1.1 BACK GROUND OF THE STUDY
For any business organization to continue Perfectually in business, there is the need for that business to be internally efficient. The business should have a watertight internal control structure in relation to a financial accounting system that will facilitate the day- to-day transaction recording in the organization recording in the organization without difficulty.
Fundamentally and stipulated in section 59 of companies and allied matter Decree (CAMD) of 1990 (1) is also the vital need for an independent body which has to monitor and check the organizations’ financial statement.
This study focuses on the role of this independent body, who is the auditor in combating fraud in a business organization.
An auditor his one who has acquired a professional certificate - passed is ICAN examination (Nigeria) and has demonstrated sufficient acceptable knowledge of accounting and auditing to carry out his responsibility of combating fraud, section 362 CAMA 1990 has to confirm certain power and duties on the auditors.
i. That every auditor of a company shall have a right of assess at all time to the company’s books, account and vouchers.
ii. He is entitled to require form government such as information and explanation as he thinks necessary for the performance of his duties.
iii. The stages in audit processes are designed to ensure that the auditor fully discharge his legal and professional obligation.
1.2 STATEMENT OF PROBLEM
So many managers have failed to recognize the effort of auditor in auditing financial performance. And as a result, it has led them to poor planning, control and decision making.
§ It retards the growth of the parastatals
§ It leads to loss in shareholders fund
§ The reputation of the company will be at stake
The loss of public confidence in the company and shifting of interest to other company.
It is a well known fact that officers of the
parastatals are entrusted with the management of both material and human resources of their establishment and in most cases, these officers are not brought under thorough control or question, the ultimate consequence of this is that much of the resources are indiscriminately mismanaged.
Equally, some accountant and key personnel in most parastatals and companies do not resist the temptation of colliding with other workers to embezzle their organizations funds to the determent of the masses and owners of the business or even the shareholders.
Also some parastatals do not seam to have an audit department or engage the service of the external auditor or where such a unit exist, they allow it to exist only in name as a mere compliance to the statutory requirement. An audit department of such standard will not make or have any impact as regards to internal control. This state of affaires from investigation is usually deliberate attempt by management to execute its exploitation, plans within any hindrances.
Another aspect of this, is lack of adequate regulatory standards in Nigeria regarding the duties, rights, responsibility and qualification of auditors.
1.3 OBJECTIVE OF THE STUDY
It is not easy to convince administrator or owners of most private owned enterprises the need and advantage it will derive from complying with all forms of internal control structure, which will be consequent to the auditor’s role in safeguarding the organization from an earlier collapse.
The researcher focuses on the primary merits of appointing auditor annually for the going concern of a business life.
How the auditor could use his magic word to prefect and safeguards the profit of a business concern. Investigating and examine when it requires the records and accounts in the business to make sure that there is no manipulation of what so ever. Presenting his public reporting the time and fair position of the business in relation with the financial using the auditing standard and guide to act a basis for his audit or examination through out his consideration of the statement made by the directors.
Furthermore, the work will stress on the role the auditor plays to the external user of the company’s financial statement.
And the effectiveness of the auditor is using the auditing standard application to achieve the goal of every business.
1.4 RESEARCH QUESTIONS:
Based on the purpose of the study, the following questions are raised to provide a guide and solution to the research problems:
i. What is the impact of auditing an organization
ii. Does the management rely heavily generated by the auditor.
iii. What is the management perception on the role of the auditor in the prevention and detecting of fraud and error in an organization.
1.5 SIGNIFICANCE OF THE STUDY
The appointment of the auditor right from the first annual general meeting by the company’s shareholders shows credence as per the auditors professional and important role in the life of the company giving him the mandate, which implies that he holds a duty of care to inform them (shareholders) about the dealings of the companies which is managed by the directors. And also in his capacity will check the excesses of the manager through his public report. More so this study makes it obvious for the public to know the civil liability of the auditor towards to know the civil liability of the auditor towards checking the daily activities of the business carelessly. Another important significant of this study is on the area of a business operational structure. Majority of business owners and administrator are not ware of the legal requirement for putting up a solid internal mechanic in its organization. They are able to record, process and present information about the commercial activities that obtains in their domain. Some do not even keep proper books of account for the business. The absent of all this statutory requirements in a defined Accounting system will effect the role the auditor will play in combating and reducing fraud in that organization.
It is also on the strength of this internal control structure that the auditor will use its audit test and questionnaires to identify some area of interest or possible lapse in the system were there could be weakness. The auditor can also use audit test in an efficient system/organization balances and other procedure such as analytical review as to the completeness, accuracy and validity of the information contained in the accounting record.
1.6 SCOPE OF THE STUDY
This work tries to answer question on how a company’s accounting system which involve gathering financial data generated, recording it, and processing it into a financial statement can be managed tools for auditor to use in auditing the company. The financial statement of an organization is been prepare by the company’s Accountant while the Auditor examines and investigate the statement given to him shows true and fair view.
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