The Impact of Auditing Guidelines on the Manufacturing Company’s Profits
Chapter One
OBJECTIVE OF THE STUDY
The objectives of the study are;
- To examine the completeness that all transactions and asset, liability and equity account have been recorded.
- To identify claim that the company holds the assets and owes the liabilities on the balance sheet.
- To evaluate those assets, liabilities and equity are held in the financial statement at the correct amount
- To find out that the transactions that resulted in the figures on the income statement actually took place.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Generally, standards are a means to an end. More specifically they are instruments of regulation used by man in the attainment of his goals and objectives. The word “standard” originally stood for a banner whose purpose was to orient and gather scattered forces in a battle, obviously a regulative function. The Oxford Dictionary of Accounting describes auditing standards as the basic principles and essential procedures with which auditors are required to comply in the conduct of any audit of financial statements. This is the basic principles which govern the auditors professional responsibilities and which must be complied with whenever an audit is carried out. Auditing standards are a number of rules accepted by the profession as guidelines to measure transactions, event and circumstances which affect financial results and financial information supplied to beneficiary parties (Igbinosun, 2011). These standards should be related to the relevant objectives of the audit, which should be relevant and appropriate within the social environment. Therefore, these standards should satisfy the four criteria of relevance, acceptability, consistency and suitability. The Auditing Practices Committee issued a series of auditing standards between 1980 and 1991. The standards issued by its successor body, the Auditing Practices Board (APB) are known as Statement of Auditing Standards (SAS). The APB also issues practices Notes (to assist the auditor in applying auditing standards of general application to particular circumstances and industries) and Bulletins (designed for issue when guidance is needed on new or emerging issues), practice Notes and Bulletins are not prescriptive. They are an indication of current good practices. International Standards of Auditing (ISA) Statement of Internal Auditing Standards, Statement on Auditing are standards being set by their various committees. International Auditing Practice Committee believes that the issue of such standards and statements improve the degree of uniformity of auditing practices and related services throughout the world (IFAC, 1997). It is however, clarified that the guidance’s do not override statutory or professional regulations. Though the International Auditing Guidelines apply (IAG) primarily to independent financial audits, it is recognized that they may also have application, as appropriate, to other related activities of auditor. IAG are not automatically binding on the auditors in a particular country. However, they provide an authoritative view of what is internationally recognized as Generally Accepted Auditing Practices (GAAP) and thus, serve as the basis for the development of auditing pronouncements by professional bodies in individual nations. Batra and Bagadia (1992) argue that in some nations, the IAG have been adopted without any change(s), in many others, they have been adopted with such modifications as are considered appropriate in the context of the domestic conditions. The ISA acknowledges that difference in financial reporting frameworks between countries result in comparative financial information being presented differently in each framework (Padar & Hopp 1998). GAAP which is the overall guidelines for auditing establishes the framework within which an auditor decides the necessary action to take in preparing for the examination of financial statements, in performing the examination and in writing the report (Cook & Winkle, 1988). Hermanson, Shrawer and Shrawer (1993) view auditing standards as a measure used in determining the ability of the auditor in the performance of the procedures and the objectives to be attained by the use of the procedures undertakes.
CHAPTER THREE
RESEARCH METHODOLOGY
RESEARCH DESIGN
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to the effect of auditing guidance on the manufacturing company
SOURCES OF DATA COLLECTION
Data were collected from two main sources namely:
- Primary source and
- Secondary source
Primary source: Personal interview was conducted with the staff of first bank of Nigeria plc.
Secondary source: The secondary formed the major theoretical part that was derived through critical review of library and also other related literature (material written by others researchers).
POPULATION OF THE STUDY
Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information on the effect of auditing guidance on the manufacturing company. 200 staff of NIGERIA BREWERIES PLC in Enugu state was selected randomly by the researcher as the population of the study.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to evaluate the effect of auditing guidelines on the manufacturing company’s company
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges the of auditing guidelines on the manufacturing company’s company.
Summary
This study was on the effect of auditing guidelines on the manufacturing company’s company. Four objectives were raised which included: To examine the completeness that all transactions and asset, liability and equity account have been recorded, to identify claim that the company holds the assets and owes the liabilities on the balance sheet, to evaluate those assets, liabilities and equity are held in the financial statement at the correct amount, to find out that the transactions that resulted in the figures on the income statement actually took place. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of breweries company plc, Enugu. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up human resource managers, production managers, breweries and junior staffs was used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
The study evaluates auditing guidelines and auditor’s performance. It was observed that the role of auditing has changed from the simple requirement that all resources have been duly accounted for, and that all uses were in accordance with the directives of the noble man in modern society an audit is viewed as providing assurances as to the performance of management in manufacturing company whose investors may be national or international.
Recommendation
The audit report should be expanded by including a statement about the auditors evaluation of the internal control system and the results of reviewing the entity’s ability to continue in the future. Expectation of the audit report to explain in more details what the auditor does and does not and the degree of assurance provided by an audit to shareholders and other users of the audit report.
- The IAs, should reconsider the external auditor’s responsibility for detecting and disclosing the major or all fraud in the audit report. This will bridge the gap between the perceptions of external auditor and other stakeholders, the management and auditors in Nigeria should be responsible for detecting frauds errors, irregularities and other illegal acts and that the auditor should disclose all frauds of whatever form in the audit report.
References
- Arrigyon, C., Hillison, W. & Williams, P. (1983). The psychology of expectations gap: Why is there so much dispute about auditor responsibility? Accounting and Business Research. Autumn, 243-250
- Bhatia, V. & Begardia, K. (1992). Text book of Auditing New Delhi: Tata McGraw Hill Publishing Company Ltd. Cook, J & Winkle, C, (1988). Auditing (4th ed). Houghton, Mifflin Company
- Defliese, P., Jeanicks, H., O’Reilly, U. & Hirch, M. (1998). Auditing (11th ed.) Australia, John Wiley and Sons.
- Gill, G. & Cossert, G. (2008). Modern Auditing in Australia (4th ed.) Australia, John Wiley and Sons.
- Hermanson, R., Shrawer, R. & Shrawer, J. (1993) Auditing Theory and Practice (3rd ed.)Boston, US, Homewood Publishers.
- Igbinosun, F.E. (2011). An Evaluation of the Auditing Standards and their Application tothe Auditing of Registered Companies in Nigeria. An M.Sc Project Presented to the Department of Accounting University of Benin, Benin City.
- International Federation of Accountants Committee (1997) IFAC Handbook Technical Pronouncing US.
- Kelly, W., Boynton, W. & Ziegher, R, (1986). Modern Auditing (3rd ed.) Canada, JohnWiley and Sons.
