ABSTRACT
The research topic is the
effects of qualified audit report of a company. A study of UACN Plc AND PZ
Cussons Plc. It is a known fact that some business organizations are in the
habit of corporate deceit where financial statements are made to appear better
than the true positions of affairs in these organizations. This had led to a
lot of business going under after declaring fantastic results at year –end. In
this study, there is the case of disagreement between the board and auditors of
UANC Plc regarding the amount of revaluation surplus included in capital
reserves to be released to profit following the transfer of the company’s
investment properties to the newly incorporated UANC property development
company. There is also the case of disagreement between the board and the
auditors of PZ Cussons Plc over payment made out of profits arising from the use
of this company’s property and fixed asset sold for dividend when the company
was unable to pay its debts as they fall due.
The objectives of the study is
to determine the relationship between the market share price and the earning
per share of UACN Plc and PZ Cussons Plc from 1992 to 2003 and also to compare
the PE Ratio of UACN Plc from 1991 to 2003. the hypotheses of the
study are the market share price and earnings per share of UACN Plc have no
significant relationship with the market share price and earnings per share of
PZ Cussons Plc from 1992 to 2003 and also there is no significant relationship
between the PE Ratio and UACN Plc and PZ Cussons Plc from 1002 to 2003.
The methodology adopted
includes the research design, sample size, and population of the study,
sampling techniques, data collection procedure, and the techniques of data
analysis. The research design, which is a guide for data collection, adopted Y
for the dependent variable, which is the market share prices and X1
and X2 for the independent variables – earnings per share and price
earning ratios respectively. The sample size is 92. it was determined using the
yard Yamene’s formular for a definite population. The population of the study
is the capital market report from 1992 to 2003 of UACN Plc and PZ Cussons Plc
published by the Nigerian stock exchange for all companies listed on the
exchanges. This is a 10 years period, which consist of 120 months. The sampling
technique adopted was the stratified sampling method. The data collected have
been assembled in tabular form with appropriate titles. The multiple regression
model technique have been adopted because we have three
variables, one dependent and two independent variables; Y, X1 and X2.
The major findings from the
study showed the with the exception of 1992 to 1997, the EPS and the PE Ratio
was unable to significantly influence the market share prices of both UACN Plc
and PZ Cussons Plc. This means that a higher EPS did not significantly move
upwards the market share price of the two companies and a lower PE Ratio did
not significantly move upwards the market share price of the two companies.
The conclusion from the study indicated that investors did not react
significantly as to influence the market share price of the shares of UACN Plc
and PZ Cussons Plc after auditors of both companies issued a qualified audit
report. The recommendation proffered indicated that a qualified audit opinion
does not necessarily mean that market share price of a company’s stock would be
affected either upwards or downwards.
TABLE OF CONTENTS
Title
page
Abstract
Table
of Contents
CHAPTER ONE:
INTRODUCTION
1.0. Background of the study
1.1 Statement of Problem
1.2 Objectives of the study
1.3 Research Question
1.4 Statement of Hypotheses
1.5 Definition of Terms used
in the study
1.6 Scope of the Study
1.7 Significance of the study
References
CHAPTER TWO: LITERATURE
REVIEW
2.0. The Origin and
Development of Auditing
2.1. Evolution of Auditing
Standards and Guideline
2.2.1.
International Auditing Standards and Guidelines
2.2.2
Statement of Auditing Standards
2.2.3
The Auditors Operational Standard
2.4. Audit of Holding
Companies
2.5. Audit of Groups of
Companies
2.6. Relevance of Accounting
Standards to Auditing
2.7. Legal Position of
Auditors Unger CAMA 1990
2.7.1.
Appointment of Auditors
2.7.2.
Qualification of Auditors
2.7.3.
Auditor’s Report
2.7.4.
Auditors Duties and Powers under CAMA
2.7.5.
Main Objectives of Audit
2.7.6.
Director’s Reports
2.8. Investment Property
[IAS40]
2.8.1.
