TABLE OF CONTENTS
of Contents vi
One: Introduction 1
Background to the Study 1
Statement of Problem 4
Research Questions 5
Objectives of the Study 6
Statement of Research Hypothesis 7
Significance of the Study 9
Scope of the Study 10
Limitations of the Study 11
Definition of Terms 11
Chapter Two: Review of
Related Literature 14
Corporate Governance and Audit 15
Auditors and Corporate Governance 16
Corporate Governance challenges in Nigeria 17
The Issues of Corporate Governance in Nigeria 18
Impact of Corporate Governance 18
Who is an External Auditor? 19
Why External Auditors? 20
Need for Auditing 20
Rights and Responsibilities of External
under the Nigeria Company Law 20
of Auditors 21
of Auditors 22
of Auditors 23
of an Auditor 24
Link Between Corporate Governance and
of good Corporate Governance 26
Role of Audit Committee 27
Functions of Audit Committee 28
Chapter Three: Research
Method and Design 39
Research Design 39
Population of the Study 40
Sample Size 40
Sampling Techniques 41
Method of Data Analysis 42
Chapter Four: Data Presentation,
Data Presentation 44
Data Analysis 45
Test of Hypothesis 57
Chapter Five: Summary of Findings,
and Recommendations 67
Summary of Findings 67
Background to the Study
Auditing and corporate
governance has become action of control,
that is been employed in organization and gaining more recognition due to the
fact that organization are striving to
achieve their vision and mission as well as maximizing shareholders’ funds.
This cannot however be
unconnected with the recent time concerning the need for strong corporate
governance globally with countries around the world drawing guidance and code
of practice to strengthen governance. This emphasis can be linked to increased
concerns over the integrity of securities markets oversight function of control
regulatory and guidance in the ways and manner business is been carried out.
governance by board of directors is recognized to influence the quality of
financial reporting which in turn has an important impact on investor’s confidence
(Levitt 1998, 2008). It is believed and advocated that good corporate
governance reduces the adverse effects of earnings management as well as the
likelihood of creative financial reporting arising from fraud or errors and
some cases misrepresentation of accounting financial statement.
external auditor played an important role in improving the credibility of
financial information so presented and published by firms, however, in recent
times, series of well publicized cases of accounting improprieties in Nigeria
has captured the attention of investors and regulators alike. The search for
means to ensure reliable and high financial reporting has largely focused on
the structure of audit report. The auditing profession has been pro-active in
attempting to improve audit report by issuing standards focused on discovery
and independence. As a result, there has been a control effort to advanced ways
of enhancing independence of an auditor and putting in place a good corporate
governance, ethics in place (Corporate Governance Code of Nigeria, 2005).
The profession has also
responded to several instructions on audit report, by emphasized that by its
nature, the inherent limitations of an audit assignment make it impossible to
eliminate the risk of audit and corporate governance failure. The effect on the
sound corporate governance practices on the quality of financial reporting has
recently received attention globally and this has lead to a change in the ways
of doing business as more organized becoming socially responsible to the
The main focus on this study
is the relationship between audit committees and fraudulent financial
reporting, with result generally supporting a negative relationship between an
active audit committee and likelihood of a company being cited fraudulent
reporting. While these results provides evidence from a strong and
sophisticated capital market environment, very little research has been conducted in countries where
capital markets are less developed and where corporate governance mechanisms
are still evolving. However, sound corporate governance practices are equally,
if not more important, in countries that are attempting to gain credibility
among global investors.
This is particularly so
in Nigeria as the country attempts to regain investor’s confidence, following
widely reported financial crises.
Statement of the Problem
has experience high weakness which is the most important factor blamed for the
corporate failure consequences from the economic and corporate crises.
Improvement of the integrity of financial reporting can be enhance through
greater accountability, the restoration of resources devoted to audit function
better corporate governance policies.
The question here is, has
there be any relationship between what audit quality should be and how it
enhance corporate governance. One may see to it that corporate governance can
be better improve through good audit.
Again, one would like
to know how an organization with good governance differ from organization
without good governance in terms of the quality of financial reporting and
auditor’s opinion. With regards to this, how then can a good corporate
governance and audit operation helps organization to achieve their goals.
All these are some of
the reasons management of organization strife hard to maintain a good audit
operation that will not have any effect or conflict of interest between the
corporate governance already existing in the organization and auditors.
