Abstracts
This project examines the role of auditors report in
corporate governance. The problems, challenges, prospects of auditing and
corporate governance looked. As a worldwide phenomenon, they have continued to
generate divergent views among scholars. The data used comprises of primary
data, which consist of self-administered questionnaires and oral interview of
some of the respondents. To achieve the purpose of the study, a survey of ten
selected companies quoted in the Nigeria to give a true and fair view of
companies, It was also discovered that good corporate governance practices
builds confidence in investors and encourages stable investment and also
auditing and corporate governance are used as a tool of control by management
in the achievement of its objectives. It is imperative for Nigeria to
adequately address the challenges of these issues for the benefit of the
economy.
TABLE OF
CONTENTS
Title
Page i
Certification ii
Dedication iii
Acknowledgements iv
Abstract v
Table
of Contents vi
Chapter One: Introduction 1
1.1 Background to the Study 1
1.2 Statement of Problem 5
1.3 Research Questions 6
1.4 Objectives of the Study 6
1.5 Statement of Hypotheses 8
1.6 Significance of the Study 10
1.7 Scope of the Study 9
1.8 Limitations of the Study 10
1.9 Definitions of Terms 11
Chapter
Two: Review of Related
Literature 12
2.1 Introduction 12
2.2 Theories on Auditing and Corporate Governance 13
2.3 Historical Framework 15
2.4 The Issue of Corporate Governance in Nigeria 20
2.5 Corporate Governance and Audit 23
2.6 The Mechanisms of Corporate Governance 24
2.7 The Roles of
the Board of Directors 28
2.8 The CEO and Management 29
2.9 Shareholders Rights and Privilege 29
2.10 The Role of the Audit Committee 30
2.11 The Functions of Audit Committee 31
2.12 Auditors and Corporate Governance 32
2.13 Origin of Auditor Independence 33
2.14 Definitions of Auditors Independence 34
2.15 Importance of Auditor Independence 35
2.16 Why External Auditors 38
2.17 Who is an External Auditor 38
2.18 Corporate Governance Challenges in Nigeria 39
2.19 Impact of Corporate Governance 40
2.20 Essence of good Corporate Governance 40
2.21 The Link between Corporate Governance
and Investor Confidence 42
2.22 The Role of
those concerned with
Financial Statements 43
2.23 Fundamental Determinants of Equity
Agency Problems 43
2.24 Perquisite Consumption 44
2.25 Diversification and Wealth 45
2.26 Resistance to Takeovers 45
2.27 Auditing 46
2.28 Auditing and Corporate Governance 53
2.29 Significance of Auditing to Management
2.30 Summary 58
References 61
Chapter Three: Research Method and Design 72
3.1 Introduction 72
3.2 Research Design 72
3.3 Description of Population of the Study 73
3.4 Sample Size 73
3.5 Sampling Technique 74
3.6 Sources of Data Collection 75
3.7 Method of Data Presentation 76
3.8 Method of Data Analysis 76
Chapter
Four: Data Presentation,
Analysis
and Interpretation 79
4.1 Introduction 79
4.2 Presentation of Data 80
4.3 Data Analysis
4.4 Hypothesis Testing 94
Chapter
Five: Summary of Findings,
Conclusion
and Recommendations 109
5.1 Introduction 109
5.2 Summary of Findings 109
5.3 Conclusion 113
5.4 Recommendations 114
Bibliography 117
Appendix 121
Questionnaires 122
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Auditing and corporate governance as a
good tool or form of control in organizations, are gaining more recognition in
Nigeria today, due to the fact that organizations are striving to achieve their
vision and mission. The company and Allied Matter Act 1990 (as amended) has
made it compulsory for an audit report by an independent auditor to be
presented alongside the financial statement of companies which are presented
during their Annual General Meetings (AGM).
According to the auditing standards, an
audit is an independent examination of and expression of an opinion on the
financial statement of an enterprise. It is an examination by an auditor of the
evidence from which the final revenue accounts and balance sheet of an
organization at the end date, thus enabling the auditor to report thereon.
Where organizations are left audited, it
would give rise to indiscipline and non-accordance to standard accounting and
auditing practices. Long before the highly publicized corporate scandals and
failures worldwide, the Nigerian public has shown increasing concern on the
issues of corporate governance, because it has a link to national growth and
development.
Corporate governance has been defined as
the way and manner in which the affairs of companies are conducted by those
charged with the responsibility. It is a system that ensures optimal
utilization of resources for the benefits of shareholders while meeting
societal expectations. Given the high correlation between corporate governance
and investor decisions, the government of Nigerian is keen to position the country
to take advantage of the opportunities in the global market by adhering to
principle of good governance, thus, Securities and Exchange Commission (SEC)
and the Corporate Affairs Commission (CAC) came out with seventeen (17) member
committee and drafted the code of best practices for corporate governance in
Nigeria.
Depending of the jurisdiction, different
bodies may have responsibility of corporate governance, board of Directors,
Audit Committee and other supervision committees. International Standards on Auditing
(ISA) 260, requires the auditor to determine those persons charged with
corporate governance. The most direct of corporate governance is to
shareholders. However, the ultimate benefit is the more efficient allocation of
capital to its most productive uses. In the real sense, no governance system,
no matter how well designed, will fully prevent greedy and dishonest people
from putting their personal interests ahead of the interests of the companies
they manage. Many steps can be taken to improve corporate governance and
thereby reduce opportunities for accounting fraud. This is where the role of
auditing (through proper audit reports) comes into play.
The auditor does not has a direct
corporate governance responsibility, but rather provides a check on the
information aspects of the governance system. The role of auditors in corporate
governance involves reporting, decision making, accountability and monitoring.
