• Chapters:5
  • Pages:143
  • Methodology:Z Test
  • Reference:YES
  • Format:Microsoft Word

    This research work examines auditor’s independence and corporate fraud. The incidence of increasing financial fraud scandal in corporate organization has been a center feature in recent years. This fact, together with the increasing sophistication of fraudsters creates difficult problems for directors (management) and independent auditors.
    This research work is carried out in five chapters; chapter one focuses on introduction with emphasis on the background of the study, statement of the problem down to the scope of the study.
    Chapter two gives detail review of relevant literatures in relation to the topic.
    Chapter three contains the research methodology used. Chapter four highlights the various data analysis and interpretations of the various hypotheses formulated were tested using the z-test statistic.
    While chapter five vividly points out our research findings, conclusions and recommendations put forward.
1.1    background of the Study    -    -    -    
1.2    Statement of the Problem    -    -    -    
1.3    Objective of the Study    -    -    -    -
1.4    Significance of the Study    -    -    -
1.5    Scope of the Study    -    -    -    -
1.6    Statement of Hypothesis    -    -    
1.7    Limitations of the Study    -    -    -    
1.8    Definition of Terms    -    -    -    -    
    References    -    -    -    -    -    
2.1    Concept of Auditor’s Independence     -    -
2.2    Components of Auditor’s Independence     -
2.3    Factors Strengthening Auditor’s Independence     
2.4    Auditor’s Independence and Professional Ethics    -
2.5    Prior Debates About Auditor’s Independence     -    
2.6    Corporate Fraud    -    -    -    -    -    -
2.7    Characteristics of Fraud    -    -    -
2.8    Responsibility of Fraud Detection    -    -    
2.9    Who Should Blow the Whistle?
 (Who should Reveal the Fraud)?    -    -    
2.10    The Attitude of the Courts on Independence of
Auditors and Corporate Frauds    -    
2.11    Changes in the Market that Affected Auditor
Independence    -    -    -    -    -    
2.12    Responsibilities of those Charged with Governance
 and of Management    -    -    -    -    
2.13    Auditor’s Independence and Deficiencies in the Prevent Practice    -    -    -    -    -    
2.14    Auditor’s Independence Statutory Framework-Nigeria-
2.15    Meeting the Challenges of Auditor’s Independence     -
2.16    Professional Accounting Bodies and Ethical Guidelines -    
2.17    Benefits from Auditor-Client Relationships     -    
    References     -    -    -    -    -    -
3.1    Introduction     -    -    -    -    -
3.2    Research Design    -    -    -    -    -    -
3.3    Sources of Data Collection     -    -    -
3.3.1    Primary Sources    -    -    -    -    -    
3.3.2    Secondary Sources    -    -    -    -
3.4    Instrument of Data Collection     -    -    -
3.5    Actual Framework    -    -    -    -    -
3.6    Method of Data Analysis and the Statistical Instrument-
    References     -    -    -    -    -    -    
4.1    Introduction    -    -    -    -    -    -
4.2    Data Presentation and Analysis    -    -    -
4.3    Test of Hypothesis    -    -    -    -    
5.1    Summary     -    -    -    -    -    -    -    
5.2    Research Findings and Discussion    -    -    -    -
5.3    Conclusion    -    -    -    -    -    -    -    -    
5.4    Recommendations     -    -    -    -    -
    Bibliography     -    -    -    -    -    
    Questionnaire     -    -    -    -    -    -          
Professional independence is a concept fundamental to the accountancy profession. It is essentially an attitude of mind characterized by integrity and objective approach to professional work. The second half of the 20th century according to Baker (2005) saw various debates in both the academic and professional literature about auditor independence. One argument pertaining to auditor independence from idealized views of professionalism that emerged historically in both the British and the American accounting profession is the issue of independence in examining financial statement and detection of errors and fraud.
‘Independence’ has become an emotive word, a banner standing for freedom, integrity and all that is good. The word independence has two distinct meaning. Firstly, it falls within a family of words implying ‘an absence of relationship’ for example, like unrelated, disconnected, isolated, remote and insular. Perhaps this is the reason why, in the olden days, auditors were often required to hold shares in their client companies so as not to be too independent’. Secondly, ‘independence’ falls within a family of words implying freedom from the exercise of powers, for example: free, unhindered.
