A lost of human, material and financial resources are trapped in medium scale businesses. They must be properly guided to ensure efficiency and effectiveness. Where audit succeeds in adding value to the growth and development of these companies, labour unemployment problems will be solved, there will be improvement in the standard of living and more profit will increase governments’ tax and value added tax (VAT) receipts as well as Gross National Product (GNP). Auditing recently has been facing confidence problem especially in the area of corporate reporting. Corporations in the United States of America and banks in Nigeria crashed even after audit report declared them healthy. This research was based on the topic: Uses and Impact of audit in managing medium scale companies in Nigeria. The objectives of the study include among others: To determine the need for the conduct of the audit in the management of medium scale companies; To examine the effectiveness of the auditors in the performance of their duties; To ascertain the relevance and adequately of accounting standards as well as its application by the auditors. The significance of audit has not been fully appreciated in most medium scale businesses in Nigeria. It is anticipated that the results of this study will serve as a practical tool to guide the shareholders in their assessment of the selfishness of audit; To ascertain these objectives, a survey research was carried out with respondents from two companies, Halden Nigeria Limited and Cogipar Nigeria Limited, both in Port Harcourt. The study also formulated the following hypotheses. There is significant relationship between audit and cost reduction; There are significant problems facing the conduct of audit; Audit reports are of significance to the user of accounting information. These hypotheses were tested with the chi-square statistic. To all cases, 5% level of significance was used. The findings are in agreement with the hypotheses as stated above. Recommendations include companies adopting regular and periodic audits; auditors having expanded knowledge of the business of their clients so as to offer reasonable advise to them and others.

1.0      Introduction
1.1      Background for the Study
Auditing is an important professional task, carrying heavy responsibility and calling for commensurate skill and judgment.

The original skill required by the auditor was such that would enable him to carry out an exhaustive examination of the document and books arising through the transactions of the business, mainly with the objective of ensuring that all was in other and no fraud was perpetrated by employees(Leslie, 1996). Today, the main object is to ensure that the account reveals a true and fair view of the business and its transactions. This leads to greater emphasis being placed on ascertaining the reliability of the records from which the accounts are drawn up and also, on verifying the assets, liabilities and other transaction in the accounts. The reliability of the records is established by first ascertaining the system of internal control within the business, testing its operation through different techniques and gathering audit evidence (Leslie, 1996).

An audit is basically an investigation by an auditor into the evidence from which the final revenue accounts and balance sheets or other statement and reports of an organization have been prepared, in order to ascertain that they present a true and fair view of the summarized transaction for the period under review and of the financial state of the organization at the end so as to enable the auditor to report thereon. It will be seen that an audit is first of all an investigation; that the investigation involves the examination of records and accounts; and gathering of audit evidence; and that the primary object of the investigation is to enable the auditor to make a report on the accounts regarding the truth and fairness of the accounts (Nnadi, 2006).

While the main function of the investigation is to enable the auditor to report on the financial statement presented to him, other specific functions are: The detection of errors and fraud; the prevention of errors and fraud; Report on internal control weaknesses; and giving constructive advice to management.

Accounts may be falsified in order to deceive shareholders as to the position of affairs or third parties, example is bankers and creditors. Mere checking of the entries in the financial books will usually fail to disclose any fraud, but comparison with original documents (example sales order) or statistical books (examples wages books, stock books, goods inwards and outward books and others) will generally disclose any existing fraud.

In regard to the prevention of errors and frauds, the fact that the dishonest employees know that their work will be independently checked for the purpose of the detection of errors or fraud on their part, tends to make them more careful or to deter them indulging in such fraudulent acts.

It is necessary to draw a distinct line of demarcation between accountancy, the actual writing up of books and the compilation of the accounts there from – and auditing, which is the examination of the completed records and the subsequent submission of a report thereon. This distinction is important as the responsibilities arising can be far – reaching in their consequences, and although, in practice, the auditor may be engaged on both kinds of work on the same job, it is necessary to understand and maintain the difference (Obaze, 2006).....

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Item Type: Postgraduate Material  |  Attribute: 83 pages  |  Chapters: 1-5
Format: MS Word  |  Price: N3,000  |  Delivery: Within 30Mins.


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