SIGNIFICANCE OF EXTERNAL AUDITOR’S ON THE EXAMINATION OF FINANCIAL STATEMENT A STUDY OF FIRST BANK OF NIGERIA PLC

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

It is obvious that enormous resources of money and material are being utilized by corporate organizations. In recent years the numbers and monetary values of public sector activities have increased substantially. This increase in activities have brought within an added demand for accountability. Auditing is one of the elements of accountability. Shareholders and government are responsible for ensuring that appropriate audit are made and reports therefore acted upon. Financial auditing contributes to public account ability since it provide independent report or whether the financial information represent a true and fair view of the organization‟s financial stand, the internal controls and the compliances with laws and regulation. As an external auditor, his auditing exercise embrace the examination of the financial report of the organization in order to see whether the account have been prepared in accordance or in compliance with general accepted accounting principle (GAAP) and applicable laws, ethics and regulations and in the process errors or fraud maybe detected (mill-champ 1990).

Since huge monetary resources are utilized by the financial institutions of public organization, errors which tend to lead fraud may exist and is not disclose in the report may contain errors or mistakes that cause it to be deliberately misleading or the report may fail to disclose relevant information. All these maybe revealed through an audit work done by the external auditor since he is independent of management. The responsibly of external auditors for ensuring high ethical standard with an organization as a lesser one than internal auditors, for the year only occasional visitors to the company and can only look at a fraction of numbers of transactions that internal auditor will not normally be directly involved in the establishment of the policies within an organization which would include policies of an ethnic nature. Therefore, their ability to shape the ethnical nature of an organization is critically affected by the attitude of the management. If the management are prepared to establish procedures demanding the highest ethnical standard from employees, and demonstrates that themselves to these standard, then the ability of external audit to help enforce ethnical standards is greatly enhanced. Based on these factors, it interest the researcher to know the place of external auditors on the examination of the financial statement.