CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
It has been said that the traditional role of financial accounts was to give account of stewardship to the owner of business who were divorced from management of business.There is always the tendency for the owners to doubt the content of the report presented to them. They fear that the report may contain errors, conceal fraud, deliberately misleading or lack on the information content. To solve this problem of credibility in reports and accounts, there is always the need to appoint and independent person to investigate the report on his findings. Therefore, Auditing can be defined as the independence examination of and expression of opinion on the financial statements of an enterprise by an appointed auditors in pursuance of that appointment and in compliance with any relevant laws and regulations. In preparation of the financial statements of an enterprise or an establishment and the present of the information contained therein is the responsibility of the management.
The auditors responsibilities are to report on the financial statement, as presented by the management (ICAN Auditing Standard and Guideline). Auditing is also defined as such an examination of the books of accounts and vouchers of a business or entity as will enable the auditors to satisfy himself that the balance sheet is properly drawn up so as to give a TRUE AND FAIR VIEW of the state of attains of a business or entity and whether the profit and loss account gives a TRUE AND FAIR VIEW for the financial period, according to the best of his information and the explanations given to him and as shown in their books, if not in what respect is he not satisfied. The origin of auditing had its roots in the necessity for the institution of some system of check upon person whose business it is to record the receipt and disbursement of money on behalf of others. In the early stage of civilization, the method of accounts were crude and transaction are small, individuals were able to check their transaction. The ancient record of auditing were confined principally to the public account. But there are indication that it was customary for an audit of account of manors and Estates to be performed. The person whose duty was to make such examination of account became known as an auditor. Auditor is derived from the latin word (audire) which means to hear. Originally, the accounting party were required to attend before the auditor who had head the account.