The Effect Of Auditing In The Development Of Nigerian Economy

The Effect Of Auditing In The Development Of Nigerian Economy

Abstract

The primary ideal of carrying out this exploration was to have an overview of “ The Effect of Auditing in the development of Nigeria Economy ”.

Fifty subjects were used as the population for the exploration. This exploration work has been logically divided into five chapters.

The first chapter entails the points and ideal of the study, compass of the study, statement of exploration problem, statement of thesis and exploration questions and description of terms.

Chapter two emphasizes on literature review. Under this, opinion of different pens in journals, magazines and textbooks in relation to the issues at hand are considered.

Chapter three will concentrate on Data Research Methodology which includes Research Design, Data Collection system, Research problems, trustability and Validity.

Chapter four is on Data Analysis and interpretation of data. This covers how the experimenter collected the data recorded and anatomized to put right the issue at hand.

Chapter five highlights the summary of the experimenters, conclusion and recommendation.

Chapter One

Preface

Auditing is deduced from a Latin word “ Audire ” which means “ To Hear ”. In the olden days, possessors of business used to hear the report of how their business progresses from the director of the business. But due to the fact that the primitive ways of keeping fiscal records which include making signs on board, keeping numbers off hand without attestation and lack of mechanical aids for computation had a lot of problems associated with it.

Also, the director may designedly decide to hide vital information for the proprietor of the business or indeed make fraud. also the need to employ another worker to act as a watch canine to the director arises. The new hand is known as “ THE Adjudicator ”.

The process by which the adjudicator gives the report of the position of the fiscal statement of a business in a true and fair manner to the proprietor of the business is known as “ AUDITING ”.

The development of auditing could be traced to the significance of checking the fiscal statement of an organisation. To that effect, auditing is regarded as one of the most lately established profession born out of complexity of ultramodern business world.

still, it can be traced to an ancient time. Indeed, since men have entered into contractual relationship with one another, thereby establishing a master- menial relationship, the hunt to insure the delicacy and trustability of the performing information has always was.

The emergence of auditing from a literal perspective was needed to cover, the shareholder’s capital investment from dubious promoters. Auditing has been revolutionary and ethical in nature right from the morning.

In the Nigerian perspective, the entire society is so upset about rising swells of theft, thievery, smuggling, corruption abuse of office, nepotism and deculturisation which hamper the country’s profitable development.

This breakdown in our society discipline which can be said to have accelerated in the last decade has now assumed an intimidating dimension; in fact, so intimidating that the unborn fortune of this country is bleak. And if nothing is done to check this unattractive and miraculous opprobrious trend, also the end product of it’ll more be ignored than educated. The issue of some act of individualities having some idle finances and some others not being financially buoyant, but have the oddities to manage business realities led to the operation of limited liability company which are possessed by their shareholders and managed by directors appointed by the shareholders.

also, public pot and parastatals are possessed and managed by the government. In Nigeria, individualities of course are appointed to enthrall colorful positions and accordingly constitutes the operation. But one problem which has always was in this master – menial relationship is, the shareholders or proprietor of the business being suspicious of the credibility of the reports, tend to have the feeling of the reports containing some crimes which may have passed either unintentionally or fraudulently so the apparent result to this credibility in both the private and public sectors is to appoint an unprejudiced and independent person( s) called “ Adjudicator ” to probe the fiscal report averted by the operation and express a professional opinion of the probity of the report to the shareholders or those that appointed him.

Auditing the public pot follows the same procedures are auditing any other form of business. Though public pot aren’t profit – acquainted organisation, still there’s need to review their books of account to enable the government to know how its annuity are being used and how the income generated from some of the pot are acted for.

still, irrespective of the vital position maintained by adjudicators, some illiterate members of the society do to see anything good, or the utility of auditing.

thus, this design will punctuate on the significance, need and effectiveness of auditing and also enlighten on whosever comes across it about the significance and objects of auditing in order to form the trustability and credibility of fiscal statement. therefore bringing about a further economically developed Nigeria. so this design is a token donation to the work of auditing profession as a vanguard of ethical revolution in Nigeria.

