The Impact of Auditing in Controlling Fraud and Other Financial Irregularities (a Case Study of First Bank Nig. Plc, Akpakpava, Benin City)
OBJECTIVE OF THE STUDY
The objectives of this research work are as follows:
- To examine the impact of auditing in ensuring fraud reduction and accountability in an organization.
- To show how auditing has helped in preventing fraudulent activities in banking sectors.
- To assess the relevance and functions of auditors in organizations.
- To explain how auditor and auditing has helped in the banking sector, also how it has helped the investors and the government in decision making.
- To explain how the auditor, through the process of auditing control fraud and other financial irregularities in a firm.
WHAT IS AUDITING?
According to Lafleur (2003), Auditing may defined as the independent examination and investigation of the books, accounts, reports whether the balance sheet and profit and loss account are properly drawn so as to ascertain a true and fair view of the state of affairs the profit and loss of the business.
According to the principle and practice of auditing by R.G. Williams (2007), an audit refers to as an investigation and a report the person who conducts the audit i.e. the auditor must know the whole system of book-keeping to determine how much detailed checking vouching of the book entries will be necessary. The process of checking and vouching is continuing until the investigation is complete, the auditors then make his report in accordance with the terms of the appointment.
An audit is also defined as the independent examination of and expression of opinion on the financial statement of an enterprise by an appointed auditor in pursuance of that appointment and in compliance with and relevant statutory obligation.
Auditing is an evaluation of a person, organization, system, process, enterprise, project or product. The term most commonly refers to audits in accounting, but similar concepts also exist in project management, quality management, etc. Cutting Thomas (2008).
THE MEANING OF AN AUDITOR
According to R. Cilynne (2008), auditor may be defined as an independent person appointed to investigate the organization, its record and financial statement prepared from them and form an opinion of the financial statement.
An auditor is a professional that accumulates and evaluates evidence to report on the degree a company’s assertions comply with an established set of procedures or standards. McKenna & Francine (2010).
According to Panda (2006), auditor can also be defined as a professional that is responsible for evaluating some aspect of project, business or individual.
Along with evaluating a project or aspect of a company, an auditor is often expected to recommendation regarding the correction of negative condition that currently impacts the organization.
Essentially, an auditor may function as an employee or an independent professional.
QUALITIES OF AN AUDITOR
Case have from time to time, been before court, in which judicial expression has been given regarding the qualities which are desirable in an auditor. This may be summarized as follows:
- He must be honest, that is he must not certified what he does not believe to be true.
- He must thoroughly conscientious
- He must be able to work without suspicion
- He is not bound to be a detective or to approach but to prevent fraud.
THE DUTIES AND RESPONSIBILITIES OF AN AUDITOR
An auditor is independent body which is called upon to investigate the book of account of an organization.
The duties and responsibility of an auditor to any organization are not defined by statute, but the auditor must be fully acquainted with those provisions of partnership Act, 1890 in England.
He must give equal consideration to the right of each individual partner and must report fully to all partners where any of the provision of the partnership agreement relating to the account has been broken.
The duties and responsibility of an auditor is also to audit the account of the company to see if the account is in compliance with the rules and regulation of the company.
The auditor is required to report to the members on the account examined by him.
It is also the duties and responsibility of an auditor, his audit find and opinion in the required manner to the shareholders.
And auditor should maintain an adequate position of independent with company and its management in order to obtain the maximum amount of confidence of the shareholders.
An auditor utilizing audit method, procedure and techniques which are generally regarded as the best practice of the day.
It is a duty of an auditor to ensure that each member is complying with the relevant point so far made in above.
RESEARCH DESIGN AND METHODOLOGY
The aim of this chapter is to describe the method used by the researcher in getting the vital information in this research project.
Methodology is generally a guideline system for solving a problem, with specific components such as phases, tasks, methods, techniques and tools. It can be defined also as follows:
“The analysis of the principles of methods, rules, and postulates employed by a discipline”;
“The systematic study of methods that are, can be, or have been applied within a discipline”;
A methodology can be considered to include multiple methods, each as applied to various aspects of the whole scope of the methodology.
The survey research design was adopted for the study. A survey research is one which collects data from a defined population to describe the present condition of the population using the variables under study. (Ofo 1999). It is adopted because the researcher is interested in the accurate assessment of the characteristics of the whole population through the study of a sample considered to be representative of the population.
This outlines the step-by-step procedure used in data collection. The major instruments used in gathering the data for the research are:
- Text books
- The internet
The questionnaire comprises of close-ended and open-ended questions.
The close-ended call for Ye/No while the open-ended questions are an indebt response. Oral interview were also conducted to some of the respondents.
