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Auditors’ Liabilities to Organizations and Societies in General

Filed in Accountancy Project Topics, Current Projects by on September 16, 2020
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Auditors’ Liabilities to Organizations and Societies in General.

ABSTRACT

The belief that whenever an auditor is engaged with any business organization, the objective(s) of such organization are likely to be achieved, seems not to stand the test of time, considering the rate of business failures and the inherent loss of economic resources resulting from such failures by the stakeholders.

Financial statement is one of the tools which companies employ to present and ex-ray their performance or position over a period of time. It is the duty of Auditors to examine these financial statements and ensure that what companies claim to have, really exists.

Stakeholders place their reliance upon these audited statements for their economic decisions. Surprisingly, some of these financial statements that have been reported to have shown a true and fair view and complied with relevant statutes by an auditor, turns out to be a reverse.

It is on the premise of the above, that this research project was set out to actually position. Those factors, which are responsible for the unreliable reports that subsequently lead to business failures, have been unraveled. The researcher also went ahead to portray the impact of these unreliable company financial statements in economy and the possible panacea.

Primary and secondary sources of data were employed, questionnaires were served to company Directors, Financial controllers and senior Accountants engaged with the selected organizations.

These companies are manufacturing industries, financial institutions and trading concerns that prepares annual financial statement. On collection of the information (data) from the respondents, they were analyzed using tables, percentages, bar charts and chi-square (X2).

Discoveries were made at the end of the study as follows: That business organizations don’t achieve their objectives with the engagement of auditors, irrespective of the fact that these auditors certify the financial statement after a thorough examination.

This unreliable report from corporate auditors goes a long way in misleading the shareholders, government and the entire society leading to the rampart business collapse in the recent time.

It was also discovered that the non-independent of auditors and their dual role (e.g. being financial adviser and auditor at the same time) to a company, influences them to give a misleading report.

After the above findings, recommendations were made, thus: Different arms

of the law, including Banks and other Financial institutions Board (BOFID), Companies and Allied Matters Decree (CAMD), According Professional Bodies and other regulatory agencies should step in through educating all the concerns, instituting monitoring teams that will ensure compliance to all the laws enacted.

These steps if followed, will no doubt, restore reliance and accountability in relation to the company financial statements in one hand, and the auditors’ report in the other hand.

TABLE OF CONTENTS

Title Page …………………………………………………… i
Certification ……………………………………………….. ii
Dedication ………………………………………………..… iii
Acknowledgement …………………………………………. iv
Abstract ……………………………………………………… vi
Table of Content ……………………………………………… viii

CHAPTER ONE

1.1 Introduction and Background of the study ………………… 1-3
1.1.2 Liabilities of auditors under common law………………….. 3
1.1.3 Liabilities of auditors under civil law………………………. 4
1.1.4 Auditor’ liabilities under criminal law……………………. 4-5
1.1.5 Arthur Anderson V. Enron …………………………………. 5-6
1.1.6 Auditors’ liabilities under CAMD…………………………… 6-7
1.2 Statement of the problem……………………………………. 7-8
1.3 Objectives of the study………………………………………. 9-10
1.4 Significant of the study………………………………………. 10-11
1.5 Scope/ limitation of the study ……………………………….. 11-12
1.6 Hypothesis……………………………………………………. 12-13
1.0 Definition of terms…………………………………………… 13-15
References. …………………………………………………… 16

CHAPTER TWO

2.0 Review of Related literatures………………………………… 17
2.1 History of auditing…………………………………………… 17
2.2.1 Definition of Auditing ………………………………………. 18-20
2.2.2 Purpose of auditing……………………………………….…. 21
2.3 The roles of non-auditing officers ………………………… 22-25
2.4 Auditors’ duties to organization and societies in general ……… 26-29
2.5 Auditors’ liabilities to third parties…………………………. 29-30
2.6 Financial statements: contents and the inherent errors and frauds . 31-33
2.6.1 Objectives of financial statement ……………………………….. 33
2.6.2 Who benefits from financial statements ………………………… 33-34
2.6.3 For what purpose are they required for ………………………… 34-35
2.6.4 What precise information to be disclosed ………………………. 35
2.6.5 Inherent frauds in financial statements…………………………… 35-39
2.7 Some cases of frauds arising from financial statements …………39 -40
2.7.1 Frauds in the financial statement…………………………………. 40-43
References …………………………………………………. 44

CHAPTER THREE

3.0 Research methodology………………………………………. 45
3.1 Primary sources……………………………………………… 45
3.2 Secondary sources…………………………………………… 45-46
3.3 Design and measurement of instruments…………………….. 46-47
3.4 Data collection procedure……………………………………. 47
3.5 Population Determination……………………………………. 47-48
3.6 Sample size determination…………………………………… 49-50
3.7 Distribution and Return of questionnaires……………………. 50-51
3.8 Instrument of data collection…………………………………. 51-52
References…………………………………………………… 53

CHAPTER FOUR

4.1 Presentation and Analysis of Data ………………………….. 54-68
4.2 Test of hypothesis……………………………………………. 69
4.3 Statement of hypothesis……………………………………… 69-71

CHAPTER FIVE

5.0 Summary of Findings, Conclusion and Recommendations…. 72
5.1 Summary of Findings………………………………………… 72-74
5.2 Conclusion …………………………………………………… 75-76
5.3 Recommendations……………………………………………. 77-79
5.4 Questionnaires question ……………………………………… 80-86
Bibliography………………………………………………….. 87-88

INTRODUCTION

1.1 Background of the Study

The origin of auditing is as a result of the separation of ownership from control. It is instituted to protect the interest of the owners by ensuring that financial statements are justifiable.

Because of the separation of ownership from control, it becomes necessary of those managers entrusted with the owners of financial and economic resources to present their financial reports to their employer.

The reports presented might contain errors, omission, and frauds or even refuse to disclose relevant information. For these reasons, the owners may hold some reservations about the credibility of the managers’ reports.

For the owners to be satisfied and even for the managers to be justified to establish and maintain their integrity, it becomes necessary to invite an independent party.

One who is not involved with either party to examine the reports for the purpose of expressing an opinion as to the truth and fairness of the reports.

BIBLIOGRAPHY

Millichap A.H (1986), Auditing, Guernsey Channels Island, Guernsey Press Co. Ltd.

Aguolu O. (2002), Fundamentals of Auditing Enugu, Nigeria Meridian Associates, Press.

Leslie R.H (1978), Auditing Great Britain, Richard Clay Press Ltd.

Aguolu O. (2005), Internal Auditing in Nigeria, Enugu, Nigeria, Meridian Associates Press

Olakunori O.K (1997), Successful Research, Theory and Practice. Enugu Nigeria. Computer edge publishers.

Onwuka E.A. (1998), Introduction to Academic Research Method. Enugu, Nigeria. Gostak Printing & Publishing Co. Ltd.

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