ROLE OF EXTERNAL AUDITORS ON FINANCIAL ACCOUNTABILITY OF MANAGERS IN NIGERIA ORGANIZATIONS A CASE STUDY OF UNION BANK OF NIGERIA PLC LAGOS BRANCH
CHAPTER ONE
INTRODUCTION
1.1. Background to the Study
Many organizations are required by law or by policy to hire an accountant to produce a periodic audit of the organization’s financial statements. Auditors affix qualifications or warnings to an audit report that exposes defects within the organization’s financial systems. The economic value of an audit opinion to users of financial statements is of great interest to academic researchers and accounting practitioners, especially in times when auditing is under considerable regulatory and public scrutiny Francis (2004); DeFond and Francis (2005).
Management of most banks is detached from owners (Principal-Agency Theory). Since stakeholders are not involved in the daily operations of the business, they may be doubtful of what the management may present to them as report of the organizations performance, thus the stake holders need confirmation or assurance by an independent party known as the external auditor. The usefulness and reliability of the audited financial statements of banks depend on the quality of audit and the integrity of the auditor. One of the measures of audit quality is the auditor’s report which contains important information for stakeholders about the quality of the financial statements as well as some indication towards the banks’ performance. While the audit quality is difficult to measure, the extent to the auditor is willing to issue qualified opinion often provides some indication of audit quality, Chen et-al (2005).
An external auditor performs an audit, in accordance with specific laws or rules, of the financial statement of a company, government entity, other legal entity, or organization and is independent of the entity being audited. The primary objectives of most organizations is to make profit and long-time survival. External auditing plays a crucial role in ensuring financial accountability of any organization. Accountability is when an individual or department is held responsible for the performance of a specific function. As an important source of organizational achievement, external auditors could be expected to be a vehicle to encourage accountability. The relationship between accountability and external auditors has been viewed as being influential in achieving organizational goals.
This study, therefore, is posed to assess the role of external auditors on financial accountability of managers in Nigeria organizations a case study of union bank of Nigeria PLC, Lagos branch.
ROLE OF EXTERNAL AUDITORS ON FINANCIAL ACCOUNTABILITY OF MANAGERS IN NIGERIA ORGANIZATIONS A CASE STUDY OF UNION BANK OF NIGERIA PLC LAGOS BRANCH