ROLE OF THE INDEPENDENT AUDITORS IN FRAUD DETECTION, PREVENTION AND REPORTING IN CORPORATE ORGANIZATION (A Study of Oceanic/Ecobank Plc., Umuahia, Abia State)
ABSTRACT
The purpose of this study was to find the role of the independent auditor play in fraud detection prevention and reporting in corporate organization data were obtained from fifty respondents in Oceanic / Ecobank plc Umuahia, questionnaires were administer and prepared out of the sixty administered, fifty were returned personal interview were also conducted. In analyzing and interpreting the data also collected from respondents, chi Square (x2) method was used. The result showed that it was internal auditors that had the impact and role to play in fraud detecting, preventing and reporting and not the independent auditors since internal auditor is to maintain a system of internal check that prevents, report and detects fraud. Independent auditor role being to give opinion on the truth and fairness of the account. From the findings however, it can be stated that the responsibility for the preventing, detecting and reporting of irregularities and fraud rests with management who may obtain reasonable assurance by instituting an adequate system of internal control and internal audit being under management. It therefore makes them responsible to management for the prevention and detection of fraud and irregularities.
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
That an independent auditor has the responsibility for preventing detecting and reporting fraud, other illegal acts and errors is one of the most controversial issues in auditing and has been one of the most frequent debates areas among auditors, politicians, media regulators and public (Gey et.al 1997). This argument has been highlighted by the collapse of both small and big corporation like bank across the globe. The auditing profession in Nigeria banks such as Oceanic/Ecobank plc to know the role independent auditor play in detecting fraud and preventing it.
There seem presently to be a misconception that auditors duties are largely the preventing, detecting and reporting of fraud for example Idirs (2009). The aim of this research is to identity financial report users perceptions of extent of fraud in Nigeria auditor responsibilities in detecting fraud and performance of related audit procedures. This research work also aim at ascertain whether the report user perception of the independent auditor responsibilities on fraud are consistent with those of the auditing profession as expressed in auditing standard of Nigeria.
1.2 STATEMENT OF PROBLEMS
Boynton et.al (2005) and Oremade (1998) claim that independent auditor are required to be more proactive in searching for fraud during the course of an audit under ISA (240) Revised. Their duties now include considering incentives and an opportunity presented to potential fraudsters as well as rationalization that fraudulent act is justified. The independent auditor is expected to inquire more closely on these problems.
The existing controversy as to the role of statutory auditors in fraud detecting, preventing and reporting.
The problem of expectation Gap
The problem of misconception over the duties of auditor
1.3 OBJECTIVE OF THE STUDY
The primary objective of this study is:
To examine the degree of responsibility of an Independent auditor in fraud detection, prevention and reporting in Nigeria banks.
To identify financial report user’s perceptions of the extent of fraud in Nigeria banks.
To determine the true Independent auditor’s responsibilities in detecting fraud and the performance of related audit procedures.
To ascertain whether individual opinion of auditors responsibility on fraud detection are consistent with prescription in auditing profession as expressed in auditing standard of Nigeria.
To identify the possible means to uncover fraudulent activities in organizations.
1.4 STATEMENT OF HYPOTHESIS
Ho: There is no significance relationship between the independent auditor’s role and fraud detection, prevention and reporting.
H1: Fraud detecting preventing and reporting is normally only during an audit and so regularity of audit has no significance relationship with the auditor’s role.
1.5 RESEARCH QUESTION
This study investigates on the role independent auditor in detection, prevention and reporting of fraud in banking system, so it arise some necessary questions which need to be answered, the question are as follows:
Do you think it is responsibility of the auditor to uncover fraud and to report this to the appropriate authority?
Should the auditor assess internal controls used by the company to prevent or detect the theft of assets?
Should the independent auditor evaluate whether there is substantial doubt about the company’s ability to continue as a going-concern?
Should the auditor assess management style to determine if the style might lead to fraudulent financial reporting.
Should the auditor assess the role of the Internal auditors.
1.6 SIGNIFICANCE OF THE STUDY
The result of this study will help auditor to know the role they will play in detecting, preventing and reporting of fraud in banking system.
It will enable us found out financial report user’s believe that detection of irregularities is the primary role of an auditor.
It will provide an insight into the financial report user’s perceptions on the extent of fraud in banking industry
It will help us know that Independent auditor have the responsibility for detecting irregularities
It will enable us know independent auditor perceptions responsibilities for the procedures in detecting fraud.
To enable the independent auditor to express an opinion whether the financial statement are prepared in all material respects in accordance with the applicable financial reporting framework
1.7 SCOPE OF STUDY
This research was undertaken to examine and to know the role of independent auditor in fraud detection, prevention and reporting in corporate organization. To achieve this aim we will try to know the role of independent auditor in detecting fraud in Nigeria our constraints emphasis will be on Oceanic/Ecobank plc Abia State.
1.8 LIMITATION OF STUDY
The major constraints in this research work are:
Lack of sufficient finance due to general economic situation.
Lack of understanding among respondents of the study duties of independent auditors due to ignorance of reading the statutory provision of the auditor.
ROLE OF THE INDEPENDENT AUDITORS IN FRAUD DETECTION, PREVENTION AND REPORTING IN CORPORATE ORGANIZATION (A Study of Oceanic/Ecobank Plc., Umuahia, Abia State)