hello@iresearchng.com Opening: Mondays - Sundays: 24hrs

A REVIEW ON AUDITOR’S INDEPENDENCE AS A DETERMINANT OF TRUE AND FAIR VIEW OF ACCOUNTING RECORDS

Accounting
Project Research
Pages: 54
Quantitative
Percentage/Frequency
1-5 Chapters
Abstract Available
APA 7th Edition
Instant Download
NGN 5,000

Project Research Pages: 54 Quantitative Percentage/Frequency 1-5 Chapters Abstract Available APA 7th Edition Instant Download NGN 5,000

Get this Material Now
Project Research Pages: 54 Quantitative Percentage/Frequency 1-5 Chapters NGN 5,000 Abstract Available APA 7th Edition Instant Download
A REVIEW ON AUDITOR’S INDEPENDENCE AS A DETERMINANT OF  TRUE AND FAIR VIEW OF ACCOUNTING RECORDS

A REVIEW ON AUDITOR’S INDEPENDENCE AS A DETERMINANT OF  TRUE AND FAIR VIEW OF ACCOUNTING RECORDS

CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND OF THE STUDY

Recently, there has been much debate about auditor independence; the management of the auditing standards board, the public oversight board, the independence standards board, and, most recently, the Securities and Exchange Commission (SEC) proposed independence rules have all attempted to clarify and strengthen auditor independence. Also, throughout the medieval era, financial statements were not required, thus they were not created or utilized to make decisions. However, with recent developments, every corporation is expected to generate financial statements in order to understand the organization's financial status so that stakeholders may make choices. The Securities and Exchange Commission (SEC) requires publicly listed corporations to have their financial statements produced and audited by a certified public accounting firm that accepts responsibility for the financial statements' fairness. This judgment strengthens the credibility of the claims agreed upon by the lender and private investors who voluntarily enable the company's assertions to be verified by an independent authority. Users of financial statements include shareholders, the government, creditors, investors, and others. To make educated decisions, everyone relies on audited financial statements. As a result, the trustworthiness and dependability of this assertion are required.

 According to Meigs and Meigs (2021), the primary function of financial statements is to aid decision makers in analyzing a company entity's financial soundness, profitability, and future prospects. The primary goal of financial statement preparation is to give information that may be used to make economic decisions. The goal of a financial statement audit is for the auditor to offer an opinion on whether the financial statements are prepared in all material aspects and in line with auditing standards. The purpose of auditing is to give credibility to financial statements. Management is responsible for preparing financial statements, while auditors are responsible for lending credibility to the financial statements. The auditor also boosts the credibility of non-audited material given by management. To be trustworthy and reliable, an audit must be completed by someone who is independent and cannot be influenced by position or authority that will affect its own findings. The Securities and Exchange Commission approved a new auditor independence policy requiring publicly listed corporations to report the amount of fees paid to their external auditor for non-audit services.

Auditor independence has long been acknowledged as a pillar of the public accounting profession (Sweeney 2017), and it is entitled to regulate itself. Accounting is endowed with power and privilege by society. Auditors are required to discharge their responsibilities for the public good in exchange for exclusive professional privilege. Traditional audit independence is seen as a moral standpoint (Preston 2020). From a moral standpoint, auditors are professionals who have professional responsibility to the public. Regardless of the entirety of their motivations, they should not engage in any behavior that looks to impede their efficacy as professionals. Professionals are assumed to act in accordance with their professional responsibilities, not in their best interests. Right and evil are centered in incentives. Morally, some tend to consider that an auditor should not "look" to be independent. The nature of the moralistic analysis that support the enhancement of audit independence and have significant to the auditor's role to play auditors' primary duty to protect the public interest and the necessity to use judgment in fulfilling this duty is an influencing factor to consider on a moral view (Dobson and Armstrong, 1995; Libby and Thorne, 2007). For a long time, the goal of auditor independence has been explicitly established. The second general norm of commonly recognized auditing standards states that "in all things relevant to the assignment, the auditor or auditors must retain independence in mental attitude." An auditor can work as an employee (internal auditor) or as an independent professional (external auditor). Investors, government agencies, and the general public rely on the external auditor to provide an unbiased and independent review of these businesses' financial information. In a perfect world, this would be true, but in practice, these auditors may be less independent than the other auditors. As a result, protecting auditor independence is a top responsibility for not just auditors but also management and investors. In today's global market, the government, creditors, institutional investors, lenders, regulators, stakeholders, and others rely on the auditors' information on the integrity and trustworthiness of financial statements.

1.2       STATEMENT OF PROBLEM

Many accounting records supplied to shareholders and interested parties in a company's report are not prepared to portray the real and fair status of accounting records. According to Igben (2019), financial reports are intended to be a formal record of business activities, and these reports are intended to provide an overview of a company's financial position and profitability in both the short and long term to users of these financial statements such as shareholders, managers, employees, tax analysts, banks, and so on.