It sees fiscal corruption as a focal point of nearly all our ethical problems and as springboard for all other forms of corruption. thus, if a determent can be set up for fiscal corruption in our society, also the result to other problems will follow naturally. The bone of contention on in this write up thus is that as an ethical function and with its law of conduct, the auditing profession is the natural leader in the current public campaign to awaken people’s social heart and to fully exclude loose tendencies for the development of Nigerian frugality.

Aims And Objects Of The Study

Having a easily defined points and objects plays a significant part in any exploration work. Owing to that, the following are the points and objects of this design.

a) To assess the goods of adjudicators in the development of Nigerian frugality;

b) To assess the adjudicators effectiveness despite the legal restriction then and there;

c) Functions or places of adjudicators – the societal view point, since it’s now egregious that adjudicators play a veritably significant part in the development of the country frugality as regards the effective operation of available coffers.

d) To punctuate the significance and indispensability of auditing and adjudicators to any economically progressive applicant nation;

e) To protest against the misconception that adjudicator collude with fraudsters to defraud. And that company’s spending on adjudicators is a necessary wrong thereby extravagant.

Compass Of The Study

Considering the hugeness of the subject matter of this design, and the limited time and coffers available to carry out this necessary exploration thus, this design won’t only concentrate itself on the objective part of adjudicators but also on their effectiveness; and accordingly the impact or effect of auditing in the country’s development.

Also, the part of an adjudicator in the disquisition when the need arises and representing their guests in colorful aspect, and their legal liabilities in performing their duties. And eventually, what the Nigeria frugality need for its development.

Statement Of Research Problem

The significance of examining the fiscal statement of an organisation gave rise to early development of auditing. Meanwhile auditing is regarded as one of the most lately established profession, which was needed by the nature of ultramodern business world.

Since the contractual relationship exists between the operation and the shareholders, there has always been the desire to insure the delicacy and trustability of the performing information. And how far the adjudicators have gone in placing confidence on the audited fiscal statement of an organisation is what I intend to determine in this study.

It has also been rumoured that a host of adjudicators machinate with the bad eggs of the operation crew to defraud the organisation, which they set upthemselves.However, I explosively believe there’s no snippet of verity in that, but since my particular opinion isn’t enough to determine the genuiness of similar critical issue, If left for me to decide.

Statement Of Thesis And Exploration Questions

In this study, there are certain questions, which a comprehensive answers is needed, viz;

Who’s an adjudicator?

What needed Auditing?

What are the introductory qualifications of an adjudicator?

What impact has auditing in an organisation’s fiscal statement.

Has adjudicator played a significant part in checking fraud?

Do adjudicators machinate with fraudsters?

Are these rules governing the conduct of auditing?

What are the goods of auditing in the development of Nigeria frugality?

Delineations Of Terms

The following are description of terms applicable in this study.

1) Adjudicator DEFINED

It’s a legal demand that a suitable good professional accountant subject accounts of limited liability comparies to an inspection at least formerly in a time called be used adjudicator.

So an inspection may be defined as “ the independent examination and disquisition of books, accounts and validations of a business with a view to enabling the adjudicator to report whether the balance distance and profit and loss account are property drawn up so as to show a true and fair view of the state of affairs and the profit and loss of the business according to the stylish of the information and explanation attained by “ the adjudicator ”.

It can also be defined as an independent examination of and the expression of an opinion on the fiscal statement of an organisation by an appointed adjudicator in agreement with its terms of engagement and the observance of statutory regulations and professional demand.

2) INTERNAL CONTROL

This refers to a whole system of control, be it fiscal or else established by the operation in order to carry on the business of an organisation in an orderly manner; guard its means and secure as far as possible the delicacy and trustability of its records. It’s also established to insure the judicious operation of the organizational coffers.

3) INDEPENDENCE DEFINED

The conception of adjudicators independence has generated a lot of argument, and different interpretations have been given to it. As regards this study, the conception relates to the ‘ INDEPENDENCE OF MIND ” of the adjudicator to singly perform his duties without fear or favour of anybody.

4) INTERNAL AUDITING

This can be defined as an independent appraisal of exertion within an organisation for the review of operation as a service to operation. It’s a directorial control which functions by measuring and assessing the effectiveness of other controls.

