THE ROLE OF EXTERNAL AUDITORS ON FINANCIAL ACCOUNTABILITY OF MANAGERS IN NIGERIA ORGANIZATIONS (A CASE STUDY OF UNION BANK OF NIGERIA PLC)

ABSTRACT

        This study is aimed at finding and expressing the Roles of the External Auditors on financial accountability of managers in Nigeria organizations play in banks, using union bank as the case study

        There has been significant attempt by the researcher to examine whether the various roles as should be carried out by audited the being introduced in banks and adopted as required by the guiding legislative.  The result of this study would aid, educate readers and  wise up banks on the roles of the external auditors play in banks.  

        To accomplish the aim of this project work, the researcher has reviewed and reported some related literature sources such information were duly acknowledged in the appropriate reference sections.

        About three hypothesis were formulated which were thereafter tested in other to establish theories of the end o the research study chi-square distribution were adopted for this test.  The some of data comes from both primary and secondary modes of data collection.  The secondary data forms the certain sages on which this project was based.

        Based on the data collected and analysis some findings made which was preceded by conclusion and some recommendation.  Suggestions were also made for further studies, summarily form the questionnaires administrated and data collected which were analyzed and interpreted, it has been generally concluded that role of auditors in banking operations have really contributed to the fairness and trueness of the financial reports and statements of banks and also check fraud in banks.

 

 

 

 

 

  

 

 

TABLES OF CONTENTS

 

TITLE PAGE

APPROVAL PAGE

DEDICATION

ACKNOWLEDGEMENT

ABSTRACT

TABLE OF CONTENTS

 

CHAPTER ONE:

INTRODUCTION

1.1   PURPOSE OF THE STUDY

1.2   SIGNIFICANCE OF STUDY

1.3   STATEMENT OF THE PROBLEM

1.4   HYPOTHESIS FORMULATION

1.5   OBJECTIVE OF THE STUDY

1.3   SCOPE AND LIMITAITON

1.6   DEFINITION OF TERMS

 

CHAPTER TWO

2.0   REVIEW OF RELATED LITERATURE

2.1   AUDITORS, HIS RIGHT, DUTIES AND STATUS

2.2   ROLES OF AN AUDITORS AND MANAGEMENT RESPONSIBILITY

2.3   THE AUDITOR AND FRAUD DETECTION

 

CHAPTER THREE

3.1   RESEARCH DESIGN AND METHODOLOGY

3.2   SELECTION OF STUDY AREA

3.3   FORMS OF COLLECTING DATA

3.4   PROBLEMS ENCOUNTERED

3.5   RELIABILITY

3.6   VALIDITY

 

CHAPTER FOUR

4.1 DATA PRESENTATION AND ANALYSIS

CHAPTER FIVE

5.1 SUMMARY OF FINDINGS, CONCLUSION AND         RECOMENDATION

5.2   FINDINGS

5.3   CONSLUSION

5.4   RECOMMENDATIONS

5.5   SUGGESTION

        REFERENCE

CHAPTER ONE

 

1.1       INTRODUCTION

An audit is the independent examination of, and expression of

Opinion on the financial statements of enterprises by an auditor.  In pursuance of this objective, he may disclose defalcations and irregularities, which are capable of impairing the truth and fairness of the financial statement.

        In recent years there has been considerable debate over the extent of the statutory auditors responsibility for the detection of fraud.  This has been stimulated by the continued uncertainty over the extent of the auditors liability to third parties for negligent audit work.  It is obvious that failure to detect a major fraud may lead to a loss for the client or some third party to whom a duty of care is owned.  The important question is low far do the auditor’s responsibilities.

        The auditing profession had always hold tight to the opinion that the primary responsibility for both prevention detection of fraud and other irregularities rest with management.  The auditor’s duties do not require him specially to search for fraud unless required by stature or the specific term of his engagement.  In accordance with normal practice, audit will be planned primary to enable us to express our professional opinion, and auditor merely obliged to plan his work and design his procedures so that he has a reasonable chance of detecting those, illegalness which might impair the truth and fairness of the financial statement.

 

A BRIEF HISTORY OF UNION BANK OF NIGERIA PLC.

        Union Bank is one of the foremost commercial bank today with every strong capital ban.

The bank which was formerly known as Dominion Colonial Overseas (DCO) started banking business in Nigeria in 1917.  The bank today has so many branches scattered all over world.  The bank also branched into other business such as Union Assurance Company Ltd. Union Homes Savings and Loan Ltd. Union on March into union stock broke etc.

1.2       PURPOSE OF THE PROBLEM

The aim of the study is to critically look or examined the

banking business in Nigeria and identifying the role the external auditors play in fraud detection.

It is well known that one of the problem facing banks in Nigeria is mismanagement of fund or inappropriate accounting for receipts and payments.  Based on the problem identified above, the objectives of the research work include: -

1.           To highlight the need for appropriate review and report upon the accounts and balance sheet for banks by external auditors.

2.           To educate on the necessity of banks to keep in mind the essence to comply with the provision of the bank and other financial institute decree, 1971.

3.           To teach the banks to ensure compliance with the company and Allied Matters Decree (CAMD) 1990 as amended.

4.           To educate auditors to land credence to the accounts of the bank and to ensure compliance with SAS to and IAS 30.

 

 

1.3       SIGNIFICANCE OF THE STUDY

To appreciate the overall significance of this research work,

one will have to put into consideration the roles of the external auditors of fraud detection.

In considering this, the importance of this study is dressed by the head to ascertain that banks keep up to the requirements of the banks.

1.           It creates room for possible assessment of the banks financial reports enabling the entire public to receive what they bargained for, that is a true and fair received report.

 

2.           Also the auditor’s role is established in the view to assessing in general the financial background of the banks dining at putting to a stop the issue of distress.