Is there any
relationship between auditing reporting and corporate governance?
Is there any
difference between the organization with good corporate governance and the one
without good corporate governance?
Does the auditor’s
independence really proves the quality of financial reports?
practice of good corporate governance enable the organization to achieve their
Objectives of the Study
There is an increasing
incidence of corporate frauds relating to exaggerated or overstated account.
This has informed the need for proper audit practice in Nigeria and good
The main objectives of
this work can be stated as follows:
To determine the
role of auditors report in corporate governance.
To determine if
there is a positive relationship between auditing and corporate governance.
To determine if
practice of good governance enables organization to achieve their goals and
To ascertain if
the auditors independence improve the quality of financial reports or if it
To ascertain the
extent of utilization of the internal audit department.
To ascertain the
strength and weakness of corporate governance policies in organization.
To compare and
contrast the difference between the organization with good corporate governance
and the one without good corporate governance.
Statement of Research Hypothesis
A hypothesis can be
seen as a claim made about a population subject to test, to determine it’s
validity. It is often stated inform of a relationship between a dependent
variables and independent variables.
hypotheses will be tested to ascertain their validity using the chi-square
H0: There is no significant relationship between
auditing quality and good corporate governance.
H1: There is significant relationship between
auditing quality and good corporate governance.
H0: Auditing and corporate governance does not serve as
a tool of control of management to ensure organizational goals.
H1: Auditing and corporate governance serve as a tool of
control of management to ensure organizational goals.
H0: Good corporate governance practice is not important
in building confidence in investors and encouraging stable investment.
H1: Good corporate governance practice is important in
building confidence in investors and encouraging stable investment.
H0: Audit in Nigeria does not give a true and fair view
of companies in Nigeria.
H1: Audit in Nigeria give a true and fair view of
companies in Nigeria.
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
helping large and medium enterprises in Nigeria where personal supervision of
employees is impossible.
The findings in this
study will be relevant in taking steps to ensure adherence corporate governance
and auditing provisions. The importance of auditing can be illustrated to under
the principal-agent relationship. The demand for external auditors is directly
related to the fact that it is the directors (the agents) who prepare the
financial statements, which is primarily based on cost reasons.
This study contributes
to the audit literature as it provides additional empirical evidence on the
impact of the size of audit firm on the level of audit report.
The study also reflects
the quality of audit report in Nigeria.
This study will be
useful to shareholders in the Nigeria stock exchange (NSE), as it provide
evidence on the relationship between audit report and the reform instituted by
them in formulating the code of corporate governance for listed companies in
Nigeria, like Flour Mill Plc, Guinness Nigeria Plc, etc.
Scope of the Study
This research will
concern itself the programme 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
Flour Mill of Nigeria, Apapa, Lagos State. The sampling frame will be
constructed from a list of companies obtainable from various sectors of the
economy especially non-financial institutions.
Limitations of the Study
It is certain that no
research work will be accurately be perfect, this research work is not
exempted. Business and other social science research investigation strive to
employ scientific tools and method. The problems that limit this research
investigate 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
5. Weaknesses occasioned by have of non responses from
the respondents and the statistical tools used in the analysis of the data
Operational Definition of Terms
Auditing Standards: This is a standard that set the minimum level of
performance and quality that auditors are expected by their clients and public
Fraudulent Financial Reporting: This is when an auditor give unqualified audit
opinion of financial statements that will be obtain a loan when he know they
are materially misstated.
The only sanction of a auditor is his report. The issuance of a report is the
final stage of audit work. The form will however, depend on the nature of the
audit. The report in order to be meaningful and significant to the users must
be, it must be clear and comprehensive. Honest, objectives, informed and well
evidenced and understandable.
Financial Institution: These are these institution that are financially
oriented e.g. Bank while non financial institutions are those institutions that
are not financially oriented e.g. Flour Mill Nig. Plc, Guinness Nig. Plc, etc.
This is required in order not a to mislead those who will have belief in and
rely on the audited financial statement.
This is the process whereby a shareholder of a company give right to
participate in the share of profile.
This is a committee that works closely with the external audit firm and
generally influences the company’s control environment.
Click “DOWNLOAD NOW” below to get the complete Projects
FOR QUICK HELP CHAT WITH US NOW!
+(234) 0814 780 1594
Login To Comment