Summary of IAS40
2.8.2.
Other Classification Issues
2.8.3.
Initial Measurement
2.8.4.
Measurement subsequent to Initial recognition
2.8.6
Cost Model
2.8.7.
Transfers of or from Investment Property Classification
2.8.8.
Disposal of investment property
2.8.9
Disclosure of IAS40.75]
2.8.10
Additional disclosures for the value Model [IAS40.76]
2.9. Additional Disclosures
for the cost model [IAS40.79]
2.9.1.
Qualified Audit Reports
2.9.2.
Types of Qualification
2.9.3.
Materiality in Audit
2.9.4.
Over all Consideration of Materiality
2.9.5.
The 5% Rule in Materiality
2.9.6. Financial Statement Amounts that should
have been recorded but were not
References
CHAPTER THREE: RESEARCH
METHODOLOGY
3.1. Research Design
3.2. Sample Size
3.3. Population of the study
3.4. Sample Techniques
3.6. Techniques of Data
Analysis
3.6.1.
Models Explanation and justification
3.7. Research Area
CHAPTER FOUR: PRESENTATION
AND ANALYSIS OF DATA
4.1. Data Presentation
4.2. Data Analysis
4.3. Test of hypothesis one
4.4. Test of Hypothesis two
4.5. Test of Hypothesis three
4.6. Test of Hypothesis four
CHAPTER FIVE: SUMMARY OF
FINDINGS, CONCLUSION AND RECOMMENDATIONS
5.1. Summary of findings
5.2. Conclusion
5.3. Recommendations
Bibliography
CHAPTER
ONE
INTRODUCTION
1.0. BACKGROUND
OF THE STUDY
The practice of auditing in a
primitive in form can be traced back to ancient times. Auditing, as it exists
today was established only in the latter part of the19th century. Under company
form of organization, the share holders as a body, delegated the management of
the company, the board of directors and periodically the board submits to the
shareholder the accounts of the company in order that the members may see the
financial position and the profit or loss of the undertaking in which they are
interested.
In these circumstance, the need
arose for some means by which share holders as s body night be satisfied that
the accounts presented to them by their board of directors show an objective
view of the financial position and results of the company.
It was for these reasons,
therefore, that the practice developed of appointing auditors whose duty it was
to verify on behalf of the shareholders the accounts of the director and to
report there on to the shareholders. Obviously is imparacticable and impossible
for every
It was for these reasons,
therefore that the practice developed of appointing auditors whose duty it was
to verify on behalf of the shareholders and therefore the shareholder as a body
of auditors to act for them.
Under the English companies act
of 1900, the auditors appointed were one or two of the shareholders of the
company. However, the chosen auditors commonly had no technical qualifications,
they were probably not able to carry out a very effective audit nor were they
paid anything for the work they did. A latter act did provide for them to
employ a clerk to do some work, whose remuneration should be provided by the
company.
It was the amended English
companies act that first made it legally compulsory for every company to
appoint independent auditors as we not know them and provide for their
remuneration.
An audit cannot be s substitute
for internal control over transactions exercised at the time, nevertheless, an
assessment of these control must the made by the auditor so that he can
determine the value of detailed checking necessary to enable the discharge of
Note that the responsibility
for the prevention and detection of irregularities and fraud rest with the
management who may obtain reasonable assurance that this responsibility will be
discharged by instituting an adequate system of internal control.
The auditor should recognize
the possibility of material [irregularities or fraud which could, unless
adequately disclose distort the results or state of affairs shown by the
financial statement. The audit should there fore be carried out in such a way
that it is planned so that the auditor has a reasonable expectation of
detecting major misstatement in the financial statements resulting from
irregularities or fraud.
The research study is
therefore, an attempt to actually establish the effects of a qualified audit
report on a company. Considering the disagreement between the board of
directors of UAC Nigeria plc and the company’s auditors regarding the amount of
the revaluation surpluses included in capital reserves to be released to profit
following the transfer of the company’s investment properties to the.....
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