ENHANCING PUBLIC CONFIDENCE IN AUDIT REPORT OF FINANCIAL INSTITUTIONS. THE ROLE OF AUDITOR’S INDEPENDENCE
ATTENTION:
BEFORE YOU READ THE CHAPTER ONE/ABSTRACT OF THE PROJECT TOPIC
BELOW, PLEASE READ THE INFORMATION BELOW.THANK YOU!
INFORMATION:
YOU CAN GET THE COMPLETE PROJECT OF THE TOPIC BELOW. THE FULL
PROJECT COSTS N5,000 ONLY.
THE FULL INFORMATION ON HOW TO PAY AND GET THE COMPLETE PROJECT
IS AT THE BOTTOM OF THIS PAGE. OR YOU CAN CALL: 08068231953, 08168759420
ENHANCING PUBLIC CONFIDENCE IN AUDIT REPORT OF
FINANCIAL INSTITUTIONS. THE ROLE OF AUDITOR’S INDEPENDENCE
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
The preparation of stewardship report from the accounting
point of view is the role of the management who oversees the affairs of the
business organization on behalf of the owners usually the shareholders. This
stewardship report represents the financial statements covering the operating
performance and the financial position of a company. It is usually prepared by
the directors and addressed to the shareholders as a fulfillment of their
agency responsibility.
Suffice to say that if all the facts concerning financial
transaction were properly and accurately recorded and if the owners were
properly and accurately recorded, and if the owners and managers of business
enterprises were entirely honest and sufficiently skilled in maters of
accounting and recording, there would be little need for independent auditing.
However, human nature being as it is, there probably will
always be a need for the auditor (www.crfonline.org/orc/cro-11,int ml).
Dependable financial information is essential to be very
existence of our society. The credit professional making a decision of our
society: the credit professional making a decision to grant trade credit, the
investors making a decision to buy or sell securities, the banker deciding
revenue based on income tax returns, all are relying upon information provided by
others.
In many of these situations, the goals of the providers of
information run directly counter to those of the users of the information.
Implicit in this line of reasoning is recognition of the social need for
independent auditors, individuals with a professional competence and integrity
who can tell us whether the information on which we rely constitutes a fair
picture of what is really going on. Good accounting and financial reporting and
society in allocating its resources in the most efficient manner.
The contribution of the independence auditor is to give
credibility to financial statement.
Credibility in this usage means that the financial statements
can be believed; that is, they can be relied upon by outsiders, such as trade
creditors, bankers, stock holders, government and other interested third
parties. According to the Oxford Advanced Learner’s Dictionary of English,
Credibility can be defined as “The quality of being generally accepted and
trusted.
Audited financial statements are now the accepted means by
which business corporations report their operating results and financial
position. The word audit when applied to financial statements means that the
balance sheet, statements of income and retained by an audit report prepared by
independent public accounts, expressing their professional opinion as to the
fairness of the company’s financial statement (www. Crfonline.org/cro/cro-11.
intml).
On the other hand, the oxford Advanced Learner’s Dictionary
of English, 5th Edition defined Confidence as “The feeling that you can trust,
believe in and be sure about the abilities or good qualities of some thing or
somebody.
Audit competence can only be achieved if public confidence on
audit reports can be improved significantly.
Both credibility and confidence go hand in hand and each
variable impacted on each other to achieve the audit quality and competence the
users of financial statement desired. However, management failure arising from
co-operate governance failure over the years majorly contributed to the loss of
credibility in audit reports. The solution to this problem of credibility in
financial and audit reporting lies in appointing an independent person and
public confidence in audit reports is enhanced when the profession encourage
high standards of performance and conduct on the part of all practitioners’.
According to Olagunju (2011), for an audit to be credible and
reliable, it must be performed by someone, who is independent and cannot be influenced
by position, power which will affect its own conclusion.
Auditor independence helps to ensure quality audit (Beck,
2004). The UK financial Reporting Council (UKFRC) has undertaken an extensive
on audit quality and in February 2008 released the audit quality frame work to
improve i.e. the confidence and
credibility in audit. They are: the culture within an audit firm, the skills
and personal qualities of audit partners and staff, the effectiveness of the
audit process; the reliability and usefulness of audit reporting; and factors
outside the control of auditors affecting audit quality
(www.mia.org.my/at/at/2011/12/06.paf)
To this end, with regards to the issue of public confidence
and credibility (1z-a-v-z the factor responsible to the loss of credibility and
public confidence, the attitude of users of financial statement to audit
reports as well as providing the way forward to improve audit credibility and
public confidence, this research work aims at utilizing the significance of
confidence and credibility as approaches to improve audit competence.
Statement of Research Problems
One to the cumulative negative effects that window dressing
(creative accounting) collapse of some USA giant companies such as Enron;
world-com, Global Crossing, Tyco, etc together with a host of smaller scale
examples worldwide such as Cadbury in Nigeria (ICAN Study Pack, 2009: 252) has
on the credibility of financial reporting, attention has been drawn to the
following problem areas and research questions
Does the investing public have confidence in the audit
reports of companies in recent Ebor?
Does improvement in the credibility of financial statement
enhance the confidence of audit report?
Is there significant relationship between auditors’
independence and credibility of financial statement?
Is audit quality and credibility a question of auditor’s
personal quality?
Is the loss of Credibility in audit report caused by the
collapse of corporate governance?
What remedy could be recommended to restore and improve audit
confidence in audit reporting?
