Role of External Auditors on Financial Accountability of Managers in Nigeria Organizations a Case Study of Union Bank of Nigeria Plc Lagos Branch
Chapter One
Research objective
The general objective of the study is to assess the role of external auditors on financial accountability of managers in Nigeria organizations a case study of Union bank of Nigeria Plc Lagos branch.
The following are the specific objectives of the study:
- To assess how effective external audit is on Union Bank‘s accountability
- To examine how external audit report is dealt with by Union Bank‘s in Nigeria.
- To ascertain the challenges that Union Banks face in ensuring accountability.
CHAPTER TWO
LITERATURE REVIEW
Introduction
The chapter entails the review of literature which relates to the topic the impact of External audit of Union Bank‘s in the light of accountability in Nigeria by focusing on Union Banks in Lagos State in Lagos State. Varied scholarly works and research would be selected and relevant areas would be appraised, assessed and evaluated. The chapter further gives relevant information about the aspects of earlier works relating to the study.
The context of Union Bank accountability
Union Bank accountability issues are concepts that are regarded complex. This is basically due to the ambiguous nature in which Union Banks are known to operate.
According to Jordan and van Tuijl (2006) and O‘Dwyer (2007), intermediary organizations essentially collaborate with multiple stakeholders who have diverse demands. Union Banks from developed nations and governments are further known to provide funds and other resources as well as locally-based service delivery. There exits numerous International Union Banks (IUnion Banks) from developed nations who also mobilize resources (funds) and channel them to developing economies via localbased operations. There are thus Union Banks at the local level and local operations of IUnion Banks who serve as intermediary between international donors and the beneficiary local communities.
Several research works have revealed that Union Banks play important role when it comes to health care delivery, education and other numerous welfare services in developing countries. Such works include Dixon et al. (2006); Ebrahim (2003a); Edwards and Fowler (2002); Goddard and Assad (2006); Gray et al. (2006); O‘Dwyer and Unerman (2007); Porter (2003); and Unerman and O‘Dwyer (2006a).
The concept of transparency is mostly deemed a significant characteristic of good governance. It is also regarded an important requirement for promoting accountability among states and citizens. Transparent government primarily shows
At its most basic, transparent governance according to Suk et al (2005:649) signifies ― the openness of government systems to citizens and the public through clear-cut and well defined procedures, loose access to information, that in the end promotes and leads to accountability in the duties of organizations and individuals managing the resources or been in public office‖. Furthermore, transparency is ―regarded a significant feature of government systems, organizations, companies and individuals having access to open information on plans, rules, actions and procedures‖ as indicated by the Transparency International (2009: 44).
Goetz and Jenkins (2005) further assert that accountability realistically takes into consideration both ―answerability‖, which is the mandate of duty-bearers to make available the required information and justification about their actions; and ―enforceability‖ which is the possibility of penalties or consequences for failing to answer accountability claims.
According to Nelson and Dorsey (2003:2014), development practices of IUnion Banks have been revealed that concentrate much on development as a need and a gift. There are however other recent revelations that indicates development to be more as a right, which has the aim of ensuring assistance that involves the duty to aid in the achievement of the entitlements of individuals. This step (rights-based) has resulted to the IUnion Banks playing the key role in educating those affected by the projects and activities of these IUnion Banks. The educational actions are geared towards inculcating higher levels of understanding or knowledge specifically on the rights of the individual. Lastly Nelson and Dorsey (2003) indicate that the design of projects of IUnion Banks have happened in a more participatory manner, which have recognized the needs to respect or consider the rights of the people who are affected by such projects.
CHAPTER THREE
RESEARCH METHODOLOGY
Introduction
This chapter will focus on the methodology the researcher will adopt to undertake the study. The areas study will cover include the study design, the population, sample size, sampling techniques; data collection and analysis as well sources of data for the study.
Study Design
The researcher used mixed approaches which consist of both qualitative and quantitative research methods. Qualitative analysis according to (Borrego et al., 2009) is characterized by the collection and analysis of textual data which are surveys, interviews, focus groups, conversational analysis, observation on the context within which the study occurs. It allows the researcher to make connection between the study and the situation. Due to this research being an explanatory research, both quantitative and qualitative analysis was needed. The qualitative results served to explain the quantitative results according to (Borrego et al., 2009).
The choice of the survey strategy allowed for the collection of large amount of data from the population. The selection of survey design over other research methods such as experimental, longitudinal, cross-sectional and others was determined by the assertion of Saunders, Lewis, and Thornhill (2007) that survey is an appropriate and a common strategy in business and management researches which is a highly economical means of analyzing a large amount of data.
In addition, the research involves quantitative study. Miles and Huberman (1994) indicated that quantitative research involves primary understanding in terms of measurement of quantity, intensity or frequency. It is about asking people for their opinions in structured way so that one can produce hard facts and statistics to guide you. To get reliable statistical results, it is important to survey people in fairly large numbers and make sure they are representative sample of the target. It is for this reason that the researcher is selecting quantitative to gain deeper understanding of the subject matter which is to assess the impact of external audit on Union Banks in relation to accountability.
Study Population
The study will focus on the impact of external audit of Union Bank‘s in the light of accountability in Nigeria by focusing on Union Banks in the Bolgatanga. The region has about twenty three (23) Union Banks operating in various projects and programmes. Out of the twenty three (23), sixteen (16) operate within the Bolgatanga township and its environs.
