Auditors Gap of Independence and Reliability of Financial Statement (A Case Study of PWC Nigeria)
Chapter One
OBJECTIVES OF THE STUDY
The general objective of this study is to elicit the opinion of auditors and audit beneficiaries on the factors contributing to the audit expectation gap problem in Nigeria with respect to PWC Nigeria. From these general objectives, the following specific objectives are drawn:
- The opinion of auditors and audit beneficiaries on the statutory roles of external auditors in Nigeria
- Whether responsibility and reliability factor contribute to the audit expectation gap problem in Nigeria
- If the independence factors contribute to the audit expectation gap problem in Nigeria
CHAPTER TWO
LITERATURE REVIEW
The following literature review entails an examination of the factors contributing to an audit expectation gap in Nigeria, following this introduction section, a conceptual frame work of the audit expectation gap is established. This is followed by a theoretical frame work. This chapter reviews previous literature associated with the history of auditing, roles of auditors, reasons for audit in Nigeria and approaches for narrowing the gap. The factors that are reviewed in this study are responsibility, nature and meaning of audit report messages and independence of auditors.
BRIEF HISTORY OF PWC NIGERIA
With offices in 157 countries and more than 195000 people, they are among the leading professional services networks in the world. They help organization and individuals create the value they are looking for, by delivering quality in assurance, tax and advisory services. Facts about PWC Nigeria:
In Fy14, PWC firms provided services to 417 companies in the fortune global 500 and 462 in the FT global 500.
In 2014, we were named the 3rdmore attractive employer in the world per business student by university.
For the year ending 30 June 2014, PWC’s gross revenues were US$34 billion, up 6% a strong performance in the face of some challenging circumstances.
PWC helps organizations and individuals create the value they are the looking for we are network of firms in 157 countries with more than 195000 people who are committed to delivering quality in assurance, tax and advisory services. In African they are the largest provider of professional services with close to 450 partners and over 8500 people in 33 countries. This means that they are able to provide our clients with seamless and consistence services, wherever they are located on the African operating environment enables them to put themselves in their client shoes to offer tailored challenge. Realizing the appeal of the continent as an investment destination, their dedication Africa desk provides assistance to organizations looking to expand their presence in African. They are one of the leading professional services firms in Nigeria with offices in Lagos, Abuja and Port Harcourt, over 900 staff and 26 resident partners. They are committed to serving as a force for integrity, good sense and wise solution to the problems facing business and the capital markets. They are guided by one promise “TO DO WHAT IS RIGHT” both with their people, clients, community or environment. Their client ranges from the biggest, most complex, global establishment to smaller, newer business both privately owned and those in the public domain with their people, clients, community or environment. Their clients range from the biggest, most complex, global establishment to smaller, newer business both privately owned and those in the public domain. Their audit and assurance, consulting, deals and tax services meet the needs and requirement of each client, irrespective of size or location.
THE AUDITOR
An auditor may be defined as an accountant who has under-gone a recognized professional course and is a member of one of the recognized accountancy bodies resident in Nigeria and who is carrying out a professional accountancy practice. He should not be a body corporate or an employee of the company being audited. An auditor must be an accountant in the context of professional studies and status. He should be recognized in the context of institute of chartered accountants of Nigeria. Act no.15 of 1965.
CHAPTER THREE
RESEARCH DEISNG AND METHODOLOGY
INTRODUCTION
The purpose of this chapter is to present the procedures taken in carrying out the study. Each of the procedures will be discuss under separate headings.
RESEARCH DESIGN
The study took the form of survey research. Moreover the major objective of the study was to study the opinion of auditors and audit beneficiaries on the problem with respect to PWC Nigeria Research questions and hypothesis were formulated leading the researcher into data collection using a well modeled questionnaires ad other secondary data were collected directly from the audit form with much concentration on savings. Analytical test were based on five percent level of significant using the chi-square.
SOURCES OF DATA COLLECTION
The questionnaire were distributed to PWC Nigeria, the managing director, deputy director, Admin manager, regional manager, personnel manager and senior auditors and junior auditors.
The result were collected at the end with the help of information given to us by the respondent. It help me to complete my work successfully.
