ABSTRACT
This study dealt on Auditors role
in safeguarding the going concern concept in Nigeria. The burden of preparing
the financial statement lies with the director, the auditor is required to
report on these financial statements. A lot of people have failed to understand
that the role of an auditor is not to detect fraud or error but the key role of
an auditor is to “examine the financial statement prepared by the director of
the company and report on it to shareholders. This study sought to investigate
the relationship between the role of an auditor and the going concern of the
company, to assess the effect of Auditors beneficial shareholdings on the credibility
of audit report, to ascertain the effect of auditors non audit engagement
services on the credibility of external audits, to examine the impact of
non-compliance with audit rotation policy on audit performances. In achieving
this objective, a number of research tools were employed both the primary data
and the secondary data. The research did not limit herself to a particular
audit firm in a state, indefinite statistical formula was used and the five
hypotheses was tested using the chi-square. The result drawn from the tested
hypothesis reviewed that there is a relationship between the role of an auditor
and the going concern concept, auditors’ beneficial holding affect the
credibility of audit report, there is significant relationship between auditors
engagement in non audit services and the credibility of external audit, here is
a strong correlation between non-compliance with audit rotation policy and
audit performance. It was therefore recommended that the big four audit firms
in Nigeria should be used for further study.
CHAPTER ONE
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
The historical development of
auditing can be traced back to the 8th century industrial
revolution, when our present day business organization were just evolving hence
it is as business itself, Wolf (1979). Business have grown into a main complex
and complicated network of contracts and activities than what used to be the case
in the past. Directors now run organizations on behalf of the owners
(shareholders); this has brought about stewardship accounting. Stewardship
accounting is the process whereby managers of a business, account or report to
the owners on the state of affairs of the business.
Aguolu (2008:1) defines auditing
simply as “the independent examination of the financial statements of an
organization with a view to expressing an opinion as to whether these
statements give a true and fair view and comply with the relevant statutes and
the international financial Reporting Standards”. The person who carries out
such an examination and expresses the opinion is called an auditor.
Going concern is one of the
accounting concepts; it means that the business unit will operate in
perpetuity, i.e. the business is not expected to be liquidated in the
foreseeable future. A business is considered a going concern if it is capable
of earning a reasonable net income and there is no intention or threat from any
source. The directors are mandated by the companies and allied matter act 1990
(CAMA 1990) to prepare periodic
According to Millchamp (1996) “Independence
is a means that the auditor meets on to play role in safeguarding the going
concept to ensure that the business continues to exist in the foreseeable
future.
The shareholders want reassurance
that the financial transactions the board of directors prepared and represented
in the financial statements/final accounts present a true and fair view of the
company/organization. It is for this reason that the shareholders/investors
appoint auditors to give an attestation to the effect that the account gives a
true and fair view of the state of the affairs of the business transaction for
the period under review.
The financial statements prepared by the directors
include;
· Balance sheet
· The profit and loss account
· The five years financial summary
· The cash flow statement etc.
When a company is formed and is
operating, it is mandatory especially for a limited liability company to
prepare a financial statement on a yearly basis. The responsibility of
preparing the financial statement is being rested on the company’s director by
CAMA 1990. The information derived from the statement s not only beneficial to
the management of the company but also to other interested parties which
include the owners of the company or in a public company shareholder.....
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Item Type: Project Material | Attribute: 85 pages | Chapters: 1-5
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