THE ROLE OF AUDITORS IN A DEPRESSED ECONOMY
(A CASE STUDY OF UBA PLC,)
The depress in Nigeria economy and the role of auditors has played to revamp the economy is a concern to all. This particular study therefore studied the whole phenomenon of depress as to the causes procedures for classifying the economy as depressed and them evaluating critically the roles plays by the auditors. After evaluating all these the roles of the auditor was then examined to determine if to date the auditors has lived up to expectation or of he should be held liable for depress. Depressed economy is therefore a condition where the whole economic system ahs decline in order of magnitude. Developing countries where generally an open economies because of the fall in capacity to import in the third world which was magnified by perverse capital flows the payments problem of developing countries were very server and their import volume was cut on an average peak-to –trough basis. To achieve the objectives of this study sixty (60) questionnaires were distributed thirty (30) wee satisfactorily collected and used for data analysis in this study. The analytical tools used were chi-square frequencies and simple percentage. Chapter one this research work starts with a brief introduction and background statement which gives an overviews of the depress economy. The hypotheses used are stated. In chapter two related texts as regards to depression in economy and the role of auditor are stated. Chapter three shows the various processes involved in obtaining analyzing and interpreting the necessary data gathered. In chapter four the analysis of the finding based on the data collected is made.
Chapter five includes the summary of finding of the study which shows that;
a. The internal auditor and internal audit department of most banks are no independent.
b. The external auditors of most banks lack a full and proper understanding of the activities of their client and also the inert related ship of those activities and others.
The conclusion stressed on the importance of the auditors to initially appraise these lacking areas in order to improve its liquidity profitability and general financial strength. The regulatory authorities the management and staff of the bank should also be blamed.
Finally in this chapter sir the recommendation which state that under no situation should the auditor allow his independence to be impaired? The management of the banks should recruit honest and qualified staff in order to control fraudulent etc.
TABLE OF CONTENT
1.1 Purpose of the study
1.2 Statement of Problem
1.3 Significance of study
1.4 Limitation of study
1.5 Definition of Terms
2.1 Review of Related Literature
2.2 Bank in Recession
2.3 The state of Nigeria Economy from 1990-2004
2.4 Major problems constraining the Nigeria
2.5 Definition and Type of Auditing
2.6 Who is an Auditor
2.7 Objective of Audit
2.8 Advantages of Audit
3.0 Research Design and Methodology
3.1 Sources of Data
3.2 Location of Data
3.3 Method of Data Collection
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.
There is a great pressure in the industrial sectors to develop new strategies if they are to remain in business. One sector of the economy that portrayed an interesting scenario was the banking industry. The economy today is bad that saving has become difficult for majority of the populace that the things those who can afford to see want to hear of is economic depress.
It has therefore become necessary to study the whole phenomenon of depress as to ascertain empirical evidence of its causes and proper solutions. Our intention is that the efficiency of auditing system particularly in a developing economy like ours depends on the extent to which auditors role is effectively and efficiently discharged in terms of the achievement of economic goals of the country. But when the auditors role is not properly discharged in terms of achieving the economic goals this will definitely lead a nation into “economic depression”
An economy can be seeing as any specified collection linter-related set of marketed and non- marketed productive activities (LIPSEY 1983). This the Nigeria economy could refer to all such economic activities taking place in the geographical domain of Nigeria or all such economic activities perform that activity (parkin1982) Nigeria economy can be structurally be classified into four (4) such as;
- General commerce
According to Guttered Haberler “economic depression” is a decline in economic activity on order of magnitude of the depressions of the inert war period and earlier.
In every major inflation government deficits have been blame as a prime sources of the trouble as well as the auditors. Austerity programs prescribed by the international monetary fund (IMF) for trouble countries that ask the fund for help invariably include provisions for fiscal discipline according to (Sach 1979) the proximate cause of the recession were two;
- The rise in oil prices and;
- The strong emphasis on disinflation of the monetary authorities in most major industries countries.
