THE RELEVANCE OF AUDITING AND ASSURANCE SERVICE TO CORPORATE REPORTING IN NIGERIA

CHAPTER ONE 

INTRODUCTION 

1.1 Background to the Study 

Over the years, public organizations have experienced gross monetary loss due to error and fraud, lack of documentation of statement of accounts and the general misappropriation of fund. This occurs as a result of lack of auditor in the organization. Carratu (2005) opined that all organizations, whatever the size and its financial potential, can suffer enormous monetary losses so long as there is no proper investigation .and tracing of assets of the organization. Thus, the need for auditing in corporate reporting cannot be over emphasized. Auditing is the examination of records and reports of a company in order to check that what is provided is relevant and accurate. That is to say, its assets and abilities are vigorously recorded in the balance sheet and all profit and losses are properly assessed. This assessment is done through two (2) methods. Firstly, by assessing internal control procedures and secondly by checking the consistence of’ items in the book. Taylor (2010), adopting a historical approach, stated that the word audit is a Latin word known as “he hears” in which an auditor had the accounts read to him.This arose from a practice whereby the stewardship accounts were checked by an independent body (auditor) by summoning those who had prepared and compiled these accounts, in an account to ensure accountability and a reliable statement of accounts. Also, Howard (2005), considers an audit as an examination by an auditor of the evidence from which the final revenue accounts and balance sheets of’ an organization have been prepared, in order to ascertain that they present a true and fair view of the summarized transactions for the period under review and of the financial state of the organization at the end date, thus enabling the auditor to report thereon. Audit is a conscientious and objective examination of, and inquiry into any statement of account relating to money or money worth, the underlying documents and physical assets where possible as will enable the auditor to form an opinion as to whether or not the statement of account present a true and fair view of whatever it purports to represent and to report accordingly. It is a review of a statement of account prepared by the appointed financial officer of an organization by some other independent persons (Okolo, 2005). However, in modem sense, Woolf (2007), as supported by Oladipupo (2011), stated that audit refers to a process whereby the accounts of business entities are subjected to scrutiny in such detail as will enable the auditor to form anopinion as to their truth and fairness. Primary objective which is to ensure adequacy and reliability of financial information distributed to shareholders and other interested persons; and secondly, to assure that the external auditor(s) have performed an effective, efficient and independent reporting channel for the internal auditor department and to monitor implementation of recommendation form external and internal auditors. In a nutshell, the relevance of auditing is to guide, direct and provide the company with the trend of development through corporate reporting, and to detect any form of weakness on the part of the company and its sundries office in the form of losses of any kind including fraud in any office so as to curb/eradicate losses to its barest minimum. Globalization has meant that financial statements are increasingly used by foreign investors and analysts. Hence clear labeling of the particular accounting and auditing framework is essential. Consequently, auditing system should he uphold and practically carried out to enhance the corporate reporting of any corporate organization. It is against this background that the study seeks to examine the effect 6f auditing and assurance services on corporate reporting in Nigeria (a case study of First bank plc. Anyigba). 

1.2 Statement of the Problem 

            The problem of financial crimes has been endemic in the Nigerian economy to the detriment of the nation as a whole. This has been a major challenge to the economy since been hit by western civilization. The law enforcement agencies and professional bodies have battled this dilemma with little success. Financial crimes have been a menace not only to the Nigerian economy but to the global economy at large. This can be by the large scale corporate and public scandals of the 21st century involving reputable global companies like Enron, global crossing, Siemens, Halliburton etc. and government official holding reputable positions. The rising spate of corruption in corporate organisations has assumed an enormous dimension. This development has eroded public trust in financial statements. Auditors in their duty to expressing professional opinion on the truth and fairness of financials are ostensibly bedeviled with quantum of challenges which could result in the issuance of a clean bill of health to corruption-riddled organizations. It is against this backdrop that this study intends to examine the effect of auditing and assurance services on corporate reporting in Nigeria.