THE ROLE OF AUDITORS IN A DEPRESSED ECONOMY

(A CASE STUDY OF SELECTED BANKS)

CHAPTER ONE

1.0 INTRODUCTION

In the 60’s especially before the civil war in Nigeria cash crops from Agricultural sectors mining and a few others provide much of the foreign exchange earnings.  In this period 70 percent (70%) of the nation’s labour price was on agriculture and this contributed to about 70 percent of the gross domestic product (GDP) this contribution of agriculture to GSP saw a decline in the agricultural sector led the nation into important of food this means a compete reverse in trend of averts.

However the decline is attributable to the over dependence of the economy on oil revenue in the 70’s and early 80’s this was know as the era of oil boom. When the oil gut of the 80’3 hit the world, the revenue according to the government declined sharply and this revenue declining continued despite all efforts made by successive government to diversify the sources of revenue.  This era was known as the oil-boom in Nigeria. This oil boom compelled many individuals company. Small-scale industrial large scale and many corporate organizations to either completely close down their operations or reduce their operations to about one- third or less of their capacity.

However, the practice of auditing which has been in existence for years has no positive impact on the economy, there had been several corporate failures, which had been led to reduction in growth (ie depressed economy) in view of the above problem this research focused on the roles of auditors in a depressed economy.

1.2 STATEMENT OF PROBLEM

The establishment of audit in organization and financial constitutions was to reduce or remove completely the problems of  fraud, to protect the company’s assets, and to check misappropriation and embezzlement of funds. But there have been and there is still problem of fraud, misappropriation and embezzlement of fraud in financial institutions.

1.3 OBJECTIVE OF THE STUDY

(1) To examine the role of auditors in financial institutions

(2) To evaluate the usefulness of Auditors to banks by providing reliable accounting information.

(3) To access the impact of government financial policies and guidelines on the execution of Audit function in financial institution (Banks).

(4) To find out the importance of Auditors in protection of company’s assets, misappropriation of funds and embezzlement of funds.

(5) To make appropriate recommendations that will proffer sound solutions in the weakness of auditing functions in banks.

1.4 SIGNIFICANCE OF THE STUDY

The significance of this study can be viewed in many ways; it is intended to create awareness in the management of private and public companies, it is hope that firms will see auditorsas those which has much to offer to the organization. Also this research recognizes the fact that depression in an economy will lead to macro economic instability and that probably auditors too have a role   to play. It is hoped that this research will identify the various factors causing depression that had hitherto been in effectively controlled so that more attention can be paid to them.

The banking management would benefit because their problems will be addressed to a reasonable extent. It will be beneficial to investors, who might not be opportune to critically view some documents either because of lack of time, it will help them to know whether to invest in a particular bank or not. To policy makers and regulators in the banking industry, it will present a scheme, through its analysis can assist them in enunciation policies that will not only positively impact on banks but also to remain relevant in the economy by performing good function in Nigeria economy.

This study, when completed will serve as a reference point and source of secondary data for future researches in the field, it will give them an insight into the role of auditors in depressed economy like ours.

1.5 RESEARCH QUESTIONS

In order to facilitate this study the researcher will base  this study on the following questions:

(a) What is the role of an auditor?

(b) How an auditor does perform this function his function to ensure efficiency in banking industry?

(c) What are the things   to be done to enhance good economy in banks and banking industry in general?

(d) Does an  auditor  duly  follow  the  laid down rules  and regulation in auditing a firm?

(e) Are         the roles of auditor followed under normal circumstance?

(f) Does an auditor play any vital role in Nigeria Economy?

(g) How far is the economic situation, similar or contrasting in the banks.

1.6 SCOPE AND LIMITAION OF THE STUDY

This study covers the cause of depression in an economy and the extent to which these causes are being addressed. The period under view is restricted to 11 years that is (1993-2004). This period is considered to be very important in the history of our country Nigeria because of a lot of crisis going on in Nigeria which has caused a lot of instability both socially, politically, and economically. During the period of writing this work. The researcher encountered limitations of time. Financial constraints also limits the scope of research work that can be embarked upon by the researcher.

Also the problem of resistance of some bankers who prefer not to comment, regards to some information as being vital and confidential therefore the researcher was deprived these information, because of this, the researcher could not carryout as much as detailed analysis as she wished.

1.7 DEFINITION OF TERMS

In carrying out this study, there are certain words, which required the expression of their meaning.

AUDIT: It consists of a searching investigation of the accounting records and other evidence supporting these financial statement.

AUDITING: It is the independence examination of the financial statements of an organization with a view to express an opinion as to whether these statement give a true and fair view and comply  with the relevant statues Aguolu (1998).

AUDITOR: A person whose duty is to conscientiously and objectively examine and inquire into any statement of account and other documents where possible.

DEPRESSION: Is a sever down-turn in economic activity that last for several years. Or feel of sadness that makes you to think there is no hope for the future.

FRAUD: It involves theft, misappropriation or embezzlement of organization fund usually in form of cash or other assets.

STATUTARY AUDITORS: These are audits carried out because the law requires them. Status, which requires audit includes CAC, the building society Act (1962, CAMA 1990) et.