5) EXTERNAL AUDITING

External Auditing could also be appertained to as independent auditing. It’s the examination and review of accounts, fiscal statements and bound of organisation by an interdependent( external) adjudicator who’ll after the review express a professional opinion on the verity and fairness of the statement presented to him; and the state of affairs of the organisation. The adjudicator, who’s an hand of an organisation, is typically appointed for a period of one time.

6) QUALIFICATION

In this environment, qualification refers to certain position, which a person must attain before he could be granted the right to act as an adjudicator.

As handed by ICAN act of 1965 to be applied in respect any auditing carried out under the decree this implies that an adjudicator must be a member of the INSTITUTE OF CHARTERED ACCOUNTANTS OF NIGERIA( ICAN) with exercising instrument. Accordingly, during the period, Nigeria was a social state under the British colony, the announced decree was also applicable to Nigeria which was also their social state. still, hardly could one find the work of auditing carried out by a Nigerian for the company operating in Nigeria. At that time, nearly all the work of auditing were carried out by the colonialist serving as agent in Nigeria to their superior who were the possessors of those business in Nigeria.

In 1960, when Nigeria got her independence, there was the need and a move toward an indigenous auditing which was known as “ Nigerian Auditing ” still with Nigeria having little knowledge of auditing and account practise, the so- called Nigerian auditing was still under the control of the whites. The auditing profession, still dominated by the outsider couldn’t allow Nigerians to know the profession more. This was in no time notable due to the foreign adjudicators repatriating profit from Nigeria to their own country which was the practise right before a independence in 1960.

also Nigerian government was called upon to insure that Nigeria labor force or adjudicators were placed on the auditing work by the first mercenary government institution in Nigeria from the times 1960 to 1964. There was no strong body responsible for the auditing aspect, there was no professional body to work as a platoon to cover the demanded auditing services until 1965, a move was made by the Nigeria professional accountants to form an association named “ Institute of Chartered Accountant of Nigeria ”( ICAN). This body was still regarded by some Nigerians as a replicant of institute of Chartered Accountants of England and Wales( ICAEW).

Eventually, the bodies were suitable to give the qualification of adjudicators. The qualification can be of social or professional aspect.

Professionally, before one can be an adjudicator, you must have passed the good test as quested by ICAN also, you must have had nothing lower than 30 months experience as an apprentice under a rehearsing chartered accountant. This 30 month, experience includes experience acquired before you good and after the qualificationi.e(pre-qualification and post qualification) as a chartered accountant. Eventually you must have been issued with a licence to exercise as an adjudicator by ICAN.

The social aspects are as follows

i) You must be a minor( ii) You mustn’t be a void

iii) An insane person can not be an adjudicator

7) TERMS OF APPOINTMENT The party appointing an adjudicator may fix its terms of appointment. For a statutory inspection, the inferred terms of appointment is the expression of inspection opinion. The adjudicator is free to do whatever work he considers necessary for the conformation of opinion. The law in this regard fixes his duty as the customer who appoints him can not circumscribe it.

8) FINANCIAL STATEMENT This contains epitomized information of the establishment’s fiscal affairs. They’re the means of presenting the establishment’s fiscal position to possessors, creditors and the general public.

9) OPINION The adjudicator opinion generally geared towards saying whether the account shows a “ true and fair view ” is one picked out of legislation.

10) INTERNAL inspection

11) operation inspection This is an inspection approach which involves examination of operation conditioning in order to ascertain whether the rules and regulations established by operation are being duly followed. This type of inspection can not be fluently carried out by internal adjudicator. External adjudicator must be politic, where this type of inspection approach is espoused.

12) SYSTEM inspection This is an inspection approach which involves valuation of internal control system established within the enterprise. The ideal of this type of inspection is to enable the adjudicator to ascertain effectiveness or else of the internal control system and also to determine whether information generated or attained under the system can be reckoned upon. In practise, system inspection are typically being carried out within the account period of a business enterprise after which a operation letter shall be issued stating the weakness in the system as well as the effect on the enterprise and how the weakness can be bettered upon.

13) sale inspection This is also appertained to as vouching. It’s an inspection approach which involves examination of colorful deals carried out by the enterprise within the period. The objects of sale inspection is as follows

a) To ascertain the authorization and blessing of the sale

b) To enable the adjudicator to determine the cost of the sale.

c) To identify whether the deals are complete, accurate and valid.