+234 813 0686 500
+234 809 3423 853
info@grossarchive.com

IMPORTANCE OF AUDIT FINANCIAL STATEMENTS

  • Type:Project
  • Chapters:5
  • Pages:35
  • Methodology:Z Test
  • Reference:YES
  • Format:Microsoft Word
(Accounting Project Topics & Materials)
IMPORTANCE OF AUDIT FINANCIAL STATEMENTS
CHAPTER ONE : INTRODUCTION

    The origin of Auditing is as old as the existence of the human society which is accompanied by the development of system of accounting. Although the ancient history of auditing has sparse documentation, its existence had been traced from the records of the Mesopotamian civilization dating back to 3,500 BC. The Mesopotamian records, which were essentially financial transactions, exhibited marking. Viewed as a system of verification, provided e evidence of the existence of internal control and separation of duties (Oladipupo, 2005).    
    Going by historical approach the work Audit is a Latin word known as “he bears”. This was brought about by the practice whereby the accounts of the estate domain or manor were checked by those in authority ensuring accountability. Hence audit in recent time refers to a process whereby the accounts of business entities are subjected to scrutiny in such details as will enable the auditor (independent person) to form an opinion as to their truth and fairness (Woolf, 1994).
    An audit is the examination of the financial report of an organization as presented in the annual report by some independent of that organization. The financial report includes a balance sheet, an income statement, a statement of change in equity, a cash flow statement, and notes comprising a summary of significant accounting policies, and other explanatory notes.
    Audit has been seen overtime as a relevant tool in reducing the threat and risk faced by organization. One of the most significant threats for many businesses today despite their size and the nature of their operations is insolvency. Extant evidence shows that in the past two decades business collapse have occurred at higher rates than at any time since the early 1930s. It is also interesting to note that during the 1980s certain sectors of the Nigeria economy, such as industrial businesses and banking sector in depressed areas experienced collapse rates as high as 50% over a time-years period (Rees, 1995).
    The economic cost of corporate collapse is relatively large. Evidence shows that the market value of the distressed firms decline substantially (Wainer, 1997).
STATEMENT OF THE RESEARCH PROBLEM  
    Many companies have failed and others are at the verge of failure in Nigeria due to various factors. It is provided in SAS of CAMA (2004) that all companies must prepare financial statements and these statements are subjected to Audit by independent person called Auditor. One of the reasons for the audit function is for the audit to express an independent opinion of the financial statements prepared by the Directors, the following problems call for answers:
1. What are the factors responsible for corporate failures in Nigeria?
2. Can Audited financial statement assist organizations to predict corporate failure using the Altman Z-test model?    
 OBJECTIVE OF THE STUDY  
    The objective of audit of financial statement is to guarantee accurate and exhaustive financial reporting, resulting in improved financial management of private sector and providing a sound basis for performance auditing.
    When financial audit were first introduced, their aim was to verify whether or not the financial reports of companies give an adequate overview of their actual financial situation.
1.    To identify reasons for corporate failure in Nigeria.
2.    To examine the relevance of audited financial statement using the Altman’s Z-score model in predicting corporate failure in Nigeria.
SCOPE OF THE STUDY
    This research is restricted to collapse entity and how the use of audited financial statements helps in recovery. It covers information gotten from personal interview, relevant journals, internet and textbooks.
SIGNIFICANCE OF THE STUDY   
    Most time when organizations collapse, that is go bankrupt, lose market share, show low profits or losses for long periods, etc, one tends to assign some single, and very often an external event for example long-drawn labour strike, failure of a major product or bad investment etc. as  the root cause.
    Corporate collapse has been attributed to reasons which are both external e.g. competition, change in government regulation, scarcity of inputs, and internal e.g. management incompetence, structural rigidity, lack of leadership etc and most importantly lack of audited financial statement.   
    Therefore, this study will help examine the following:
1.    It will help to examine the causes of decline in companies and organizational life-cycles.
2.    It will help to examine why most companies tend to get trapped in their past success pattern, and lose their flexibility to change and adapt.
3.    It will help to examine the usefulness of financial statement.
LIMITATION OF THE STUDY       
    The failed companies were limited to the banking sector because their financial statements were already in the Nigerian stock exchange fact book. More failed companies were not ready to release their financial reports.  

IMPORTANCE OF AUDIT FINANCIAL STATEMENTS

Share This

Details

Type Project
Department Accounting
Project ID ACC1637
Price ₦3,000 ($9)
Chapters 5 Chapters
No of Pages 35 Pages
Methodology Z Test
Reference YES
Format Microsoft Word

500
Leave a comment...

    Details

    Type Project
    Department Accounting
    Project ID ACC1637
    Price ₦3,000 ($9)
    Chapters 5 Chapters
    No of Pages 35 Pages
    Methodology Z Test
    Reference YES
    Format Microsoft Word

    Related Works

    THE IMPACT OF INTERNATIONAL FINANCIAL REPORTING STANDARDS IFRS ON THE QUALITY OF FINANCIAL STATEMENTS (FIRST BANK) Abstract The IFRS adoption is already an issue of global relevance among various countries of the world due to the quest for uniformity, reliability and comparability of financial statements of companies. This research paper... Continue Reading
    CHAPTER ONE INTRODUCTION 1.1      Background of the study According to America Accounting Association, Accounting is the process of identifying, measuring, and communicating economic information to permit informed judgment and decisions by users of information. From this definition, it can be seen that the main objective of accounting is to... Continue Reading
    Abstract The research topic of this study is  “The role of financial statement in investment decisions”  – a study of selected banks in Enugu metropolis. The purpose is to identify the relationship between financial statement and investment decisions, and the impact of financial statement in investment decision making and also to know if... Continue Reading
    EFFECT OF AUDIT ROTATION AND AUDIT COMMITTEE ON THE QUALITY OF FINANCIAL REPORTING ABSTRACT The major objective of the study is to examine the impact of audit committee to financial reporting in Nigeria, using some Nigerian quoted companies. However, the specific objectives are to: Find out whether audit committee has any significant relationship... Continue Reading
    CHAPTER ONE INTRODUCTION 1.0.      Introduction This study was about the efficiency of accounting softwares in the preparation of financial statements in selected banks in Benin City, Edo State. The chapter presented the background of the study, statement of problem, objectives of the study, research questions, and the significance of the... Continue Reading
    THE USEFULNESS OF ACCOUNTING STANDARDS IN THE PREPARATION OF FINANCIAL STATEMENTS  ABSTRACT The most common report from external use are the financial statement included in the annual report to shareholders (owners) and potential investors.  These financial statements are prepared to confirm with “generally accepted accounting principles”... Continue Reading
    (A CASE STUDY OF UNION BANK NIGERIA) ABSTRACT The study was carried out to analyse how organizations and other stakeholders can make use of accounting ratios to critically analyse financial statements to evaluate organizational performance, using... Continue Reading
    A STUDY OF OBAJANA CEMENT INDUSTRY, KOGI STATE ABSTRACT This study was carried out to ascertain the effect of asset valuation on profitability of manufacturing industries. A survey research design was adopted in which Ninety (90) workers of Obajana Cement... Continue Reading
    CHAPTER ONE INTRODUCTION 1.1 BACKGROUND OF THE STUDY The purpose of financial statement is to present primarily for the benefits of stakeholders and any interested party about the progress or otherwise of the organisations, results of the operations... Continue Reading
    CHAPTER ONE 1.0               INTRODUCTION: 1.1        BACKGROUND OF THE STUDY: A company’s financial statements are analyzed internally by management and externally by investors and creditors. Management... Continue Reading