EXTERNAL AUDIT AND AUDIT COMMITTEE RELATIONSHIP IN THE BANKING SECTOR
1.1 Background to the Study
Banks play a vital role in economic development of a nation. Time continued strength and stability of the banking system, is a matter of general concern as they hold the savings of the public, provide means of payment for goods and service and financial development of business and trade of a country.
However, auditing financial statement of banks has been a long time in practice. The auditing of accounting records of bank by an external auditor and audit committee become very important.
Therefore to perform these challenging functions severally and effectively the banking industries must command the confidence of the public and those with whom they do business. The public interest is reflected in the ways banks in all countries are subjected to supervision of financial soundness by central bank and other financial agencies.
Banks financial statements are subject to examination by external auditor and auditor committee whose opinion lead to credibility to such statement. And thereby assist in promoting confidence in banking system in Nigeria. It is therefore importance to nullify that the relationship and importance of external auditor and audit committee cannot be overemphasized to maintain this credibility.
The external auditor and audit committee are reamers to audit with reasonable skills and for an auditor are professional. Opinion by waiter (1972), “The auditor must be able to show that in the covers of his duty or work has reached an acceptable level of performance that is making sure that audit are properly planned audit are supervised and performed by auditors of appropriate experience relevant test and desired and properly applied in sufficient dept and conclusions are soundly based on relevant and properly documented.
1.2 Statement of the Problem
There are various problems faced by inventors, depositors and other interest group in forming a decision about the financial institution.
The statement of problem of the study are; the insensitivity on management to report made by the auditor regarding to the financial statement of bank; whether the auditor have the ability to report objectively and independently; and if there any opportunity which results from fraud, which may exist or are there any need or means to detect some common type of fraudulent activities that will continue to cause a loss to the banking industry.
However, this study will investigate into some areas where external auditor and audit committee exist in banking operation in Nigeria and its relationship. For a successful evaluation of external audit and audit committee which exist within an organization. The above listed question would be analyzed for the completion of this research work.
1.3 Research Questions
The following are the questions to be considered in the research work;
· How has the external audit and audit committee has been able to ensure a better relationship and importance in a bank?
· Does external audit committee aid credibility in financial statement of the bank?
· How is financial statement audited?
· What are the various factor offering external auditors and audit committee in their ability to report objectively and independently?
1.4 Objectives of the Study
The following are the main objectives of this research study;
· To ascertain how the external audit and audit committee has been able to ensure a better relationship and importance in a bank.