 

3.           The government regulations on banks are being acknowledged by the external auditors, however making sure that they are continuously put of effect by banks.

 

4.           The project will provide for any student carrying out a similar topic or further research work on this subject a solid foundation for the realization for his other research purpose or work.

 

5.           The study is also in partial fulfillment of the requirement for the award of dgree in accountancy to the researcher.

 

 

1.3                         PURPOSE OF STUDY

        This study aims at assessing the internal audit as a subsystem of internal control being operated in the bank.  

i.  The purposes are outlined below

ii.  To aid good accounting system

iii. To eliminate wastage and losses

iv. To survey the external audit unit of union bank Plc. Head quarters      

    at  Victoria Island so as to review the predominant audit practice

      in the bank.

 v.   To point out deficiencies in the internal control system used by

      the bank.

vi.   To appoint out the implications of the system and suggest

       Recommendation that will bring improvement.

vii. To evaluate the expenditure procedure of the bank.

To ensure adherence management policies procedures, secure completeness and accuracy of record and safe guard all assets.

 

1.4       STATEMENT OF THE PROBLEM

It is a test to this research work to investigate on the positive

effects and influences the auditors, most emphatically the external auditors have financial organization like banks.

        Auditing has the basic means to control the financial system of organizations still present fraudulent financial statements, financial and reports to the public and certainly there has been persistent gradient practice in the banks which at the end gets the banks distressed.

        However, it could be questioned, how could this situation persist while auditing process had been in existence.  In carrying out his research work some problems have attracted special attention.

They are as follows: -

1.           What have been the reasons for consistent fraudulent practices in the bank.

2.           What are the identified reasons why most financial reports have not been and the other Financial Institution and Allied Mater Decree (CAMD), 1990.

3.           To what extent should the external auditors play in banks to enhance the growth of the bank ad for the banks tokeep standard as required by CAMD.

 

 

1.5       HYPOTHESIS FORMULATION

In view of the problems and questions already mentioned and

the objectives and significance set to be achieved in this research work, the hypothesis for this may be formulated for acceptance or rejection as follows:

given        Ho    =      null Hypothesis and

                Hi     =      Alternative Hypothesis

1.     Ho:  Fraudulent practices have not declined in the bank since

1990

        Hi:   Fraudulent practices have declined in the bank since

1990.

 

2.     Ho:  bank have not been employing the services of external

auditors to audit and investigate their financial statements, reports and records.

        Hi:   Bank have been employing the services of external audit

and investigate their financial statement, report and records.

 

3.     Ho:  The management of banks have been accepting

recommend shows and specialized ideas or advices of auditors managing finance .

 

4.     Hi:   The management o banks have been deception recommendation and specialized ideas or advices of auditors in managing their finance.

 

1.6       SCOPES AND LIMITATION

The research work is to enable the auditor discuss on union

banks Plc. And their various affordable auditors, stating the auditors objective, roles and services in the bank.  In view of this, the project covers the auditing of Union Bank Nigeria Plc.

The research work has identified the role of external auditor in fraud detection.

        In as much a these are so many branches of Union bank Plc. In specific towns and location around the country the scope of this study has been subjected within the Union Bank of Nigeria Plc. Akwa.

The Awka branch was taken as the case study since it can represent the entire branches of Union Banks, as they all exhibit and maintain similar functions, business transactions and the some organizational frame work.

 

1.7       LIMITATIONS OF THE STUDY

In the course of this study, some limiting factors were

encountered by the researched.

1.           The study was carried on amidst of tight academic schedule.

Thus regents interruption with lectures, test and private studies was not in common consequently limited time was available for the study.

 

2.           Lack of funds which restrict is the researchers investigation to a few already made work which she could lay her hands on.

3.           The researcher’s in ability to hold talk with all the auditors and bank managers whole she tended to have interviewed on issue relating to bank with regards to the roles of external auditors.

4.           The refusal of some university libraries and polytechnic libraries to conduct a library research on the above topic.

5.           Lastly, our ill-equipped library, which provided little or no information on this topic, is worth mentioning.

 

 

1.8       DEFINITION OF TERMS

The analogy o learning accounting, auditing and learning

language is not perfect, but the similarities the significant.  Some terms used in auditing could have different meaning from that used outside business hence, the need to define the following terms from auditing perspective for clear understanding as they would be used in this study.

The following are the definitions of the terms used in this project work.

AN AUDIT

        It is an undependable examination of and expression of opinion on the financial statements of an enterprise by an appointed auditor in pursuance of that appointment and in compliance with any relevant statutory obligations.

 

ACCOUNTING POLICIES

        This encourages the principles bases, contentious, role and procedures adopted by managements in preparing and presenting financial statement.

 

 

AUDIT EVIDENCE

        Are all the relevant and reliable data or information obtaining and recorded by the auditor n arriving at conclusion of the audit work bases in independent opinion on financial statement.

VERIFICATION

        This means establishing the existence ownership, valuation, and presentation of assets and liabilities a the balance sheet date.

COMLIANCE TESTS

        Are test, which seek to ensure the auditors at the external control procedures are being applied as prescribed.

 

 

SUBSTANTIVE TESTS

        Are those test on transactions and balance on other procedures such as analytical review, which seek to provide audit evidence as to the completeness, accuracy and validity of the information constrained in the accounting records or financial statements.

CHI-SQUARE TEST (X2)

         A test statistic used to test whether an observed serves of value differ significantly from which was expected.

It is employed for testing more than two population properties.

AUDIT REPORT

        This is communicated statement of opinion based upon convincing evidence by an independent competent authoritative person, concerning the degree of correspondence in all material aspects of accounting and information communicated by an entity with established criteria.