The Relevance of Nigeria Auditors in the Management of Business Organization

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Every business out fit requires management without which, success or failure of such a business may not be easily determined. To achieve growth and expansion pre-supposed a well-defined accounting of or financial system that is capable of upholding the goals of the business. Thus, accounting is an information measurement system that identifies records and commercial relevant and reliable information about an organization business activity (Cliappette 2000) an aspect of such information measurement is auditing. Accounting; to American Accounting Association. (1973) auditing is a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events and communicating the result to interested users.

To ensure probity, organizations employ auditors who vet from time to time the statement of accounts of organizations. Konorth (1999) affirmed that auditing is a form of attestation about the reliability of someone ascertain. In order, however, to evaluate fairness, the auditors must gather evidence either supporting or refuting the assertion. In gathering and evaluating audit evidence the auditor adheres to a set of standards established by the auditing standards board referred to as the General Accepted Auditing standard GAAS (Alamante, 1993). According to the professional standard New York, 2003) auditing is a systematic process; consisting of a series of sequential steps that includes; evaluating internal accounting control and testing the substance of transactions and balances. The accounting system according to the Board include the necessary internal controls to produce the data appearing in the financial statement, it expresses the auditor’s opinion as to the fairness of those who prepared the financial statement of the organization as prepared by the accountants. The professional accountant has a responsibility to the companies and any other users of the statement. Auditors are involved in the financial system of organizations because shareholders are not actively involved in the daily affairs of the business; they must rely on the auditors to ensure that management is fairly presenting the financial statements of the business (Eneje 2006) Eneje further stated that auditors’ report is an opinion not a statement of fact. In doing this, however, the auditors need to evaluate the evidence gathered which must be sufficient and competent. Thus, the job of an auditor according to AKPA (1973) is to determine whether the representations are indeed fair, that is, to ascertain the degree of correspondence between the ascertain and established criteria. According to Konreth (1999), the auditor communicates the result of his or her audit work to interested users. The attestation or the audit report is included with the financial statements in the annual report to stockholders and describes the scope of the audit and the findings of the auditors Konerth further stated that the findings are expressed in the form of an opinion concerning the fairness with which the financial statements present the firm’s financial position, results of operations and cash flow of the company.

1.2 STATEMENT OF THE PROBLEM

A breach in Okeke (2008) affirmed that a combination of two sets of skills involving ‘thinking and doing” is the bane of management. For him, the thinking component; otherwise referred to by him as the mental skill of deliberation judgment and decision, the determination of objectives and goals with the ways and means of effectively attaining them. The second set is attitude and behaviour and the capacity to motivate fellow human beings to give their best in team efforts towards the accomplishment of organizational set goals. From this posit, therefore, any person in an organization that makes use of his or her deliberation thinking and decision is indeed in management. The auditors are by no means an exception in this regard. They are the police of the accounting system. The auditors, both internal and external are employed in organizations to help achieve performance and profitability goals and prevent loss of resources by fraud and other means. This is achieved through reporting and compliance with laws and regulations (Walage 1999). However, despite the role performed by auditors to enable strict compliance to the regulations and laws guiding the finance in an organization, many organizations whose financial base was once strong have been declared bankrupt. According to AJCPA professional standard, New York section at 100/10, the evidence gathered by the auditors must be objective and must evaluate evidence gathered. The evidence according to this body must be sufficient and competent. Sufficient presupposes that “enough” evidence was examined. The determination is a function of the auditors’ professional judgment and does not guarantee the accuracy of the financial statement. It simply exposes the auditor’s opinion as to their fairness.

Again, to be efficient, an auditor who is to terminate a rational opinion on the financial statement must be able to recognize material departure from GAAP including errors in recording transactions and events. Ideally, the auditors ensure that the expected policy guidelines on finance are adhered to and any form of the derailment is assured to be found. In Nigeria, however, many organizations have failed including the banks and stock houses due to financial appropriations. The study, therefore, examined the relevance of the Nigerian auditors in the management of the business organizations with particular reference to First Bank of Nigeria plc, Okpara Avenue, Enugu.

1.3 RESEARCH QUESTIONS

For the study. the following research questions were raised.

i. How fair are the Nigerian auditors in the reporting of audit findings with particular reference to the banks?

ii. To what extent have the personal interests of the auditors been able to influence their findings?

iii. To what extent are organizations prepared to implement auditor findings to avoid future occurrences with particular reference to the first bank of Nigeria plc?

iv. To what extent does the customer-organization relationship affect the auditor’s effectiveness concerning the banking industry in Nigeria?

1.4 PURPOSE OF THE STUDY

The purpose of the study includes

i. To examine how fair the Nigerian auditors are in reporting their audit findings.

ii. To examine the extent to which the personal interest of auditors influences their findings iii. To find out the extent organizations are prepared to implement audit findings to avoid future occurrences.

iv. To investigate the extent customer-organization relationships affect job effectiveness.

1.5 SIGNIFICANCE OF THE STUDY

At the end of the research, it will be of immense importance in the following ways;

i. The study when completed will help financial institutions and other organizations on the best approaches to auditing their accounts.

ii. It will be of value to the auditors because the research will unveil some of the attendant issues that jeopardize the duties of auditors.

iii. It will equally provide a mirror for self-evaluation by auditors as to whether they conform to the expected standards in the course of discharging their functions.

iv. The study will be of immense importance to organizations as it will provide a platform for conforming to the audit reports made or otherwise.

v. To the government and general public, the study will assist them in understanding the value of auditors in every system and equally disabuse their minds that auditors functions are no less victimization of some people.

1.6 DEFINITION OF TERMS

For the study, the following terms have been defined within the content of their usages.

Accounting: This is the process of keeping the financial account of an individual or organization.

Ascertain: This refers to the statement of fact based on the evidence.

Auditors: Someone who investigates the financial statement of an organization to ensure compliance with the set standard.

Auditing: It is the process of investigating the financial transactions of an organization to ensure that rules comply with the basis of the organization’s policy and audit standards.

Attestation: This refers to as the proof of fact about the opinion of the audited accounts as presented in the statement of accounts.

Banks: This refers to a financial institution where money is kept and equally given to the customers.

Business: This refers to a commercial venture with the primary purpose of making a profit Evaluating Evidence refers to the affirmation made on the audited account to ensure fairness and non-interference to guidelines.

Fairness: This refers to the judgment made by the auditors when presenting the audit reports.

Financial system: This refers to all the processes involved in keeping the financial receive of an organization.

Financial statement: This is a financial record that contains all the financial transactions of an organization. Organization: The coming together of people with the sole aim of protecting their interests.