POPULATION AND SAMPLE SIZE
The data obtained from the questionnaire distributed to 200 respondence is presented in the next chapter. 150 questionnaires were retired, however 25 of the retrieved questionnaire were ether incomplete or two mutilated to the analysis, therefore the researcher was left with 125 questionnaires which he deemed sufficient to make a compressive analysis and valid conclusion.
The total population size as recorded above is 200 while the sample size is 125 questionnaires which were analyzed.
CHAPTER FOUR
PRESENTATION AND ANALYSIS OF DATA
INTRODUCTION
This chapter focuses on the hypothesis formulated based on the research problems stated in chapter one. The data obtained from the questionnaires distributed to two hundred respondents is presented in this section. One hundred and fifty questionnaires were retrieved. However, twenty five of the retrieved questionnaires were either incomplete or too mutilated to be analyzed.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
SUMMARY OF FINDING
From this study the following findings were deduced;
- The audit function is crucial in providing users with assurance about the information provided by management in the financial statements users expect this information to be free from management bias and correct true and fair with respect to the enterprise resource.
- The audit expectation gap is associated with the independent audit function (Lin and Chen 2004;93).
- Some of the cause of an audit expectation gap may be traced to audit objective, auditors obligation to detect and report fraud, auditors independence and the third party liability of auditors, quality of professions performance, its objectives and results and that which the society experts.
- There is difference in independence scores between auditors, bankers, investors and accountants in Nigeria.
This research illustrates that even though auditors are responsible for maintaining public confidence in a company. There are certain expectations that the society has about the audit function that are unreasonable. These contribute on an audit expectation gap. This study demonstrates a substantial knowledge of auditing by the other three group of respondents with respect to fraud detection prevention by auditors, verifying every transaction and liability for business failure.
- Since there s no audit expectation gap in the area of the company’s financial statement, responsibility for verifying every accounting transaction undertaking by the company responsibility for detecting/preventing all fraud in company, responsibly for disclosing weather any theft occurred during the financial year the accounting profession should seek to reduce the number of years an auditor can provide auditing service to a client. This is because the independence of an auditor is threatened when engaged in providing audit services for a long time.
CONCLUSION
To conclude, the research indicated there are several over-expectations of users of audited financial statement regarding the attest function while external auditors plays a vital role. The detecting of fraud is however not only auditors responsibility. According to the auditing standard the primary responsibility for fraud prevention and detection rests with the management of the company (IFAC; IAASB, 2009 cited in Bogdanovicute, (2011). An auditor however in accordance with ISAs is responsible for obtaining as a whole are free from material misstatement, weather caused by fraud or error. Additionally, the study provides some evidence that auditors themselves do not have the same perceptions in relation to role and responsibility of the auditors.
The analysis indicated that issues in relation to fraud prevention and detection are one of the most uncertain even for auditors.
Finally, it can be concluded that audit expectation gap exist n Ghana, in relation to the auditors responsibility, especially in relation to fraud detection and soundness of internal control structure of the audited entity.
RECOMMENDATIONS
The researchers recommend that audit profession in Nigeria educate their member on the duties and responsibilities of auditors. It is also incumbent on the profession and the regulators to frame such standards, rules and regulations that shall adequately guide the auditors to fulfill the reasonable expectations of various uses groups. Again the audit profession should educate users of financial statements about the duties and responsibility of the profession so as to clear all doubts in the minds of the users, lastly, since the study was limited to only stockholders’ as users of financial statement, the results may not reflect the view of all uses of financial statement. It is therefore recommended that other studies be conducted to include many users of financial statement such as financial consultants, brokers etc. to see the extent of expectation gap in Nigeria.
BIBLIOGRAPHY
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- Baron, C.A. Johnson D.A. Sear Foss, A.G. & Smitt, CIL (1977), Uncovering Corporate irregularities are we closing the expectation gaps; journal of Accounting K14 243-250.
- Dana G. (2011). Audit expectation gap in the public section in Romania. Annals of the University of Oradea Economic Science Series, 20 (2), 510-516.
- Evans, J.R. (1978). Improving the accounting profession; A shared responsibility, securities and exchange commission news, retrieved 11/04/2011 from http//www.sec.gov/news/speech/1978/120878evans.pdf.
- Dixon, R. Woodhead, A.D. & Sohliman, M. (2006). An investigation of the expectation gap in Egypt Managerial Auditing Journal, 21,293-302.