Decision requires relevant and reliable information, accountability involves
measuring, reporting and transparency, and monitoring includes system and
feedback. Auditor’s primary role is to check whether the financial information given
to investors is reliable, i.e. if its expressed the true and image of the organization.
The objective of an audit is to express an expert opinion on the fairness with
which the financial statement are prepared and presented, in all material
aspects a company’s financial position, results of operations, and cash flow in
conformity with GAAP to be able to express such an opinion. This must be done
using sound auditing techniques.
People rely on financial statements to
make economic decision, especially the shareholders, that is, an enterprise
outside the organization. With the help of audit work by the external auditor,
risk and uncertainty are reduced. Error and fraud can cause irregularity in the
case of financial report or statement of any organization. It is the
responsibility of the auditor to verify the cause of any irregularity of the
auditor to verify the cause of any irregularities in the financial statement.
One perception to corporate failures has been to focus on public companies
internal controls. Sarbanes-Oxley Act (2002) (SOX) requires a separate report
on the effectiveness of internal controls. Recent changes to ISAs place a much
higher focus on the auditors understanding internal controls as a part of the
audit.
Auditing involves a public
responsibility that is more important than the employment relationship with the
client. To meet it obligations to shareholders, the board must ensure that it
receives relevant and reliable information. The auditor assist the board in
achieving those goals. There should be open dialogue between the Auditors and
the Board. The auditor must be candid in communicating with the board and its
audit committee.
1.2 Statement of Problem
Every business organization is set up,
to achieve some specific objectives. To achieve such objectives, rules and
regulations are laid down even procedures are set out which have to be compiled
with. No shareholder or potential investor would like to invest in a business
that would not yield returns on investment. There are many factors that could
cause lack of returns on investment in an organization. It can be due to
improper accounting records, frauds and other internal factors.
Good corporate governance and proper
audit report provides for accountability and an input to management information
system. Based on the problems stated above, it is very necessary for effective
operations and as such, the need for proper audit reporting cannot be
overemphasized.
This research intends to examine the
role of auditors report in corporate governance in relations to non-financial
institution in Nigeria
and possibly way forward.
1.3 Research Questions
1.
Is there any relationship between
auditing and corporate governance?
2.
Is there any difference between the
organization with good corporate governance and the one without good corporate
governance?
3.
How do we improve the quality of
financial quality of auditor’s independence report?
4.
How do we ascertain the strength and
weaknesses of corporate governance policies in organizations?
1.4 Objectives of the Study
There is an increasing incidence of
corporate frauds relating to exaggerated or overstated accounts (engineering
account). This has informed the need for proper auditing in Nigeria. Investors are ready to pay
up to a 20% premium to invest in companies with good corporate governance
practices.
The main objectives of this work can be
stated as follows:
·
To determine if there is a positive
relationship between auditing and corporate governance.
·
To compare and contrast the difference
between the organization with good corporate governance and the one without
good corporate governance.
·
To ascertain if the auditors
independence improves the quality of financial reports or if it affects it.
·
To ascertain the strength and weaknesses
of corporate governance policies in organizations.
1.5 Statement of Research Hypothesis
The following hypothesis will be tested
to ascertain their validity using the chi-square analysis.
Hypothesis
One
Ho:
There
is no significant relationship between auditing and corporate governance.
Hi: There is a significant relationship between
auditing and corporate governance.
Hypothesis
Two
Ho:
There
is no significant relationship between organization with good corporate governance
and the one without good corporate governance.
Hi:
There is a significant
relationship between organization with good corporate governance and the one
without good corporate governance.
Hypothesis
Three
Ho:
There
is no significant relationship between the auditors independence and the
quality of financial reports of an organization.
Hi:
There is a significant
relationship between the auditors independence and the quality of financial
reports of an organization.
Hypothesis
Four
Ho: There is no significant
relationship between strength and weaknesses and corporate governance policies
in organizations.
Hi: There is a significant
relationship between strength and weaknesses and corporate governance policies
in organizations.
1.6 Scope of the Study
This research will concern itself with
the program and standards of the general
auditing practice and procedures and also corporate governance techniques put
in place in organizations especially non-financial institutions in Nigeria.
The study will cover public quoted
companies in Lagos, Benin, Imo and Delta State. The sampling frame will be
constructed from a list of companies obtainable from various sectors of the
economy especially non-financial institutions.
1.7 Significance of the Study
This research attempts to identify the
role of auditors report in corporate governance and the significance or
relationship between auditing and corporate governance. This study is aimed at
large and medium organization in Nigeria where personal supervision
of employees is impossible. The findings in this study will be relevant in
taking steps to ensure adherence to corporate governance and auditing
provisions. It could also stimulate further research in this field.
1.8 Limitations of the Study
It is certain that no research work will
be accurately be perfect, and this research work is not exempted. Business and
other social science research investigations strive to employ scientific tools
and methods. The problems that limit this research investigation are as
follows:
1.
Inability to obtain sufficient data.
2.
Unwillingness of companies to give
information and in cases where they do, such information is highly altered.
3.
Inability to actually access some
organization due to undue rules and regulations.
4.
Presentation of incomplete reports by
the originations.
5.
Weakness occasioned by time and
financial constraints.
1.9 Definition of Terms
Audit: The
evaluation of a system in order to express an option.
Analysis:
An examination of something by dividing into separate parts.
Control:
A process by which organizations are conformed to a desired plan and such plan
conform to organization activities.
Click “DOWNLOAD NOW” below to get the complete Projects
FOR QUICK HELP CHAT WITH US NOW!
+(234) 0814 780 1594
Login To Comment