- AN EVALUATION OF MANAGEMENT ACCOUNTING TECHNIQUES ON ORGANIZATION DECISION MAKING PROCESS (A CASE STUDY OF CADBURY NIGERIA PLC, IKEJA, LAGOS)
- AN ASSESSMENT OF THE IMPACT OF BANK CREDIT ON AGRICULTURAL DEVELOPMENT (A CASE STUDY OF FIRST BANK OF NIGERIA PLC)
- THE IMPACT OF PERFORMANCE EVALUATION THROUGH THE ANALYSIS OF FINANCIAL STATEMENT ON INVESTMENT DECISIONS (A CASE STUDY OF LOGMAN NIGERIA PLC.)
- ASSESSMENT OF THE IMPACT OF BANK CREDIT ON AGRICULTURAL DEVELOPMENT (A CASE STUDY OF FIRST BANK OF NIGERIA PLC)
- EFFECTS OF PERFORMANCE EVALUATION THROUGH THE ANALYSIS OF FINANCIAL STATEMENT ON INVESTMENT DECISIONS (A CASE STUDY OF LOGMAN NIGERIA PLC.)
- IMPACT OF COMMERCIAL BANKS IN AGRICULTURAL FINANCING IN NIGERIA (A Case Study of First Bank Nigeria Plc.)
- THE IMPACT OF BANK FRAUD AND DISTRESS ON BANKING HABIT IN NIGERIA (A CASE STUDY OF FIRST BANK, GTB, UBA, UNION BANK AND ZENITH BANK)
- THE IMPACT OF ELECTRONIC BANKING ON THE PERFORMANCE OF BANKING IN NIGERIA (A Case Study of Eco Bank Plc)
- IMPACT OF INFORMATION TECHNOLOGY ON OPERATIONAL EFFICIENCY OF BANKS IN NIGERIA (A STUDY OF DIAMOND BANK NIGERIA PLC)
- THE INDEPENDENCE OF AUDITORS AND RELIABILITY OF FINANCIAL REPORTS IN THE NIGERIA BANKING SECTOR
IMPACT OF AUDITOR’S INDEPENDENCE ON FINANCIAL STATEMENT TOWARDS INVESTMENT DECISION MAKING IN NIGERIA
Auditor’s independence is the bedrock of the reliance of any form of audit report in accounting profession and is a major attribute to ensuring accountability however. The ultimate aim of this research work controlled or censored auditing is to assist owners of business the true and fair view of the financial statement as well as give insight into how its independence to have a positive correlation on the report they give which is being relied upon by users. The researcher employs primary data (questionnaire and personal interview) in its data collection. It was discovered or found out that closeness in terms of giving management decisions can impair an auditor’s independence. Conclusion was made that Independence has been noted is at the core of the accounting profession, the very essence that gives an auditor’s work its value. It was as well recommended amongst others that seminars and lectures should be con-ducted for auditors to enable them appreciate their profession the more to maintain their personal integrity despite the advise situation in the country, knowing fully well that a good name is better that riches.
TABLE OF CONTENTS
Title Page i
Table of Contents vi
Chapter One: Introduction 1
1.1 Background to the Study 1
1.2 Statement of Problems 2
1.3 Research Questions 3
1.4 Objectives of the Study 3
1.5 Statement of Hypothesis 4
1.6 Significance of the Study 5
1.7 Scope of the Study 5
1.8 Limitations of the Study 6
1.9 Definition of Terms 6
Chapter Two: Review of Related Literature 8
2.1 Introduction 8
2.2 What is Auditing? 9
2.3 Reasons for Auditing 12
2.4 Objectives of Audit 13
2.5 The Detection of Errors 14
2.6 Types of Audit 15
2.7 Audit Risk 17
2.8 Limitation of Auditing 18
2.9 Types of Auditors 19
2.10 Qualities of an Auditor 20
2.11 Auditors Qualification 22
2.12 Auditors Appointments 24
2.13 Auditors Remuneration 24
2.14 Rights of an Auditor 25
2.15 Auditors Duty 26
2.16 Auditor’s Liability 28
2.17 Types of Independence 33
2.18 Audit Independence 35
2.19 Perceive Independence 35
2.20 Independent and Management Advisory Services 35
2.21 Auditors Independence it’s Effectiveness 36
Chapter Three: Research Method and Design 38
3.1 Introduction 38
3.2 Research Design 38
3.3 Description of Population of the Study 38
3.4 Sample Size 39
3.5 Sampling Techniques 39
3.6 Sources of Data Collection 39
3.7 Method of Data Presentation 41
3.8 Method of Data Analysis 41
Chapter Four: Data Presentation, Analysis and Interpretation
4.1 Introduction 43
4.2 Data Presentation and Analysis of Data 43
4.3 Hypothesis Testing 48
Chapter Five: Summary of Findings, Conclusion and Recommendations 52
5.1 Introduction 52
5.2 Summary of Findings 52
5.3 Conclusion 54
5.4 Recommendations 56
Appendix I 59
Appendix II 50
1.1 Background to the Study
The independence of an auditor is one of the fundamental concepts of the accounting profession.
