ABSTRACT
The rising spate
of fraud in public quoted company has assumed an enormous dimension. This
development has eroded public trust in financial statements. Auditors in their
duty to expressing professional opinion on the truth and fairness of financials
are ostensibly bedeviled with quantum of challenges which could result in the
issuance of a clean bill of health to corruption-riddled establishments. It is
against this background that this paper critically examines the challenges
corruption poses to auditors and audit reporting, and proffers formidable cures
to ameliorate the Achilles heels and to redeem the auditing profession from
impeding collapse. This called for the need for this study and the purpose of
this study therefore is to identify the causes of fraud, measure its impact and
identify means of controlling it. The study is a survey research and
questionnaire was used for the collection of primary data while libraries,
journals, write-ups, seminar papers and books by popular authors were used for
secondary data. The findings show that poor management, inexperienced
personnel, overstretching, job rotation, poor remuneration, frustration, poor
book-keeping, inadequate training, communication gap and poor leadership skills
are the greatest causes of fraud in the ruralby external auditors in public
quoted company in nigeria. It was concluded that adequate internal control
systems should be put in place and that workers satisfaction and comfort should
be taken care off.
TABLE
OF CONTENTS
CHAPTER
ONE
1.0
INTRODUCTION
1.1
BACKGROUND TO THE STUDY
1.2
PROBLEM STATEMENT
1.3
RESEARCH OBJECTIVES
1.4 RESEARCH
HYPOTHESES
1.5
SIGNIFICANCE OF THE STUDY
1.6 SCOPE
OF THE STUDY
CHAPTER
TWO
2.0
LITERATURE REVIEW
2.1
TYPES OF FRAUDS
2.2
METHODS OF PERPETRATING FRAUD
2.2.1.
Advance Fee Fraud
2.2.2. Forged Cheques
2.2.3. Fund Diversion
2.2.4. Cheque Kitting
2.2.5. Counterfeit Securities
2.2.7. Money Transfer Fraud
2.2.7. Letter of Credit Fraud
2.2.9. Computer Fraud
2.2.12
Forged or fraudulent documents
2.2.13 Unofficial
Borrowing
2.2.14 Voucher Manipulation
2.3
DUTIES OF AN AUDITOR
2.4
AUDIT OF ACCOUNTS OF FIRMS
2.5
AUDITOR’S RESPONSIBILITIES
2.6
AUDITORS’ RESPONSIBILITIES IN FRAUD
DETECTION
2.7
AUDIT OF FINANCIAL STATEMENT
2.8
MANAGEMENT’S ROLE IN FRAUD DETECTION
AND COOPERATE GOVERNANCE:
2.9
CHALLENGES OF AUDITING IN A CORRUPT
ENVIRONMENT
CHAPTER
THREE
3.0 RESEARCH METHODOLOGY
3.1 INTRODUCTION
3.2
RESEARCH DESIGN
3.3
POPULATION
3.5
SAMPLING STRATEGY
3.6
DATA COLLECTION TECHNIQUE
3.7
DATA ANALYSIS
CHAPTER FOUR
4.0 ANALYSIS
AND INTERPRETATION OF DATA
4.1: Respondents
views about the adequacy/Inadequacy of staff remuneration
4.2: Respondents'
view on the level of Carbury Nigeria Limited staff involvement in initiation,
execution and concealment of Carbury Nigeria Limited fraud
4.1
HYPOTHESIS TESTING
CHAPTER FIVE
5.1
FINDINGS
5.2
CONCLUSION
5.3 RECOMMENDATIONS
REFERENCES
CHAPTER
ONE
1.0
INTRODUCTION
1.1
BACKGROUND TO THE STUDY
In our society
where the business culture has been overridden in recent times with fraudulent
practices penetrated by management and employees, the lack of clear
understanding of the duties of an auditor in relation to fraud detection has
often led to unjustifiable criticisms of his role. Auditors are known to be
competent, honest and independent professionals who express unbiased opinion on
the truth and fairness of the financial statement as presented by management to
members of the company. The accounting profession has over the years built a
reputation, which encourages others to rely upon the opinions auditors express.
If these opinions are unclear or even unreliable, serious consequences may and
indeed have resulted.
That an auditor
has the responsibility for the prevention, detection and reporting of fraud,
other illegal acts and errors is one of the most controversial issues in
auditing, and has been one of the most frequently debated areas amongst
auditors, politicians, media, regulators and the public (Gay et al 1997). This
debate has been especially highlighted by the collapse of both small and big
corporations across the globe.