McGrath (2001) suggested that “An honest auditor will behave like someone who is independent, using independence to mean an attitude of mind which does not allow the viewpoints and conclusions of its possessor to be reliant on or subordinate to the influence and pressure of conflicting interest. This Olidipupo (2003) further buttressed that, auditor independence is a quality which permits an individual to apply unbiased judgment and objective consideration to establish facts in arriving at an opinion or decision. It is implicit that auditors should be independent from management influence so as to add credibility to financial statement.
In the face of independence of auditors, so many companies like the World Com, Enron, Anderson etc have fallen victims to corporate fraud. The incidence of financial fraud is increasing and has a central feature in a number of financial scandals around the world in recent years. This fact together with the increasing sophistication of fraudsters, create difficult problems for management and auditors. There are some who would argue that the detection of fraud, should be the auditors principal function. This prevailing attitude clearly gives rise to a public expectation which is neither shared nor fulfilled by the profession.
The English Illustrated Dictionary (1990:331) defines “Fraud” as ‘deceitfulness’, ‘criminal deception’ and using false representation to obtain unjust advantage. Adeniyi (2004) defines “corporate fraud” as an intentional act by one or more individuals among management, employees or third parties, which results in a misrepresentation of financial statements. This he further noted that corporate fraud may include manipulation, falsification or alteration of records or documents, misapplication of accounting policies, suppression, omission of the effects of transactions from records or documents etc. The various cases of corporate fraud arose from inadequate internal control system, poor security management for security document, management attitude to audit, chaotic accounting system and irregular balancing of books etc, Izedonmi (2000).
The detection of these frauds tends to pose serious concern on the stakeholders who rely adequately on the independent auditor, audited financial statement prepared by management.
The thrust of the project work is on independence of auditor and corporate fraud in an organization with thorough investigation of these manifestations in the accounting firms (independent auditors) in Nigeria.
Auditor’s independence from their clients is compromised by any relationship that builds a common identity between them. Auditor independence and the quality of auditing decisions deteriorate over time as the auditor-client relationship lengthens (Dies and Giroux 1992). Thompson (1995) has shown that even the most superficial affiliation with a partisan leads people to interpret ambiguous information in ways that are consistent with the partisan interest. This signifies that auditors independence and their role in corporate fraud has created crucial problem in people perception. In the current auditing practices, various incidence of fraud occurring in corporate organizations has attracted doubt if auditor independence is necessary. Stakeholders whom they represent or act as corporate governance from management exploitation seem to have lost confidence in them. The perception that independent auditor is responsible for fraud and error detection has created expectation gap in the mind of the public.
Despite the unending efforts by regulatory bodies in the protection of auditor’s independence and corporate fraud perception, there are still some questions that remained unanswered. These are stated in questions from which the research work seeks to suggest solutions to. These include:
How does auditor’s independence impact on corporate fraud?
Who should be charge with the responsibility of detection and prevention of fraud in the organization?
What are the threats to auditor’s independence?
What are the deficiencies to the auditor’s independence in the current practices?
How does the occurrence of different fraud affects auditor’s independence in the emerging market?
Does auditor’s independence have any relationship with corporate fraud?
It is an obvious fact that independence of the auditor is the heart of the auditing profession and the lack of inadequacy of such independence amounts to the failure of the profession and discipline. The objectives of the research work are stated below as follows:
To examine the threats to auditor’s independence
To investigate how auditor’s independence impacts on corporate fraud.
To find out who should be charged with the responsibility of detecting and preventing fraud in corporate organization.
To find out the deficiencies in the auditor’s independence in the current auditing practices.
To assess how occurrence of different frauds affects auditor’s independence.
To find out the relationship that exists between auditor’s independence and corporate fraud.
    The relevance of this study cannot be ruled out when completed because it would be of immense benefit to the following:
The Government: It would give the government insight on various issues surrounding auditor independence and corporate fraud. Based on that, government can use it as an avenue to review and strengthen various auditors’ independence rules and relationship on corporate fraud.
The Public: It would enlighten the public of the expectation and notion created about the independence auditor and corporate fraud. This would eventually assist to reduce the gap created about the independence of the auditor and the detection of fraud.
Auditors: It would add to their existing stock of knowledge.
Organizations: It would be vital to management of various organizations like banks, companies etc indicating their area of responsibilities in financial statement preparation and that of the independent auditor.
Shareholders: It would serve as guide to the shareholders, investors and other stakeholders on who to be held responsible in detection of fraud and errors between independent auditor and management.
Students: It would serve as an addition to knowledge and as a push for academic exercise especially accounting students.
    The research intensively examines the independence of the auditor and corporate fraud in an organization. The research work spanned across some accounting firms in Nigeria but for the purpose of coming up with a reliable study, some selected accounting firms in Edo and Lagos States were focused on.
    All the information and data generated were strictly within the ambit of the study. Irrelevant materials, information and data no matter how interesting they are, were totally filtered out from the research work. The study covers a period of five years that is 2005 to 2010.
    Hypothesis is one of the most powerful tools that man has invented to guide the process of investigation (Osunde and Iyamu, 1999). They further contend that a hypothesis is a is a tentative proposition advanced as a solution to a problem or as an explanation to some phenomena.
    On this note, the below hypothesis are formulated for the purpose of the study:
Auditor independence has significant impact on preventing corporate fraud.
Auditor independence has effect on auditing practices.
There exist relationship between auditor independence and occurrence of corporate fraud.
    The research work is faced with the below major constraints:
Problem of sourcing for data and materials: The research is faced with the problem of sourcing reasonable amount of vital information on the subject matter.
Problem of generalization: This is due to the smallness of the sample size in representing the population. This is strongly believed to be attributed to insufficient time and fund to cover the entire accounting firms in the country.
Geographical coverage: A challenged topic of this nature supposed to have covered the entire country instead of focusing on Edo and Lagos State. This is due to the fact that the researcher would have problem of retrieving questionnaire from respondents.
Audit:    Attwood and Stein (1986:12) put the definition of an audit succinctly as “Checking somebody else’s accounting”, while Meig et al (1982:28), put it as “an examination or investigation by independent public accountant of a set of financial statements, and the accounting records and other supporting evidence, both within and outside client’s business.
    The Institute of Chartered Accountant in England Wales (ICAEW, 1985:3) defines an audit as: the independent examination of, and expression of an opinion on the financial statements of an enterprise by an appointed auditor in pursuance of that appointment and in compliance with any relevant statutory obligation.
ICAEW:    Institute of Chartered Accountant in England and Wales.
ICAN:    Institute of Chartered Accountant of Nigeria.
AICPA:    America Institute of Certified Public Accountant.
CACA:    Chartered Association of Certified Accountants
Auditor:    An auditor is an independent person appointed to examine the organization; its records and the financial statements prepared from them and thus form an opinion on the accuracy and correctness of the financial statements (Oladipupo, 2005).  
Independence:    Freedom to organize or do things without     interference from any quarter.
Adeniyi A.A (2004); Auditing and Investigation: Lagos Value Analysis Consult.
Baker, R.C. (2005); The Varying Concept of Auditor Independence; Shifting with Prevailing Environment; New York School of Business of Addphi University, Garden City.
Izedonmi, F.I.O. (2000); Introduction to Auditing, Benin City; Ambik Press
McGrath, S. (2001); A Framework for Auditor Independence (Independence Standards Board Exposure Draft).
Oladipupo A.O (2003): Principles and Practice of Auditing: Benin City, Mindex Publishing Co. Ltd.
Osunde, A.U. and Iyamu, E.O.S. (1999); Hypothesis Testing in Educational Research; Benin City: Vision Publishing Co. Ltd.
Thompson, L. (1995); “They Saw a Negotiation” Partisanship and Involvement. Journal of Personality and Social Psychology 69. 859-853.

