THE ROLE OF EXTERNAL AUDITING IN FRAUD DETECTION
(A CASE STUDY OF UNION BANK ASABA DELTA STATE)
This study is an attempt to discover the need for an internal auditing in an organization for better performance. The research involved getting the opinion of accountants of three categories namely, Head of department of chief accountants, organization and practicing accounting in the federation. The researcher will make use of primary and secondary data. The methods of data collection would includes oral interview, observations and questionnaire scores standard deviation and normal curve would be use to investigate while percentage table and mean would be used in the analysis of response from respondents. It was generally discovered that the internal auditing should be encouraged in corporate organization to improve organizational performance restore probity, accountability and integrity in our national life.
TABLE OF CONTENTS
Chapter One - Introduction
1.1 Background of the study
1.2 A Brief History of Union Bank of Nigeria plc
1.3 Statement of problem
1.4 Objective of the study
1.5 Significance of the study
1.6 Scope of the Study
1.7 Limitation of the Study
1.6 Definition of Terms
Chapter Two – Literature Review
2.1 Definition of Fraud
2.2 Type of Fraud
2.3 Auditors, His Rights, Duties and Status
2.4 Roles of Auditors
2.5 The Auditor and Fraud Detection
2.6 Indications of Fraud
2.7 The Auditing Guidelines Concerning Fraud Detection
2.8 Reporting to Members and Management
2.9 Liabilities of an Auditor
Chapter Three - Research methodology
3.2 Research design
3.3 Sample Size
3.4 Sample Techniques
3.5 Research Instrument
3.6 Validation of Instrument
3.6 Reliability of the Instrument
3.7 Method of Data Collection
3.8 Questionnaire Design
Chapter Four - Data Analysis and Presentation
4.1 Data Presentation
Chapter Five - Summary Conclusion and Recommendations
5.1 Summary of the Study
5.4 Suggestions for Further Studies
BACKGROUND OF THE STUDY
An audit is the independent examination of an expression of the opinion of the financial statement of enterprises by an auditor. In pursuance of this objective, he may disclose defalcation and irregularities, which are capable of impairing the truth and fairness of the financial statement.
In recent year there has been considerable debate over the extent of the statutory auditor’s responsibility for the dictation of fraud. This has been stimulated by the continued uncertainty over the extent of the auditor liability to third parties for negligent audit work. It is obvious that failure to detect a major fraud may lead to a loss for the client or some third party to whom a duty of care is owned. The important question is low for do the auditor responsibility.
The auditing profession had always held tight to the opinion that the primary responsibility for both prevention detection of fraud and other irregularities rest with management.
The auditor duty does not require him especially to search for fraud unless required by stature or the specific term of his engagement. In accordance with normal practice audit, will be planned primary to enable us to express our professional opinion, and auditor merely obliged to plan his work end design his procedures so that he has a reasonable chances of detecting those, illegalness which might impaired the truth and fairness of the financial statement.
A Brief History of Union Bank of Nigeria Plc
Union bank is one of the foremost commercial bank today with every strong capital ban.
The bank which was formally known as dominion colonial overseas (DCO) started banking business in Nigeria in 1917 the bank today world has no many branches scattered all over the world. The bank also branched into their business such as union assurance company ltd. Union home savings and loan ltd, union on March into union stock broke etc.
STATEMENT OF THE PROBLEM
It is a test to this research work to investigate on the positive effects and influences the auditors most emphatically the external auditors have financial organization like banks.
Auditing has the basic means to control the financial system organization sill prevent fraudulent financial statements, financial and report to the public and certainly there has been persistent gradient practices in the bank which at the end gets the banks distressed.
However it would be questioned how this situation could persist while auditing process has been in existence in carrying out his research work some problems has attracted special attention. They are as follows;
What have been the reasons for consistent fraudulent practices in the bank?
What are the identified reasons why most financial report has not been and the other financial institution and Allied Mater decree (CAMD) 1990?
To what extent should the external auditors play in bank to enhance the growth of the bank for bank to keep standard as required by CAMD
OBJECTIVES OF THE STUDY
The aim of the study is to critically look or examined the banking business in Nigeria and identifying the role the external auditors play in fraud detection.
