Tuesday, 28 June 2016

An Assessment Of The Relevance Of Audit Practice In Business Organisation In Nigeria


Pertinently, in reference to the above statutory established by the company allied matter degree (CAMD) auditing could be traced from ancient times when the land owners allowed tenant farmers to work on their land. While land owners themselves did not become involved in the business of farming. The land owners relied upon the business of farming. The land owners relied upon the stewed who listed to the account provided by tenants. This is further explained that the productive resources owned by one person or group of person are managed by another or group of person.


TABLE OF CONTENTS
TITLE PAGE                                                                                                        
CERTIFICATION                                                                                                
DEDICATION                                                                                                     
ACKNOWLEDGEMENT                                                                                  
TABLE OF CONTENT

CHAPTER ONE
INTRODUCTION                                                                                                               
1.1 Background of the Study                                                             
1.2 Statement of the Study                                                                               
1.3 Objectives of the Study                                                                               
1.4 Research Hypothesis                                                                     
1.5 Research Methodology                                                                
1.6 Scope and Limitation                                                                       
1.7 Definition of Terms                                                                        
1.8 Plan of the Study                                                                            
1.9 Research Question                                                                         

CHAPTER TWO
2.0 Definition of Auditing                                                                    
2.1 Meaning of Auditing                                                                      
2.2 Objective of Auditing                                                                    
2.3 Audit Fundamental                                                                        
2.4 Types of Auditing                                                                            
2.5 Accounting and Auditing Compared                                       
2.6 Auditors Responsibilities                                                             
2.7 Audit Plan                                                                                          
2.8 Audit Working Papers                                                                   
2.9 Audit Report                                                                                     
REFERENCES                                                                                      

CHAPTER THREE
3.1 Research Design                                                                              
3.2 Research Approve/Method of Data Analysis      
3.3 Population Sample and Sampling Technique       
3.4 Sources of Data                                                               
3.5 Research Instrument                                                    
3.6 Method of Investigation                                                              

CHAPTER FOUR
4.0 Data Analysis and Presentation of Results           
4.1 Regression Analysis                                                       

CHAPTER FIVE
SUMMARY CONCLUSION AND RECOMMENDATION
5.1  SUMMARY
5.2  CONCLUSIONS
5.3  RECOMMENDATIONS

CHAPTER ONE
BACKGROUND TO THE STUDY
1.1 INTRODUCTION
In Nigeria, the company allied matter degree statutorily established basic frame which the auditor prevails. The degree made it obligation for every company incorporated in respect of;

a. All fee received and expenditure by the companies and the matter in respect of which the receipt and expenditure takes place
b. All sales and purchases of the goods of the company
c. All asset and liabilities of the company (section 140)
d. The degree future provides that proper books of account shall not be deemed to be kept if there are no such books as are necessary to give a true and fair view of the state of the company affairs and to explain its transaction.

Apart from the public own central government or person appointed by government.
                These are owners of properties who appoint another person to take care of their properties. He will want to know, how effectively the stewards managed the property when the owners of the property inquire from the stewards, how effective will be give the account.
               
This is known as ‘stewardship’ in the case of limited liability company reporting to the shareholder it is done through the use of the final account it often vary in problems the exists when the manager or stewards reports to owners, the owners may not belief the report, the attempt to solve this problem of creditability gave rise to ‘auditing’ This means that another person other than the person who prepared true account will have to assess the account whether or not the account is correct.
                According to the Audit Practice Committee (APC) which defines auditing as ‘the independent examination of an expression of opinion on the financial statement of an enterprise by an appointed auditor in pursuance of what appointment and compliance with any statutory obligation.
                As pertaining to the auditing standard, ‘the independent examination and investigation of the evidence from which the financial statement has been prepared with a view to enabling the independent to examination report whether in his opinion an accounting is to the best of the information and explanation obtained by him. The balance sheet is properly drawn up so as to give a true and fair view of the state of affair of the business and that the profit and loss account gives a true and fair of the profit and loss for the financial period, according to the best of the information and explanations given him, and as shown by the books, and if not report in what respects he is not satisfied’.

The Company and Allied Matter Decree Act 1990 in schedule “9” laid down the following matters which expressly state the following matters in their reports:
a. Whether they have obtained all the information and explanations which to the best of their knowledge and belief were necessary for the purpose of their audit.
b.Whether in their opinion proper books of account have been kept by the company as far as appears from their examination of those books.
c. Whether proper returns adequate for the purpose of their audit have been received from branches not visited by them.
d. Whether the company’s balance sheet and unless it is framed as a consolidated profit and loss account; profit and loss account dealt with by the report are in agreement with the books of account and returns.
e. Whether in their opinion and to the best of their information and according to the explanations given them the said statements give the information requires by the Decree in the manner so required are given a true fair view of affairs and profit or loss of the company and its subsidiaries and associate.
i. in the case of the balance sheet of the company affairs as at the year end of its financial year.
ii. In the case of profit and loss account of the profit or loss for it true and fair view is made subject to the no disclosure of any matter (to be indicated in the report) in the case of companies which are granted exception by law.

