) duty our experience in this country has been that in both public and private sectors of our economy there have been fraudulent transactions, cover up of tax evasion and some inexplicable losses of physical assets”
“ultimately , it is such accusation as carrying out audit evidence and of being deliberately misleading” that informed this research work.
1.5 SIGNIFICANCE OF THE STUDY
the important of this research will rest squarely on the fact that through it solutions and controversies that surround the concept of auditing in it entirely put differently, the outcome of this endeavor will,
(1) either role in auditors, the more on the ground that they eroded rather dangerously public confidence on their reports.
1.6 SCOPE AND LIMITATION OF THE STUDY
Auditing as a practice applying to virtuallity all organization and institution where financial matter arise. It applies to profit making organization as well as to non-profit making organization like churches, club, and co-operative societies.
For the sake of adequate coverage, the researcher had wished that information were sourced from a cross section of these organized bodies. However, owing to constraints researcher could not cover Enugu-State talkless of Nigeria as a whole in pursuance of the objectives of this research. As a result, the work is limited not just to Enugu State but further to Niger gas ltd.
In the process of trying to realise the lotly aims of this research, some difficulties were experienced by the researchers such set backs include:-
Finally, and more importantly, is the reluctance of most respondents in giving honest feed backs for fear of being accused of releasing classified information to competitors and even tax authorities.
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