Objective of the Study
To determine whether the investing public has confidence in
the audit report of an audit in recent time.
To investigate whether improvement in the credibility of
financial statement can enhance the public confidence of audit report
To examine whether there is significant relationship between
auditors’ independence and credibility of financial statement.
To determine whether audit quality and credibility of
financial statement.
To investigate whether the loss of credibility in audit
reports is caused by the collapse of corporate governance in companies.
To provide some possible remedies to restores and improve
public confidence in audit and financial reporting.
Statement of Research Hypotheses
In order to achieve empirical findings the following
hypotheses have been postulated:
Ho: Improvement in the credibility of financial statements
cannot enhance the public confidence of audit report.
Hi: Improvement in the credibility of financial statements
can enhance the public confidence of audit report.
Ho: Audit quality and credibility is not a question of
auditors’ personal qualities.
Hi: Audit and credibility is a question of auditors’ personal
qualities
Ho: Loss of credibility and confidence in audit report is not
caused by the collapse of corporate governance in companies.
Hi: Loses of credibility and confidence in audit report is
caused by the collapse of corporate governance in companies.
Scope of the Study
Geographically, the study will cover the global view on
issues of public confidence and credibility in audit and financial report
reporting. Cases of window dressing and collapse of corporate governance as it
negatively impacted on audit credibility will be converted, both in global view
and in Nigeria.
Significance of the Study.
The research work will be of great significance to the
professional accountants and their stakeholders or interest groups having
financial interest in audit reports. They include shareholders, directors,
investors, employees, labour and trade union, creditors, government etc could
through the finding of this research appreciate the true nature of an audit and
its importance as it related to transparency and accountability achievement.
Also, the duties and obligation of each stakeholder as to the
enforcement of good corporate governance leading to the independence of the
auditors and the generation of objectives audit report will be appreciated.
Lastly, readers will be exposed to other factors militating
against public confidence achievement which is not directly caused by the
auditors ( as most times, auditors are being blamed for the feature of
management and corporate governance)
Limitation of the Study
The constraints facing this research include the relatively
short times to conduct it. Also, inadequate previous literature on the topic is
another constraint.
Finally, the general apathy of Nigerians towards answering
research question posed little differently. However, irrespective of whatever
constraints available the researcher remained tenacious in achieving a
promising study.
Definition of Terms
Some keywords that are used in this project work are defined
below:
Audit Report: This audit report is a written summary of
finding of the auditors during their audit work along with their opinions on
such findings.
Iinternal Audit: Internal audit is an independence appraisal
function within an organization for the review of the system of control and the
quality of performance as a service to the organization (Okolie 2007: 76)
Corporate Governance: ICAN Study Pack (2009:207) defines
corporate governance as “the set of mechanisms through which outside investors
are protected from expropriation by insiders(including management, family
interest and for governments).
Internal Control System: Okolie (2007:71) defines internal
control system as “the complete range of control, financial or otherwise
established by management in order to carry on the business of the organization
orderly manner and to ensure adherence to management policies, safeguard the
asset and secure as far as possible the completeness and accuracy of the
records.
Stewardship Report: It is the financial statement prepared by
the directors addressed to the shareholders as a fulfillment of their agency
responsibility.
Fraud: According to statement of Auditing standards 110,
fraud comprises both the use of deception to obtain an unjust or illegal
financial advantage and international mis-representation affecting the
financial statements, employees or third parties.
Window Dressing/Creative Accounting: When a company undertake
expenses and losses and consequently overstate profit earnings, just as Enron
corporation have done, the organization’s account are “window dressed or
created. It is fraudulent and criminal to create account (ICAN Study Pack,
2009:191).
Paper Profit: This is the consequence of “window dressing”.
The term is used to describe a situation whereby the profit disclosed in the
financial statement lack cash equivalent or tangible assets equivalent (Oxford
Advanced Learner’s Dictionary of Accounting).
Self Interest: It is the management’s financial or other
interest which will inappropriately influence the professional manager’s or
accountants judgments, conduct or behaviour.
Expectation Gap: Is the difference between what the public
expect from an audit and what the auditing profession prefers the audit
objectives to be (Porter, 1993).
Audit Risk: Is the term given to the risk that the auditor
will draw an invalid opinion or conclusion from his audit work. (ICAN Pack,
2009.379).
HOW TO GET THE FULL PROJECT WORK
PLEASE, print the following instructions and information if you
will like to order/buy our complete written material(s).
HOW TO RECEIVE PROJECT MATERIAL(S)
After paying the appropriate amount (#5,000) into our bank Account
below, send the following information to
08068231953 or 08168759420
(1) Your project topics
(2) Email Address
(3) Payment Name
(4) Teller Number
We will send your material(s) after we receive bank alert
BANK ACCOUNTS
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 0046579864
Bank: GTBank.
OR
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 2023350498
Bank: UBA.
FOR MORE INFORMATION, CALL:
08068231953 or 08168759420
AFFILIATE LINKS:
myeasyproject.com.ng
easyprojectmaterials.com
easyprojectmaterials.net.ng
easyprojectsmaterials.net.ng
easyprojectsmaterial.net.ng
easyprojectmaterial.net.ng
projectmaterials.com.ng
googleprojectsng.blogspot.com
myprojectsng.blogspot.com.ng
https://projectmaterialsng.blogspot.com.ng/
Comments
Post a Comment