Finally, for any auditing practice to be succeeded in any organization the auditor must be free on his own, that he is independent and objective.  Also, the auditor should exercise his name to be associated with a financial/statement that is misleading.

1.2 STATEMENT OF THE PROBLEM
All organization irrespective of size structure and function has sets of goals.  In addition to the set goals, proper utilization of the shareholders fund are needed to be considered.  The pertinent question that after comes to mind is “how will low funds could be utilized and how will the report provided by the director could be accepted without doubt on it”.

In this study we will looking at the stages of auditing and step taken by the auditor to determine any forms of fraud in any management of any organization of a company that is effective and efficient in the utilization of a company fund.

The problems that have been identified with director or management reports in the private sector include:
i.  Lack of protection of interest of non-active shareholder.
ii. Improper use of non-active shareholders fund by the director.
iii. In correspondent of an organization state of account with the statutory requirement by the Accounting

Standard Practice (ASP) This study and also aforementioned problem from the bedrock of this project it shall conduct prefer problem from solution so as to achieve a good conduct of audit in any organization.

1.3  OBJECTIVE OF THE STUDY
Research could be define as a diligent and systematic attempt at finding answer to question through certain logical designed process or step this study is therefore making an attempt of non-active shareholder.
1. To justify the proper use of the non active shareholder and emphasized the importance of the audit practice of various business organization.
2. To enable the different organization to comply with the statutory requirement of the Accounting Standard Practice (ASP)
3.  The protection of the interest of non active shareholders.
4. To suggest the best accounting system to be used for the internal control system in business organization.

1.4  RESEARCH HYPOTHESIS
The following hypothesis were formulated to guide the researcher in finding answers to the research questions
H0:  There is a negative relationship between board size and corporate financial performance
H1: There is positive relationship between proportion of outside directors sitting on the board and corporate financial performance.
H0: There is a negative association between director’s stock holding and corporate financial performance
H1: There is a negative relationship between CEO duality and corporate performance.


The remainder of this paper is organized as follows: Section II discusses there relevant literature on board composition, size, ownership, CEO duality.  The methodology adopted is discussed in Section III while Section IV captures empirical results and discussion.

1.5 RESEARCH METHODOLOGY
This study uses a survey research design.  Since this study is on board structure of quoted companies in Nigeria population of the study is made up of companies listed on the floor of the Nigerian Stock Exchange (NSE).

However, firms belonging to the financial services industry and regulated utility companies are excluded from the population.  This is due to the special regulatory environment in which they operate.  This follows from the argument that regulation masks the efficiency differences across firms, potentially rendering governance mechanisms less important (Cafeas and Thearodu, 1988, Singh and Davidson, 2003)

A sample consisting of companies list on the NSE was considered a good representation of quoted companies in Nigeria since the ultimate test of a sample design is how well it represents the characteristics of the population it purports to represent (Emory and Cooper, 2003) A sample of thirty (30) quoted companies for the period 2007 year end was used. Therefore, respondents cut across public limited companies that were listed on the floor of the NSE.

Information relating to firm performance (ROE and ROCE) and board characteristics (board size, board composition, Board ownership and CEO duality) was collected from the sampled company’s annual reports.

DEPENDENT AND INDEPENDENT VARIABLES
Dependent Variables of the study is corporate financial performance which is represented by ROE (measured as the proportion of profit after tax to issued share capital) and ROCE (measured as the proportion of profit after tax to issued share capital plus reserves).

The independent variables are board size, board composition, board ownership and CEO duality.

Statistical Analyses
For the purpose of empirical analysis, this study uses descriptive statistics, Pearson Correlation analysis and linear multiple regression as the underlying statistical tests.  The regression analysis is performed on the dependent variable, CORPERF, to test the relationship between the independent variables (board structure characteristics).
1.6  SCOPES AND LIMITATIONS
This essay will only cover DUNLOP Nigeria Plc OBA AKRAN Ikeja which represents one of the greatest public companies in Nigeria.  This study is limited to DUNLOP Nigeria Plc. Because of the statutory impose on the company to audit its account every audit year and require that director to forward its statement of affairs of the company annual general meeting (AGM) which is done once in a year. 
 
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