Auditing as a profession arose primarily because of separation in the ownership as well as the administration of the company, we therefore have to employ a professional manager whose responsibility is to utilize the shareholders resources and produce a quantitative statement. This statement is referred to as stewardship account, in order to make the owners of the business place reliance on members of management as regard the true and fair view of the financial statement, the shareholders appoints an auditor to produce on audit, reports.
Independence is often an altitude of the mind characterized by integrity and objectively to professional works. In May, 2000, the Institute of Chartered Accountant of Nigeria reviewed an existing document issued in November, 1979 embodying a code of conduct for the members. This document titled ‘rules of professional conduct for members” because of the essential part of the rules to incoming members; the essential part of the rules is majorly on
Independence of an auditor definitely must have a direct impact in the audit report. This therefore means that if an auditor’s independence is effective, what we should be expecting qualified report. The importance of the independence to an auditor cannot be over emphasized owing to the fact that it forms the crux of the profession and can be likened to the part of the auditing profession.
1.2 Statement of Problem
The concept of independence is cornerstone of the accounting profession. The main aim of employing the services of an auditor to financial statement is to produce a report that will add credibility to financial statement but in practical terms, the independence is not in place. This research is to carryout an investigation to ascertain the effect of auditor’s independence on management decision making process and to proffer solutions on the ways forward to enhance auditor’s independence in Nigeria.
1.3 Research Questions
Below are research questions meant to direct the study.
i. Does the degree of auditor’s independence have an impact on the report given?
ii. Does the increase in credibility on the financial statement have an impact on user?
iii. Do auditors know and appreciate relevance of independence?
iv. Can one appraise the areas of weakness and strength with a view to making recommendation on possible improvements where necessary?
v. Is the provision by statutory bodies and standard on auditor’s independence?
1.4 Objectives of the Study
The level of reliance on the audited financial statement by the users is not that encouraging due to the ineffectiveness, of auditor’s independence. The objective of this study are:
i. To evaluate the impact of auditors independence on audited report.
ii. To find out if increase credibility on the financial statement affect the users.
iii. To ensure that auditors know and appreciate relevance of independence
iv. To appraise the areas of weakness and strength with a view to making recommendation on possible improvements where necessary.
v. To assess relevance of provision by statutory bodies and standard on auditor’s independence and as certain how credible it has been. If not to evaluate and give necessary suggestions that will help appraise the system.
1.5 Statement of Hypotheses
In order to achieve the objective of this study, the following hypotheses were formulated.
Ho: Auditors’ independence does not have a direct impact on the auditor’s report.
HI: Auditors independence have direct impact on the auditor’s report.
Ho: There is no significant relationship between the provision of statutory bodies and auditors independence.
HI: There is significant relationship between the provision of statutory bodies and auditors independence.
1.6 Significance of the Study
This study aims at evaluating the impact of auditor’s independence on audited report and gives insight into the effect to the users of such reports. It is also to assess relevant provision by statutory bodies and standard on auditor’s independence and ascertain how credible it has been.
1.7 Scope of the Study
This research focuses on the independence of auditors and its impact on audit report in accounting and its scope is centered on selected audit firms in the country using some audit firms in Benin City, Edo state as case study. The study covers the range between 2010 – 2015 and the sample size of 30 is used for the population.
1.8 Limitations of the Study
The limitation of this study was the difficulty in getting relevant journals that is related to the area of study.
1.9 Definition of Terms
Audit: it is a process carried out by suitably qualified auditor where the accounts of business entities, including limited companies, charities trusts and professional firms are subjected to scrutiny in such details as will enable the auditor.
Auditing: It is defined as the process by which a competent qualified independent person accumulates and evaluates evidence about quantifiable information relating to a specific economic entity for the purpose of ascertaining the compliance with any relevant statutory obligation.
Auditor: Is an auditor as an expert accountant who makes an examination of accounting data in order to form his opinion as to the reliability of those data.
Independence: This is the independence of the auditors mind in order to form an objective opinion of the financial statement examined by him without any direct interference from his client.
True and fair view: This means accounts prepare in accordance to the generally accepted accounting principles.
Audit Report: This is the opinion of the auditor after due examination of the financial statements. Audit report is a written summary of the findings of the auditors during their audit work along with their opinion on such findings. The report may either be the domestic report also called letter of weakness addresses to owners of the organization (in case of company’s shareholders).