CHAPTER ONE
INTRODUCTION
An audit is an independent examination by a statutory appointed person called the auditor to investigate an organization, it’s records and the financial statements prepared from them, and thus form an opinion on the accuracy and correctness of the financial statements. The primary aim of an audit is to enable the auditor to say “these accounts show a true and fair view or of course, to say that they do not. That an auditor has the responsibility for the preventing, detecting and reporting of fraud, other illegal acts and errors is one of the most controversial issues in auditing, and has been one of the most frequently debated areas amongst auditors, politicians, media regulators and the public. This debate has been especially highlighted by the collapse of both small and big corporations across the world.
Auditing guideline lay the responsibility for preventing and detecting fraud firmly on the shoulders of management. The fraud cases that most catch the public attention invariably involve management, and the public perception is often that the auditor has failed in his duty. The auditor’s professional responsibilities are clear. He should have a reasonable expectation of detecting material misstatements in financial statement. Serious fraud usually involves materials mis-statements, so in general, auditors should have a reasonable expectation of finding it. Auditors should also wish to detect fraud because of the client service. Irrespective of whether there is a duty on the auditor to detect fraud, the auditor provides a good service if he succeeds in identifying it.
1. BACKGROUND OF THE STUDY
External auditing which is the function of statutory auditors is the process of reviewing the accounting and manufacturing books of a company by a certified public accounting firms (Inyiama, 2010). This task is performed quality and annually, consistent with the reporting cycle for public investment. Companies professional accountants performs this function to enhance the credulity of information about a subject matter which conforms in all materials respects with suitable criteria (law) Millichamp and Taylor (2008). External auditing function is carried out by an external auditor who is approved by the shareholders of the organization and for whose interest the (external auditor) represents. This follows that the external auditors report are key to measuring the performance of public investments in companies as the quality assurance reports attracts deposit while a negative of deposits (Inyiama, 2012).