POPULATION OF THE STUDY
The population of the study includes assumed number of senior and junior staff of First Bank of Nigeria Plc, Akpakpava, Benin City which is made up of 100 workers. This population is gotten by estimation based on the fact that in getting the population of any given group of people or a country is usually done by estimation.
PRESENTATION AND ANALYSIS OF DATA
Data analysis requires researchers to sort out non-usable data such as incomplete questionnaires or dropouts in an experiment; code and edit data to meet the requirements; and analyze data quantitatively, qualitatively or both.
Analysis of data is a process of inspecting, cleaning, transforming, and modeling data with the goal of highlighting useful information, suggesting conclusions, and supporting decision making. Data analysis has multiple faces and approaches, surrounding various techniques under a variety of names, in different business, science, and social science domains.
SUMMARY, CONCLUSION AND RECOMMENDATION
SUMMARY OF FINDINGS
This project research work attempts to diligently analyze the impact of auditing in controlling fraud and other financial irregularities in an organization using First Bank of Nigeria Plc, Akpakpava, Branch, Benin City as a case study.
The impact of auditing within the context of fraud control and other financial irregularities in an organization can not be over emphasized.
For the purpose of clarity and academic understanding of this study, the researcher shall start by looking at the meaning of an auditor, the nature and scope of auditing and auditor in an organization, before looking at the impact of auditing in controlling fraud and other financial irregularities.
After a due research conducted, it has been discovered that:
Proper auditing helps to control fraud and other financial irregularities in banking sector and that professional auditors help to correct irregularities in finance in the banking sector.
Based on the research, there is a reasonable assurance that transactions are fully and properly recorded to avoid fraud in First Bank Nigeria Plc. It was observed that fraudulent activities have been reduced in First Bank Plc through the process of proper auditing.
The research project also helped to establish the fact that there is a relationship between fraud and financial irregularities in the banking sector based on the fact that when fraud takes place, it affects financial records.
Audits are performed to ascertain the validity and reliability of information; also to provide an assessment of a system’s internal control. The goal of an audit is to express an opinion of the organization in question, under evaluation based on work done on a test basis.
Due to constraints, an audit seeks to provide only reasonable assurance that the statements are free from material error. Hence, statistical sampling is often adopted in audits. In the case of financial audits, a set of financial statements are said to be true and fair when they are free of material misstatements – a concept influenced by both quantitative (numerical) and qualitative factors. But recently, the argument that auditing should go beyond just True and fair is gaining momentum.
Auditing is a vast and complex subject but in the course of study, we will concentrate our mind on verification and valuation of asset and liability legal position of an auditor. We also discuss the characteristics and conduct of auditor.
Furthermore, such area as the nature of auditing in controlling fraud and other financial irregularities are covered in this project.
The area covered in this research work is limited to First Bank of Nigeria Plc, Akpakpava branch, Benin City.
This research aimed at revealing the impact of auditing in controlling fraud and other financial irregularities. The project showed that auditors also examine, on a test basis, underlying transactions and records supporting financial statement balances and disclosures. It was observed that an auditor assesses the accounting principles used and significant estimates made by management and evaluate the overall financial statement presentation, most importantly, it was observed that auditors through the process of auditing have helped to control fraud to such a significant level.
Irregularity refers to the intentional misstatement or omission of significant information in accounting records, financial statements, other reports, documents or records.
Auditors are not specifically searching for the existence of fraud when performing auditing. We are more concerned with ensuring that adequate systems of internal control exist to reduce the risk of fraud. In situations where internal controls are weak, our testing is designed to determine if indications of fraud exist.
Based on the research findings, I therefore make some recommendations which are as follows:
An auditors should posses a through knowledge of the principle of book-keeping and accounting and the capacity to apply those principle to verifying facts and circumstance in a practical manner, so that they may understand the whole of the transaction and entries which they find in account under audit where they face with matters of technical difficulties of a particular concern, they should obtain satisfactory explanation of such technicalities by questioning concerned person to avoid fraud and financial irregularities.
Management should create good atmosphere and security for auditors in order for them to carryout their work. Workers in organization should be free in mind when dealing and communicating with auditors.
In auditing, auditors should be more concerned with ensuring that adequate systems of internal control exist to reduce the risk of fraud.
I also recommend that the duties expected of auditors should be to report on the truth and fairness of the financial statements; to detect material cases of errors and fraud which should be revealed by the application of procedures and to prevent errors and fraud by the moral prevention effect of their examinations.
Auditors and the organizations concerned should adopt different means and method of checking fraud because if fraud is left unchecked, it could leads to financial ruin of business enterprises as well as a seriously damage to economic systems.
I also recommend that students should go into auditing as profession and forget the difficulties involved, since auditing is the engine house for proper accountability in large organizations.
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