The study focused on these 16 Union Banks in addition to some selected beneficiaries. The beneficiaries included heads of schools, opinion leaders and Assembly Men in various areas.
CHAPTER FOUR
PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA
Introduction
This chapter deals with presentation of the results relating to the study variables. It analysed the general characteristics of the sample studied and also answers the research questions. In other words it deals with four major issues, namely characteristics of the sample, impact of external audit of Union Bank‘s in the light of accountability in Nigeria by focusing on Union Banks in Lagos State in Lagos State, Challenges that hinder the accomplishment of external audit of the Union Banks and General Open-ended questions
Out of 108 targeted respondents from different Union Banks in Lagos State in Lagos State, the researcher managed to get 86 respondents thereby representing a response rate of 79.63%, which is good for any standards. The composition of respondents was as follows.
CHAPTER FIVE
SUMMARY OF FINDING, CONCLUSIONS AND RECOMMENDATIONS
Introduction
This chapter provides a summary of the major findings of the study, conclusion and recommendations. The study assesses the role of external auditors on financial accountability of managers in Nigeria organizations a case study of Union bank of Nigeria Plc Lagos branch
. Summary of findings
The analysis of the data revealed the following findings:
Assessment of how effective external audit is on Union Bank’s in accountability.
It was established that external audit report does not have positive effect on Union Banks activities in relation to accountability.
According to the findings indicated on table 4.4 above, on the average 21.96 % of the respondents strongly agreed that there is Effectiveness of external auditing on
Union Bank‘s accountability, 22.22 % of the respondents agreed, whilst 27.57% disagreed strongly that there is effectiveness in external auditing on Union Bank activities and 28.29% disagreed. Out of the total population who responded and returned the questions majority disagreed strongly with the assertion that external auditing is impacting positively on accountability. In other words it indicates that though Union Banks are audited periodically and report submitted to management, it does not have any positive impact directly on the lives of beneficiaries thus challenging their accountability approaches.
Examination of how external audit report is dealt with by Union Banks in Lagos State in Lagos State.
From the findings, it is observed that the external audit report of Union Banks are not utilised to bring about compliance and that recommendations of the external auditors are not enforced by management. This invariably calls for a case by case research on Union Bank activities.
The research reveal on the average that 12.79% of the respondents strongly agree that external audit report of Union Banks are discussed, and recommendation enforced and implemented, 14.78% of the population agree, 40.20% of all respondents strongly disagree with the assertion, while 32.23 disagree.
Challenges that Union Banks face in ensuring transparency and accountability. On the basis of the facts from the research, indicators are that the resources, systems and procedures are all in place but they are challenged in implementing these best practices hence rendering Union Bank activities unaccounted for.
The research revealed that 31.16% of the respondents strongly agree that there are challenges in Union Banks in ensuring accountability, 34.65% of the respondents agree, 16.28% strongly disagree whilst 17.91% disagree.
Conclusion
From the research work carried out, the following conclusions were arrived at. 55.81% of the total respondents disagree that there is effectiveness in external audit on Union Bank in the pursuit to be transparent and accountable. While 44.19 agree with the assertion that there is effectiveness in external audit. There is therefore more to be done for external audit report to be effective in the Union Banks industry.
It was revealed also that the audit reports of Union Banks are not discussed with the key players and recommendations are not enforced and implemented and as such contributes nothing to accountability thereby further reinforcing the assertion that corrupt practices is pervasive on Union Bank activities.
Finally the challenges Union Banks face are as a result of non – compliance to their own procedures and regulations, though logistically they are not constraint to ensuring that accountability approaches are followed to the latter.
In conclusion external audit has no impact on Union Banks activities in relation to accountability.
Recommendations
For the impact of External audit to be effective on Union Banks activities in relation to accountability the following have been recommended.
Project end evaluation should not be only narrative as has been the case in most evaluations but should include audited financial statement to be signed by the external auditor.
External Auditors should not be hired by management of Union Banks but by the Board of Directors or Donors so the external auditors will report to the Board
or the donor or funding agency and not management of Union Banks. Accountability can best be enforced when anomalies are identified and management is called to explain why compliance is compromised. Union Banks contracts with donor agencies could end if it is clear in external audit report that there has not been transparency and that funds meant for beneficiaries are not properly accounted for, so that only credible and accountable and transparent Union Banks are supported to implement projects.
Audit Committees should be established in Union Banks so that they can educate staff on the findings in the audit reports. This will help put information available to all. The audit committees would ensure that external auditor‘s recommendations are studied, enforced and implemented.
Beneficiary communities and stakeholders should be educated to demand full disclosure of the entire package of support such that they can hold Union Banks implementing the projects within their community accountable if they refused to render the agreed support package. The Union Banks also at the time of evaluation would require the various stakeholders to mention areas of support for the external evaluator to document demonstrating how successful they have been and the impact thereof. When communities and stakeholders who these grants are meant to support understand their role in the roll out and achievement of outcomes of the Union Banks, the can hold them accountable.
Areas of Further research
This study has identified the need to assess the impact of external audit in accountability of Union Bank‘s in The Bolgatanga Municipality In order to better understand the accountability of Union Banks future in broader perspective, future research should be carried out covering the country as a whole since this research is limited Union Banks in Bolgatanga in the Upper East Region of Nigeria.
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