Therefore auditors role in depressed economy cannot been over emphasized as we know auditors are those whose duty is to conscientiously and objectively examine inquires into any statement of accounts and other documents and the physical assets where possible in order to assertion or form an opinion. An auditor has to play a role in preparing their report to carry out investigations as may enable them to form an opinion. They have to state in their report if in their opinion proper companies not visited by them have received returns. Again it shall be auditor’s duty to include in their report if the requirements of parts V and Vi of schedule and part I to iii of schedule 4 of the decree are not complied with in the accounts. Finally it shall be the auditors duty to consider whether the information given in the director’s report in respect of the year for which the accounts are prepared are consistent with those accounts and of they are of the opinion that it is not they shall state the fact in their report.
Therefore in a depress economy the role of auditors should be intensified and they should put more effort order to help to revamp the economy.
1.1 PURPOSE OF THE STUDY
The main aim of this study is stated below as follows;
a. The objective of this study is for the researcher to examine the vital roles of auditors in the Nigerian “Depressed economy” with a view to alerts to the challenges ahead
b. The research wants to find out the extent to which Nigeria economy is depressed
c. The researcher hopes to find out the possible causes of this depression in the economy and how the auditors has helped to revamp Nigeria economy from this situation
d. To determine the extent of depression of an economy bearing in mind the Nigeria situation and what extent will depression by very dangerous to an economy.
e. The researcher wishes to determine those factors, which makes available economic resources not be efficiently managed.
f. Should the auditor be held liable for depression in economy? The purpose of this study is to find solutions to the problems surrounding the positive roles the auditors can offer towards our economic situation, which is depressed.
1.2 STATEMENT OF PROBLEM
Inspite of the roles played by the auditors in Nigerian economy there has not been improvement in the Nigerian economy. Nigerian has been experiencing micro and macro economic problems. A lot of depression in the economy and auditors has been auditing the economy without observing the problems banks. Manufacturing companies private companies public companies etc. have been experiencing until when prudential guideline un 1991 by the central Bank of Nigeria (CBN) was introduced that people started noticing that many banks private companies public companies etc. had been distressed.
This auditor was observing all these problem because of management problems that impair them from excreting their independence very well. One of the auditing concepts is independence but one normally find out that it is not always applicable in practice because auditors are not always allowed to exercise their fiduciary function very well.
Economic depression connotes a condition where the while economic system has negative capital and current profit which are insufficient to cover losses such to an intent that the economy is no longer able to generate internally positive capital. Depression in economics shows the extent of our nation’s economic and political decay.
1.3 SIGNIFICANT OF THE STUDY
The establishment chosen to a case study will benefit immensely from the work in that a full analysis of the work have been done and lapses exposed.
The banking management would benefit because their problems at last to a reasonable extent will be addressed. One the problem is identified there will be a way of solving this problem. It will be beneficial to investors who might not be opportune to critically view some document either because of lack of time so by mere glancing into this work will find out whether to invest or not.
The general publics will also benefit from it be reading the economic trend existing in our country.
This research therefore recognized the fact the 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 litter to been ineffectively controlled so that more attention can be paid to them. It is also hoped that this study will be of help to the students in management science especially in Accountancy department because it will give them an insight into the various roles of auditors in a depressed economy like ours.
1.6 DEFINITION OF TERM
Below are the definition of various terms used in this research work
- Depression: Depression is a sever down turn in economic activity that lasts for several years. Real out put declines during this period by a significant amount and unemployment rate rises to 30% or more. In depression prices of goods and services rises without a corresponding output which leads to inflation
- Recession: Is a decline in real out put (CNP) that lasts for six months or more? It is an economic problem, which shows the economic system.
- Gross national product (GNP): This is the total market value of all production during a specified period usually one years
- Gross domestic product (GDP): This is defined as an addition of the value added in every productive enterprise or unit in the economy is equal to the total production. This occurs in the economy over a period usually one year.
- Deregulation: This is the opposite of regulation a situation where the federal government is not very sticks with her policies measure but allows the market forces to determine the exchange rate the interest and lending rate in the banking industry
- Privatization: This is defined by oxford advanced learners dictionary as the act of transfer from state control or ownership to private ownership.
- Diversification: This means varying the range of product investment etc. in order to be more competitive or reduce risk.
- FRN; Federal republic of Nigeria
- Scenario: This means the imagined sequence of future events.
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