There are different perceptions to the auditor’s duty guarding fraud. In today’s technological age, fraud has become very complicated, and Increasingly difficult to detect, especially when it is collusive In nature and committed by top management who are capable of concealing It. Consequently, auditors have argued that the detection of fraud should not be their responsibility rather the auditor sees financial statements of an enterprise by an appointed auditor in pursuance of that appointment and compliance with any relevant statutory obligation.
However, the public including many business communities tend to see an auditor’s duty in terms f the detection and prevention of fraud. Although, the most misunderstood and hence maligned aspect of the accounting functions is auditing as it is thought to be a fraud-preventing mechanism, and it produces a measure of the quality of health of corporate entities, the economic and social dislocations which the fore closure of corporate concern has caused and is exerting great negative pressures on the goodwill of the whole profession as the dividing line between the different areas of specialization in the discipline is now blurred.
A little wonder, that the pages of the newspapers are daily filled with diverse sews that tend to cast aspersions on the hard-earned credibility and depth of technical knowledge of professional auditors. Even in market places, the question is being asked as to where the auditors were, during the mismanaging and plundering of the terminally distressed banks in the country now under liquidation by the Government.
In fact some have ignorantly called for the arrest and prosecution of the auditor of the failed banks and other financial institutions, because the view is rife in many quarters that the auditors do not report everything he sees during an audit exercise.
These are legitimate developments in dynamic environment.
Thus, given the magnitude of pecuniary losses associated with the spate of insolvency of enterprises whose financial statements were certified to have presented a true and fair view in both the developing countries and developed countries the complaints of the investing public have become inevitable protests which have manifested in litigation’s.
While it can be argued that the society has become litigious as a result of improved literacy and consciousness levels, what best explains the trend is the gradual loss of faith in the audit system based on an unfulfilled societal expectation which is founded on the wrong premises that audit exercises do not only give rise to financial statements, but are synonymous with fraud-detection and prevention, the feeling is that an audit exercise that does not detect fraud is not worth its salt and should be viewed with disdain, in fact whistle blowing is viewed as the hall mark of auditors. 2.
Statement of the Problem account and sometimes conflicting with related regulations such as the Companies Acts, Memorandum and Article of Association, other corporate governance and repressions code of ethics. The numerous regulatory bodies have made it impossible for the nature, duties, roles and responsibilities of the auditors to be within a strict confinement, and this has led to the following problems; I. Definition of the term “true and fair view’ it. The degree of reasonable skill and care to be exhibited iii. What constitutes negligence of duty and care lb. To whom is the auditor legally responsible v.
The extent to which auditors are liable to client, shareholders and other third parties who might be strangers to the contract. Other problems are: ‘. Misconception of the auditor’s duty by the general public. Vii. The extent to which audit-risk assessment can be utilized in determining the audit work necessary to reach an opinion of the truth and fairness. 3. Aims and Objectives of the Study The broad objective of this study is to gain an insight into and correct the erroneous accompanying opinion of the public as to the role, responsibility and assessment of the auditors in fraud detection.
Against this, the researcher want to validate the view that the auditors’ duty is to state whether the financial statement how a true and fair view and complies with relevant statues, and the main objective of an audit of any financial statement is to enable the auditor express the above opinion. Management of companies on the prevention, detection, and minimization of fraud. 4. Relevant Research Questions The research questions that relate to the subject matter are stated below: I. Is the main objective of statutory audit, prevention and detection of fraud? Lie. Is the internal auditor related to the management? Ii. Does statutory audit in a company discourage fraud? lb. Is the independent auditor responsible to the management or members (shareholders) of the company? V. Does the independent auditor have a responsibility in relation to fraud? V’. Is statutory audit deterrent to fraud? 5. Relevant Research Hypothesis Hypothesis 1 Ho: Statutory audit has no effect on fraud HI : Statutory audit has effect on fraud Hypothesis 2 Ho: There is no relationship between an auditor’ diligence and discovery of fraud. HI : There is a relationship between an auditor’ diligence and discovery of fraud.
Ho: Computer has not changed the role and responsibility of auditors on fraud detection. HI : Computerized audit has changed the role and responsibility of auditors in fraud detection. 6. Scope of the Study To achieve the broad objective of this study, our research is limited to study of Denote Group of Companies, whose head office is situated at 3 Osborne Road, Kooky, Lagos. 7. Significance of the Study This write up will go a long way in correcting some of the wrong impressions on the impact of auditing in fraud detection and the responsibility of auditors as regards fraud.
Furthermore, the knowledge of the researcher will be broadened. 8. Brief Outline of Literature to be Reviewed Further work on this project would be of little or no relevance without making a critical evaluation of past relevant works in this field. Past works related to this project can be said to be an advanced study on the topic so as to have more information or facts on the research process. Hence, this section will review several literatures which will enlighten readers on the assessment of the impact of auditing in fraud detection.
It will also site relevant cases in line with the research topic. 9. Research Methodology interest or problem through the application of scientific approach or process. The research methodology will focus on the different ways or procedures used in the collection of information for this research study and states how the researcher intends to carry out the study. Hence, it will cover the sample (respondents); sample selection, that is, the pattern or blue print to follow in sampling and the instrument to use in generating or collecting the data.
Also the significance of research design cannot be over-emphasized because it helps to give answers to research problems or questions. For this purpose, its collection would be economically conducted based on alternatives. Research methodology is therefore the formulated facts that would serve as a guide to proffer solution to the research problem. Setting The research of this study would be carried out at the office of Denote Group of Companies which situate at No. 3, Osborne Road, Kooky, Lagos.
The fact that it is a large company with many business facets makes it an easy prey to fraud. The choice of this company over others stems from its vulnerability to fraud and the existence of the standard that every company shall appoint an auditor. Research Design This research will be designed in a way that will enable the researcher achieve TTS objectives one of which is to gain an insight into the role and responsibility of auditors in fraud, bearing in mind the entire hypothesis underlying the research.
The conduct of this research would be carefully based on gathering relevant data. All data gathered would be analyzed and applied in order to test their validity or otherwise the hypothesis. The research instrument that would be used for this study would be the interview and questionnaire as the primary source of data while the use of Journals and books would be from the secondary source. From the primary data that would be used, the interview from the respondent will help to give detail information in a clear and understandable manner.
As a result of this, the information that would be gathered from the respondent would be considered as accurate, especially the response that would be obtained from the questionnaires. The questionnaire that will be used for obtaining data for this research work will be validated by the researcher’s supervisor. To ensure that the respondents who will complete the questionnaire understands the survey, educational achievement would e solicited which is a characteristics that is important to assess the respondents’ familiarity with the subject matter. The questionnaire would be divided into two sections.
Section A would be used for obtaining the bio-data of the respondent while section B will consist of the relevant questionnaire items which are the general questions. In addition, the usage of Journals and textbooks will also give more information on the latter source of data, which cannot be easily gathered from primary source data. Data Analysis and Presentation Here, after the questionnaires have been duly given out to the respondents who loud give good evidence to the work and provide necessary and needed information as requested by the questions.
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