CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Every professional body has some code of conduct governing their relationship .with their members and other bodies. Before an auditor accepts an engagement he has to consider certain things, for example, an accountancy firm whose senior partner has been a director of a proposed client for some years could not accept the audit even if the partner resigned as a director. Again, it is an established professional custom for the proposed auditor to seek the permission of the company to communicate with the previous auditor to see if there is any professional or other reason why the change was necessary and this would help him decide whether or not to accept the offer. If the company refuses to grant him the permission, he should reject the offer. If the permission is granted, the previous auditor would still seek the permission of the client to disclose information; if the permission is refused the appointment will be rejected.
(Howard, 2008) Today most businesses are operated by limited companies which are owned by shareholders and managed by directors appointed by the shareholders. Owners who appoint managers to look after the owner’s property will be concerned to show what has happened to their property. Like we were told in Matthew chapter 25 about the rich man who went on a journey and delivered his servants to look after his business while he was away. On his return he asked each of his servants to account for the goods with which he had been entrusted. He was not pleased with the servant who had not profitably managed the goods in his master’s absence. Today, the process of managers reporting to the owners of business is call stewardship accounting. This reporting and accounting is done by means of financial statements. Financial statement usually takes the form of profit and loss accounts and balance sheet. (Millichamp, 1996) In summary, for the government owned corporation to achieve the above objectives there is the need for administered to safeguard against misappropriation, frauds, mismanagement and other sharp practices by the executive and staff of the council. As a result, the executive should be able to render account of their stewardship to the people through proper management and control of resources using internal audit techniques in the council. (Ndorne, 1998)
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