ABSTRACT
The belief that whenever an auditor is engaged with any business
organization, the objective(s) of such organization are likely to be achieved,
seems not to stand the test of time, considering the rate of business failures
and the inherent loss of economic resources resulting from such failures by the
stakeholders.
Financial statement is one of the tools which companies employ to present
and ex-ray their performance or position over a period of time. It is the duty
of Auditors to examine these financial statements and ensure that what
companies claim to have, really exists. Stakeholders place their reliance upon
these audited statements for their economic decisions. Surprisingly, some of
these financial statements that have been reported to have shown a true and
fair view and complied with relevant statutes by an auditor, turns out to be a
reverse.
It is on the premise of the above, that this research project was set out
to actually position. Those factors, which are responsible for the unreliable
reports that subsequently lead to business failures, have been unraveled. The
researcher also went ahead to portray the impact of these unreliable company
financial statements in economy and the possible panacea.
Primary and secondary sources of data were employed, questionnaires were
served to company Directors, Financial controllers and senior Accountants
engaged with the selected organizations. These companies are manufacturing
industries, financial institutions and trading concerns that prepares annual
financial statement. On collection of the information (data) from the
respondents, they were analyzed using tables, percentages, bar charts and
chi-square (X2).
Discoveries were made at the end of the study as follows: That business
organizations don’t achieve their objectives with the engagement of auditors,
irrespective of the fact that these auditors certify the financial statement
after a thorough examination. This unreliable report from corporate auditors
goes a long way in misleading the shareholders, government and the entire
society leading to the rampart business collapse in the recent time. It was
also discovered that the non-independent of auditors and their dual role (e.g.
being financial adviser and auditor at the same time) to a company, influences
them to give a misleading report.
After the above findings, recommendations were made, thus: Different arms
of the law, including Banks and other Financial institutions Board (BOFID),
Companies and Allied Matters Decree (CAMD), According Professional Bodies and other
regulatory agencies should step in through educating all the concerns, instituting monitoring teams that will ensure
compliance to all the laws enacted.
These steps if followed, will no doubt, restore reliance and
accountability in relation to the company financial statements in one hand, and
the auditors’ report in the other hand.
CHAPTER ONE
1.1 INTRODUCTION
1.2 BACKGROUND OF THE STUDY:
The origin of auditing is as a result of the separation of ownership from
control. It is instituted to protect the interest of the owners by ensuring
that financial statements are justifiable. Because of the separation of
ownership from control, it becomes necessary of those managers entrusted with
the owners of financial and economic resources to present their financial
reports to their employer. The reports presented might contain errors,
omission, and frauds or even refuse to disclose relevant information. For these
reasons, the owners may hold some reservations about the credibility of the
managers’ reports.
For the owners to be satisfied and even for the managers to be justified
to establish and maintain their integrity, it becomes necessary to invite an
independent party, one who is not involved with either party to examine the
reports for the purpose of expressing an opinion as to the truth and fairness
of the reports. The independent party’s duty is not just mere examination of
the accounts from which the financial statements were prepared, rather, it
include collection of all relevant information thought necessary to satisfy
section 360 (3) of companies and Allied Matters Decree (CAMD) 1990. It is
obvious that
In the past, investors rely
solely on the advice given to them by their financial consultants rather than
analyzing the financial statements by themselves. Today there has been a great
change on that direction. Many stakeholders including the Government focuses on
the financial statements as one of their most reliable source or instrument of
assessing the viability or otherwise of companies......
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Item Type: Project Material | Attribute: 91 pages | Chapters: 1-5
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