It is well know that one of the problem facing banks in Nigeria is mismanagement of fraud or inappropriate accounting for receipts and payment. Based on the problem identified above the objectives of the research work include.
To highlight the need for appropriate review and report upon the account and balance sheet for banks by external auditors
To educate on the necessity of banks to keep in mind the essence to comply with the provision of the bank and other financial institute decree 1971.
To reach the banks to ensure compliance with the company and Allied Matters decree (CAMD) 1990 as amended.
To educate auditors land credence to the account of the bank and to ensure compliance with SAS to and IAS 30.
What are auditors land credence to the account of the bank?
How can we educate on the necessity of banks to keep in mind the essence to comply with the provision of the bank?
What are the appropriate review and report upon the account and balance sheet for banks by external auditors?
Significance of the Study
To appreciate the overall significance of this research work, one will have to put into consideration the role of the external auditors of fraud detection.
In considering this, the importance of this study is dressed by the head to ascertain that bank keep up to the requirement of the bank.
It creates room for possible assessment of the bank’s financial reports enabling the entire public receives what they bar dined for that is a true and fair received report.
Also the auditor role is established in the view to assessing in general the financial background of the banks dining at putting to a stop the issue of distress.
The government regulations on banks are being acknowledge by the external auditors. However making sure that they are continuously put of effect by banks.
The project will provide for any student carrying out a similar topic or further research work on this subject a solid foundation for the realization for his other research purpose or work.
The study is also in partial fulfillment of the requirement for the award of higher national’s diploma (ND) in accounting to the researcher.
SCOPES OF THE STUDY
The research work is to enable the auditor discuss on union bank plc, and their various affordable auditors stating the auditor’s objectives, roles and services in the bank. In view of this the project covers the auditing of union bank Nigeria plc.
The research work has identified the role of external auditor in fraud detection.
In as much as these are so many branches of union bank plc, in specific towns and location around the country the scope of this study has been subjected within the union bank of Nigeria plc Asaba.
The Asaba branch was taken as the case study since it can represent the entire branches of union banks as they all exhibit and maintain similar functions, business transaction and the some organizational frame work.
1.7 LIMITATION OF THE STUDY
In the course of this study some factors were encountered by the researcher.
The study was carried on audit of tight academic schedule thus regents interrupts with lecturers, test and private studies was not in common consequently limited time was available for the study.
Lack of funds which restrict is the research investigation to a few already made works which she could lay hands on.
The researcher in ability to hold talk with all the auditors and bank manager whole she tended to have interviewed on issue relating to bank with regards to the roles of external auditors.
The refusal of some university libraries and polytechnic libraries to conduct a library research on the above topic.
Lastly our rill-equipped library which provided little or no information on this topic is worth mentioning.
DEFINITION OF KEY TERMS
The analogy of learning accounting auditing and learning language is not perfect but the similarities the significant some terms used in auditing could have different meaning from that used outside business hence, the need to define the following terms from auditing perspectives for clear understanding as they would be used in this study the following are definition of the term used in project work.
An audit: It is an undependable examination of an expression of opinion on the financial statement of an enterprise by an appointed auditor in pursuance of that appointment and in compliance with any relevant statutory obligations.
Accounting Policies: This encouraged the principles based continuous role and procedures adopted by management in preparing and presenting financial statement.
Audit Evidence: Are the relevant and reliable data or information obtaining and recorded by the auditor in arriving at conclusion of audit work bases in independent opinion of financial statement.
Verification: The means establishing the existence ownership valuation and presentation of assets and liabilities as the balance sheet date.
Fraud: Fraud is referred to those act which include the use of deception to obtain an illegal or unjust financial advantages and or omission of account or disclosure from an entity accounting records of financial statement.
Compliance Test: Are test, which seek to ensure the auditor on other control procedures are being applied as prescribed.
Substantive Test: Are those that on transaction and balance on other procedures such as analytical review which seek to provide audit evidence as to the competence accuracy and validity of the information constrained in the accounting records or financial statement?
Chi-square test (X2): A test statics used to test whether an observed serves of value differ significantly from which was expected it is employed for testing more than two population properties.
Audit Report: This is communication statement of opinion based upon convincing evidence by an independent competent authoritative person concerning the degree of correspondents in all materials aspect of accounting and information communicated by an entity with established criteria.
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