CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Etymologically, the word audit “is derived from the Latin word ‘audile’ which means “to hear”. Thus, in the beginning, the word ‘audit’ was means to ‘hear and auditor literary meant a ‘hearer’ (Salehi, 2008). The origin of audit is in disputes (Laubaya, 2005) but can be traced to ancient times when landowners allowed tenant farmers to work on their land while the landowners themselves did not become involved in the business of farming. The landowner relied upon an oversear who ‘listened’ to the account of stewardship given by the tenants (Adeniji, 2004).
Thus was aimed at declaring correct that the account given was true and correct and his function was to give assurance against fraud and intentional mismanagement.
Accordingly, the main objective of audit also transformed thus making the auditor declare that the accounts prepared by the companies as revealed by their financial statements were “true and fair” (Littleton 1993 p. 260) was the view that early auditing was designed to verify the honesty of persons charged with fiscal, rather than managerial responsibilities.
The earliest audit, the auditors has been directly linked to management stewardship function (Flint 1971) with stewardship being regarded in the narrow sense of honesty and integrity. But the verifying function was on sampling basis because of the burgeoning volume of business activity. This functional shift in auditing from “true and correct view” to “true and fair view” to caused a paradigm shift in the audit process. Thus, also caused a change in audit opinion from “complete assurance” to “reasonable assurance”.