ABSTRACT
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.
CHAPTER ONE
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
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