Accounting Project Topics

The Role of Auditing in Developing Economy: Nigeria Experience

The Role of Auditing in Developing Economy Nigeria Experience

The Role of Auditing in Developing Economy: Nigeria Experience

Chapter One

Objective of the study

The objectives of this research are:

  1. To assess the effects of auditors on inonhe development of the Nigerian economy
  2. To assess the auditor’s efficiency despite the legal restrictions here and there
  3. To highlight the significance and indispensability of auditing and auditors to any economically progressive aspirant nation
  4. To analyze the impact of auditing in Nigeria as a developing nation




Generally, standards are a means to an end. More specifically they are instruments of regulation used by man in the attainment of his goals and objectives. The word “standard” originally stood for a banner whose purpose was to orient and gather scattered forces in a battle, obviously a regulative function. The Oxford Dictionary of Accounting describes auditing standards as the basic principles and essential procedures with which auditors are required to comply in the conduct of any audit of financial statements. These basic principles govern the auditor’s professional responsibilities and must be complied with whenever an audit is carried out. Auditing standards are several rules accepted by the profession as guidelines to measure transactions, events, and circumstances which affect financial results and financial information supplied to beneficiary parties (Igbinosun, 2011). These standards should be related to the relevant objectives of the audit, which should be relevant and appropriate within the social environment. Therefore, these standards should satisfy the four criteria of relevance, acceptability, consistency, and suitability. The Auditing Practices Committee issued a series of auditing standards between 1980 and 1991. The standards issued by its successor body, the Auditing Practices Board (APB) are known as Statement of Auditing Standards (SAS). The APB also issues practice Notes (to assist the auditor in applying auditing standards of general application to particular circumstances and industries) and Bulletins (designed for issues when guidance is needed on new or emerging issues), practice Notes and Bulletins are not prescriptive. They are an indication of current good practices. International Standards of Auditing (ISA) Statement of Internal Auditing Standards, and Statement on Auditing are standards being set by their various committees. International Auditing Practice Committee believes that the issue of such standards and statements improves the degree of uniformity of auditing practices and related services throughout the world (IFAC, 1997). It is,guidance however, clarified that the guidance’s does not override statutory or professional regulations. Though the International Auditing Guidelines apply (IAG) primarily to independent financial audits, it is recognized that they may also have application, as appropriate, to other related activities othe f auditor. IAG is not automatically binding on the auditors in a particular country. However, they provide an authoritative view of what is internationally recognized as Generally Accepted Auditing Practices (GAAP) and thus, serve as the basis for the development of auditing pronouncements by professional bodies in individual nations. Batra and Bagadia (1992) argue that in some nations, the IAG have been adopted without any change(s), in many others, they have been adopted with such modifications as are considered appropriate in the context of the domestic conditions. The ISA acknowledges that differences in financial reporting frameworks between countries results in comparative financial information being presented differently in each framework (Padar & Hopp 1998). GAAP which is the overall guideline for auditing establishes the framework within which an auditor decides the necessary action to take in preparing for the examination of financial statements, in performing the examination, and in writing the report (Cook & Winkle, 1988). Hermanson, Shrawer, and Shrawer (1993) view auditing standards as a measure used to determine the auditor’s ability to perform the procedures and the objectives to be attained by the use of the procedures undertakes. However, Molid (2009) states the objectives of IAS, include: harmonizing the development of the auditing profession to follow the development in business, bridging the gap between the auditors in the world, ensuring standards are of an acceptable level of quality of professional activity, being a keystone in the evaluation of auditor’s performance and providing guidance about auditor’s responsibility and due professional care. Auditing standards set minimum standards of technical proficiency in auditing. These standards apply to each financial report audit made by an independent auditor regardless of the size of the entity, the form of business organization, the type of industry, or whether the entity is for profit or not for profit. Shareholders and other users should be informed in the scope section of the audit report that the audit has been conducted by specified auditing standards. Auditing standards guide the minimum level of care required in performing an audit. They may also comment on whether the professional standards are adequate ultimately, the courts determine whether this standard has been met during a particular engagement (Gill & Cosserat, 2000). Schulte (2007) states that when the conduct of an auditor is in question in legal proceedings it is not the province of the auditing profession itself to determine what is the legal duty of auditors or to determine what reasonable skill and care is required to be exercised in a particular case, although what others do or not what is usually done is relevant to the question of whether there had been a breach of duty. The court may decide that the standards are deficient. Auditors should review and update their practices and procedures to meet changing business conditions and expectations.




Research design

The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to the role of auditing in developing economy: Nigeria experience

Sources of data collection

Data were collected from two main sources namely:

(i)Primary source and

(ii)Secondary source

Primary source:

These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.

Secondary source:

These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.

Population of the study

Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information on the role of auditing in developing economy: Nigeria experience. 200 staff of Nigerian Stock Exchange, Abuja state were selected randomly by the researcher as the population of the study.




Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey.  This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.





It is important to ascertain that the objective of this study was to ascertain the role of auditing in developing economy: Nigeria experience. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of auditing in developing economy: Nigeria experience


This study was on the role of auditing in developing economy: Nigeria experience. Four objectives were raised which included: To assess the effects of auditors in the development of Nigerian economy, to assess the auditor’s efficiency despite the legal restriction here and there, to highlight the significance and indispensability of auditing and auditors to any economically progressive aspirant nation and to analyze the impact of auditing in Nigeria as a developing nation. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of Nigerian Stock Exchange. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made statisticians, economists, data analysts and junior staff were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies


It was observed that the role of auditing has changed from the simple requirement that all resources have been duly accounted for, and that all uses were in accordance with the directives of the noble man in modern society an audit is viewed as providing assurances as to the performance of management in public companies whose investors may be national or international.


It would be recommended that companies should have more than one director position as it enhances audit committee contribution to the companies’ financial reporting quality.

It is recommended that the frequency of meetings held by the audit committee in companies should improve. To the extent that this statement is true, it should be expected that the frequency of meetings of the audit committee should be positively related to audit quality. The study also reveals provision of non-audit services would likely have a significant effect on the audit quality in Nigeria. Consequently, there is a need to strengthen the capacity of the regulatory bodies and review adequacy of statutory enforcement provisions. This will enable the regulators to effectively deal with accounting, auditing and financial reporting practices of the regulated entities properly. Finally, it is recommended that the independence of the board of audit committee should be encouraged in companies as it would improve audit quality and enhance the credibility level of financial reporting in Nigeria.


  • Abbott, L. J., Park, Y. and Parker, S. (2000). The effects of Audit Committee Activities and Independence on Corporate Fraud, Managerial Finance, 26(11), 55-67.
  •  Bhagat, S. & Bolton, B. (2009, March 18). Sarbanes-Oxley, governance and performance. Retrieved September 17, 2010 from SSRN:
  •  Blue Ribbon Committee (1999). Report and Recommendation of the Blue Ribbon Committee on Improving Effectiveness of Corporate Audit Committees. New York Stock Exchange and National Association of Securities Dealers.
  •  Boo, E. and Sharma, D. (2008). Effect of Regulatory Oversight on the Association Between Internal Governance Characteristics and Audit Fees, Accounting and Finance, 48:51-71.
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