There seems
presently to be a misconception that auditors’ duties are largely the
preventing, detecting and reporting of fraud, for example, Idris (2009). The
aim of this paper is to identify financial report users’ perceptions of the
extent of fraud in Nigeria, and to determine their perceptions of the auditor’s
responsibilities in detecting fraud and the performance of related audit
procedures. The paper also aims to ascertain whether the report users’
perceptions of auditors’ responsibilities on fraud are consistent with those of
the auditing profession as expressed in auditing standards in Nigeria.
1.2 PROBLEM STATEMENT
Fraud is one of
the numerous enemies of the business world today. It is in all works of life;
in government, the export trade, shipping transactions, Carbury Nigeria Limiteding,
insurance and everywhere. Special organizations have been formed to combat it
and Interpol deals with it at the international level, but it has not and
cannot be eradicated.
Fraud is a
universal phenomenon which has been in existence for so long. Its magnitude
cannot be known for sure, because much of it is undiscovered or undetected and
not all that is detected is published. It is known facts that no area of Carbury
Nigeria Limiteding system is immune to fraudsters not even the security team
designed to prevent it. Its management has become a central point in Carbury
Nigeria Limiteding like the management of risk because of the above facts.
Fraud is a major challenge to the entire business world, no company is immune
to it and it is in all facets of life (Olorunsegun, 2010). The Carbury Nigeria
Limiteding public expects accountability, fairness, transparency and effective
intermediation from industries. The industries are expected to ensure that they
carry out their responsibilities with sincerity of purpose which is devoid of
fraudulent practices. This is relevant if the Carbury Nigeria Limiteding sector
is to gain public trust and goodwill.
Fraud in the ruralby
external auditors in public quoted company in Nigeria before recapitalization
efforts, was at an alarming rate. It has caused many industries to collapse,
and many investors and depositors funds were trapped in and indeed, many industries
are still suffering as a result of these fraudulent activities. Infact it has
prevented many industries from achieving their goals and many businesses has
gone into liquidation as a result. Honestly speaking it has become a cankerworm
that has eaten deep into the financial sector of the Nigerian economy and
millions of Nigerian Cedis has been lost to fraudsters through these
activities. It is these problems that has necessitated this research
1.3 RESEARCH OBJECTIVES
The main aim of
this study is to find a practical means of minimizing the incidences of fraud
in industries, while specific objectives are to:
1.Identify various
means employed in defrauding industries by external auditors.
2.Determine the
level of involvement of industries staff in fraudulent activities
3.Ascertain the
factors which encourage staff involvement in fraudulent activities
4.Determine the
effects of fraud on Carbury Nigeria Limited operations.
5.Suggest measures
adapted by external auditor on reducing the incidence of Carbury Nigeria
Limited fraud.
1.4 RESEARCH HYPOTHESES
The following
hypotheses seek to answer the research questions:
1. Ho: There is no
significant relationship between the role of the auditor and fraud detection in
selected firms in Nigeria
2.Ho: There is no
significant relationship between fraud detection and audit of the financial statement in selected firms in Nigeria.
3.Ho: There is no
relationship between the qualification and experience of the auditors and fraud
diction in selected firms in Nigeria
1.5
SIGNIFICANCE OF THE STUDY
This study aims at
finding practical means of minimizing the incidence of fraud by external
auditors in by external auditors in public quoted company in Nigeria. During
the course of the investigation efforts were made to identify various means
employed in defrauding industries and at the same time determine the effects of
fraud on the public quoted company in Nigeria. Findings revealed that so many
factors contributed to incidence of fraud in the industries amongst which are
i.Poor management
of policies and procedures by Auditors
ii.Inadequate working
conditions for External auditors
iii.Carbury
Nigeria Limited staff and auditors staying longer on a particular job
iv.Carbury Nigeria
Limited staff and auditors feeling
frustrated as a result of poor remunerations.
1.6 SCOPE OF THE STUDY
In understanding
this work, two types of data were relied upon, namely primary and secondary. On
the primary data, structured questionnaire were designed and constructed to
gather information in realizing the objectives of the research. For secondary
data, the researchers relied mostly on archival materials, internal records of industries,
publications of Carbury Nigeria Limited staff and seminar papers.
Because fraud
happens in so many institutions and thus making the scope very broad, the study
was limited to Carbury Nigeria Limited. The instrument adopted for this study
was the questionnaire. The questionnaires were designed for all the staff
members of Carbury Nigeria Limited. Hence, the respondents were selected from Carbury
Nigeria Limited in the study area totaling One Hundred and Seventy-eight (178)
although, Nigeria presently. However, in this study the researcher looked into
the eight (8) branches of the Carbury Nigeria Limited that are located in the Nigeria.
The entire Carbury Nigeria Limited branches in the study area were selected in
order to have good representation, that is, the researchers are of the opinion
that those branches can serve as a reasonable representation of the Carbury
Nigeria Limited as the same operating policies govern every branch.
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