AN APPRAISAL OF THE USEFULNESS OF THE INDEPENDENCE OF EXTERNAL AUDITORS IN THE PREPARATION OF OBJECTIVE FINANCIAL STATEMENT (A CASE STUDY OF SHELL PETROLEUM DEVELOPMENT COMPANY). A RESEARCH PROJECT MATERIAL ON ACCOUNTING
The aim of this project is to dial on the issue of external auditors independence, which has been a major concern of various financial information users and external auditors. This research work will lay emphasis on advisory role of external auditors on general business commitment, which will come in the form of preparation of accounts, advice on tax issue and the provision of other business services. It will also be aimed at ensuring that auditors come to know those factors (threats) that may term –paper with integrity and avoid them.The Researcher hope to study on selected professional accounting firms and manufacturing firms in Imo State.Questionnaires and personal Interviews will serve as primary sources of data while library, journal and already made project will serve as secondary source of data.
1.1 BACKGROUND OF THE STUDY
Recent studies into causes of most business failures revealed that such failures result from reliance on inaccurate financial reports by external auditors, which is consequent upon the reliability of the external auditor to separate himself both physically and mentally from the client company. In the words of Midgley (1994:9) “most of the inquest into major auditing failures of the last ten years or so have involved searching questions about independence of auditors”.
A general understanding of the nature of external audit, the legal and regulatory frame work applicable to the auditor and the auditors client comply with this frame work will reveal that the external auditor is in a better position to recognize non- compliance that may cause the company to cease its operations. This, the external auditor can do only if he is independenct.
Clients patronage is now a sensitive one to an external auditor. Years back, Shell production development companies did not bother much about retaining existing clients coming into the company and competition for new existing clients were minimal. Today, however the case is different. The number of shell production development companies have multiplied clients are more sophisticated and they consistently demand higher level of quality service each years.
We cannot overlook the importance of objective technical information in the survival of the company both big and small.