Share This

Project Details

Department Accounting
Project ID ACC0850
Price ₦3,000 ($9)
Chapters 5 Chapters
No of Pages 143 Pages
Methodology Z Test
Reference YES
Format Microsoft Word

Leave a comment...

    Project Details

    Department Accounting
    Project ID ACC0850
    Price ₦3,000 ($9)
    Chapters 5 Chapters
    No of Pages 143 Pages
    Methodology Z Test
    Reference YES
    Format Microsoft Word

    Related Project Topics

    ABSTRACT This research work examines auditor’s independence and corporate fraud. The incidence of increasing financial fraud scandal in corporate organization has been a center feature in recent years. This fact, together with the increasing... Continue Reading
    • Type:Project
    • ID:ACC0850
    • Department:Accounting
    • Pages:143
    • Chapters:5
    • Methodology:Z Test
    • Reference:YES
    ABSTRACT The objective of this study is to investigate the impact of audit tenure on audit quality in Nigeria. The study adopted the three widely used binary regression models. The difference in this model is based on the type of probability distribution they... Continue Reading
    • Type:Project
    • ID:ACC0829
    • Department:Accounting
    • Pages:84
    • Chapters:5
    • Methodology:Regression Analysis
    • Reference:YES
    ABSTRACT This study is motivated by a desire to examine the auditor independence and firm performance. In light of the empirical review and other discussions, a number of questions arose as to whether there is a significant relationship between auditor... Continue Reading
    • Type:Project
    • ID:ACC0756
    • Department:Accounting
    • Pages:87
    • Chapters:5
    • Methodology:Ordinary Least Square
    • Reference:YES
    THE EXTENT OF AN AUDITORS INDEPENDENCE. AN EMPERICAL INVESTIGATION ABSTRACT An auditors independence cannot be over-emphasized. It is considered as the bedrock on which any audit work rest. However, this project work tends to determined if auditors are really independent or if they apply... Continue Reading
    • Type:Project
    • ID:ACC0201
    • Department:Accounting
    • Pages:86
    • Chapters:5
    • Methodology:Chi Square
    • Reference:YES
    ABSTRACT This study appraised auditors’ independence and the going concern of firms. In order to actualize the objectives of the study, various literature and theoretical issues were discussed. The instrument used for the... Continue Reading
    • Type:Project
    • ID:ACC0693
    • Department:Accounting
    • Pages:119
    • Chapters:5
    • Methodology:Z Test
    • Reference:YES
    • Type:Project
    • ID:ACC0571
    • Department:Accounting
    • Pages:102
    • Chapters:5
    • Methodology:Chi Square
    • Reference:YES
    ABSTRACT This study is designed to provide knowledge for the important role auditor plays in a going concern as per combating fraud. The materials in the study have been systematically presented in (5) five chapter. CHAPTER ONE: This... Continue Reading
    • Type:Project
    • ID:ACC0067
    • Department:Accounting
    • Pages:50
    • Chapters:5
    • Methodology:simple percentage
    • Reference:YES
    ABSTRACT This Study focused on an analysis of the role of auditors in fraud detection: a survey of selected firms in Nigeria. The data collection technique used for this study is questionnaire and oral... Continue Reading
    • Type:Project
    • ID:ACC0609
    • Department:Accounting
    • Pages:45
    • Chapters:5
    • Methodology:Chi Square
    • Reference:YES
    THE ROLE OF EXTERNAL AUDITORS IN FRAUD DETECTION (A CASE STUDY OF UNION BANK OF NIGERIA PLC. ENUGU BRANCH) ABSTRACT This study is aimed at finding and expressing the Roles, the External Auditors play in banks, in Fraud Detection. There has been significant attempt by the researcher to examine... Continue Reading
    • Type:Project
    • ID:ACC0406
    • Department:Accounting
    • Pages:47
    • Chapters:3
    • Methodology:Descriptive
    • Reference:YES
    AUDITORS REPORT ON CORPORATE GOVERNANCEIN NIGERIA NON-FINANCIAL INSTITUTION A case study of Guinness Nigeria Plc Abstract The major corporate collapses and related frauds which occurred in Nigeria and around the world have raised doubts about the credibility of the operating and financial reporting... Continue Reading
    • Type:Project
    • ID:ACC0018
    • Department:Accounting
    • Pages:48
    • Chapters:1-3
    • Methodology:Chi-Square
    • Reference:YES