However, in recent years, financial manipulations, weak internal control systems, ignorance on the part of the board of directors and audit committee, manipulation on the part of the reporting auditor, and other fraudulent activities within companies have created a negative goodwill among the general public. The well-known case of Enron is an example of a financial statement failure. Enron was one of the major energy corporations in the United States. Enron executives dodged income taxes through deception and bribes, leading to the company's demise. Importantly, this was not the first time this had happened; a similar example occurred in 1973, when equity financing, a Los Angeles-based insurance business, went bankrupt (Mclean and Elkin, 2017). Every year, a new company scam is discovered, typically with identical components: corporate insecurity, uniformed accountants, high-level contacts, and bankrupt investors (Swartz and Watkins, 2019)

The basic goal of the auditor's reliance is to gain and maintain the trust of users of financial information in the audit report. Over the years, financial information consumers in Nigeria have depended on auditors' reports, along with other sources of information, to make financial decisions. Their assessment of their client's financial statements is critical for users of accounting information. However, recent distortion and deceptive reports in most corporations' financial reports have suggested that auditors do not have the independence to convey the true problem of such organizations to the outside world, which is the cause for this study endeavor.

1.3   OBJECTIVES OF THE STUDY

The broad objective of this study is to review on auditor’s independence as a determinant of  true and fair view of accounting records. In achieving this, other derivation objectives are considered and will serve as guidance for the study, they include:

i.          To evaluate the factors that influence auditor’s independence on the audit work.

ii.        To examine if auditor’s independence has actually reduced the doubt attributable to authenticity of the auditor’s report.

iii.      To investigate if auditors are performing their tasks in compliance with the provision of the professional rules.

iv.      To examine reasons for auditor’s independence.

1.4       RESEARCH QUESTIONS

In achieving the purpose of this study, the following research questions are put forward in the quest for answers to the problem being investigated.

i.          What are the factors that influence auditor’s independence on the audit work?

ii.        Does auditor’s independence actually reduce the doubt attributable to authenticity of the auditor’s report.

iii.      Are auditors performing their tasks in compliance with the provision of the professional rules.

iv.      What are  reasons for auditor’s independence in organizations

1.5       SIGNIFICANCE OF STUDY

This study will bring increase in investment from the shareholders because the financial reports so presented to them could be relied upon. This research work will change the orientation of the general public especially the shareholders as to their dependability on the accounts audited by an independent auditor. This work will also seek to make known areas where auditors need much assistance and full backing of the law in the discharge of their duties.

The study will also give vital information to those aspiring to be auditors as regard their appointment, remuneration, removal and independence in the various organization set ups and parastatal they find themselves. The possible outcome of the study will reduce the chance of conspiracy, fraud and misappropriation of shareholders’ funds and also embezzlement can be minimized where there is a qualified independent auditor to cover document.

1.6       SCOPE OF THE STUDY

This research work attempts to give insight into auditor’s independence and see it as the only tool for achieving true and fair view of accounting records. It will examine the meaning of independence, the class of independence and their various advantages and also the statutory and professional regulations that ensure auditor’s independence together with their appointment, removal, liabilities and duties. Although the research topic is one which will cover a wide area and aspect to the development of accounting and auditing profession, but as it will not be convenient to visit all audit firms in the country as to know their opinion on this issue due to time and cost constraint, the study is only limited to Raywhite Folorunsho and chartered accountants in Abuja

1.7 Limitation of Study

Like in every human endeavour, the researchers encountered slight constraints while carrying out the study. The significant constraint was the scanty literature on the subject owing that it is a new discourse thus the researcher incurred more financial expenses and much time was required in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size covering only Raywhite Folorunsho and chartered accountants in Abuja Thus findings of this study cannot be used for generalization for other accounting firms in other states within Nigeria. Additionally, the researcher will simultaneously engage in this study with other academic work will impede maximum devotion to the research. Howbeit, despite the constraint encountered during the  research, all factors were downplayed in other to give the best and make the research successful.

 

A REVIEW ON AUDITOR’S INDEPENDENCE AS A DETERMINANT OF TRUE AND FAIR VIEW OF ACCOUNTING RECORDS

NOT THE TOPIC YOU ARE LOOKING FOR?


SUGGEST A TOPIC

OR

Try searching for your topic

Confuse about anything?

Call or WhatsApp us

+234 810 144 4147

Or reach us via email

hello@iresearchng.com

How do I get the Complete Project material on A REVIEW ON AUDITOR’S INDEPENDENCE AS A DETERMINANT OF TRUE AND FAIR VIEW OF ACCOUNTING RECORDS

Once payment is made, kindly send us your project topic, email address and payment name to +234 810 144 4147

Once payment is confirmed, Project materials will be sent to your email

What's your project topic?

Related Project Topics

Projects By Departments

Explore Thousands of Research Project Topics.

Get project material instantly!