CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF STUDY
The origin of auditing The practice of auditing had the origin in the necessity for the institution of some system upon person whose business it was to record the receipt and disbursement of money on behalf of others. When a company is established under the companies and allied matters act 1990, as public company, the mining of such company is normally vested in the care of management the earners of the business i.e. the shareholders are usually not involved in the day to day activities of the company, there is thus the need for ran independent person or group of persons to examine the record on behalf of the owners the person (s) whose duty it was to report on such record to the owners is the “auditor”. The word “audit” was derived from the Latin word “audile” meaning to hear. In medieval Britain, auditor were appointed by feudal Barons to ensure that the revenue produced by their serfs and tenant revenues farmers were accurately accounted for and that their serfs were not cheating or hiding revenue due for the landlord. The landlord rarely became involved in the management of their estates and would simply rely upon the properly verified or substantiated accounts of their employees. However, in the remote times, auditors works were portrayed in ancient Egyptians wall painting and their activities were recorded in the writing of the early Roman empire. During this period, audit was confined to ascertaining whether the acting party had properly accounted for the receipt and all the payment on behalf of his principal. This made the acting party just merely a cash auditor. The modern audit however, include not only cash transaction but also the verification of the finance position disclosed by the balance sheet and the profit and loss account of the undertaking
Definition and scope of auditing Definition there are various definition given to auditing by different bodies but having the same meaning. The international auditing practice committee (IAPC) has defined an audit as “an independent examination of and the expression of an opinion on the financial statement of an enterprise by an appointed auditor in accordance with the terms of his engagement and in compliance with relevant statutory obligation and professional requirement. The auditing standard and guideline of the consultative committee of the accountancy body (CCAB) has defined an audit as an independent 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 relevance statutory obligation”. Okolo JUT (1987) expressed that “an audit could be conscientious objective examination of and inquiring in any statement of account relating to money in money worth, the underlying document and the physical assets where possible will enable the auditor to form an opinion as to whether or not the statement of account present a true and fair view of whatever it purport to represent and to report accordingly”.