EFFECT OF AUDIT REPORT ON ANNUAL FINANCIAL REPORTING QUALITY OF ORGANIZATION


EFFECT OF AUDIT REPORT ON ANNUAL FINANCIAL REPORTING QUALITY OF ORGANIZATION

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ABSTRACT

The study was intended to examine the effects of audit report on annual financial reporting quality of organization (a case study of Enugu metropolis).

This study was guided by the following objectives; Determine the cause of issuing unprofessional audit report by professional auditors, Ascertain the benefits and limitations associated with this auditing concept, Determine the perceived roles of audit report on financial reporting.

 The study employed the survey research design; questionnaires in addition to library research were applied in order to collect data. The population of this study comprises all the auditors in Enugu metropolis.

Primary and secondary data sources were used and data was analyzed using the correlation statistical tool at 5% level of significance which was presented in frequency tables and percentage. The respondents under the study were 30 auditors from each of the firms in Enugu metropolis.

The study findings revealed that audit report affects the financial report positively; that auditor report makes the financial report credible.

The outcome of this research will improve the quality of accounting information offered by the auditors, represent a gain both for users and society in general, contribute to the development of the profession and promote the good name of the external audit.

 

TABLE OF CONTENTS

Title Page -        -        -        -        -        -        -        -        -        i

Approval Page   -        -        -        -        -        -        -        -        ii

Declaration        -        -        -        -        -        -        -        -        iii

Dedication          -        -        -        -        -        -        -        -        -        iv

Acknowledgement      -        -        -        -        -        -        -        v

Abstract    -        -        -        -        -        -        -        -        -        vi

Table of Contents       -        -        -        -        -        -        -        vii

 

CHAPTER ONE – INTRODUCTION

1.1    Background of the Study    -        -        -        -        -       

1.2    Statement of General Problem   -        -        -        -       

1.3    Objective of the Study         -        -        -        -        -        -       

1.4    Research Questions   -        -        -        -        -        -       

1.5    Hypothesis   -      -      -      -      -      -      -        -        -       

1.6    Significance of the Study    -        -        -        -        -       

1.7    Scope of the Study      -        -        -        -        -        -       

1.8    Definition of Terms    -        -        -        -        -        -       

 

CHAPTER TWO – REVIEW OF RELATED LITERATURE

2.1    Introduction       -        -        -        -        -        -        -        -        -

2.1 Conceptual frame work       -        -        -        -        -        -        -

2.1.1 Audit report     -        -        -        -        -        -        -        -        -

2.1.2 Quality of report       -        -        -        -        -        -        -        -       

2.1.3 Effectiveness of Internal Audit Function -        -        -        -       

2.1.4 Organizational performance    -        -        -        -        -        -

2.1.5The relationship between auditors and the efficiency of an organization -          -        -        -        -        -        -        -        -

2.2 Theoretical frame work       -        -        -        -        -        -        -       

2.2.1 Agency theory through auditing (Mills, 2009)           -        -        -

2.2.2 Capture theory         -        -        -        -        -        -        -        -        -

2.3 Empirical Review        -        -        -        -        -        -        -        -        -

2.3.1 Literature on the objectivity of audit report      -        -        -

2.3.2 Internal audit reporting channels    -        -        -        -        -

2.3.3 Internal audit report completeness -        -        -        -        -

2.3.4 Internal audit report timeliness       -        -        -        -        -

 

CHAPTER THREE – RESEARCH METHODOLOGY

3.1    Introduction       -        -        -        -        -        -        -        -        -

3.2    Research Design         -        -        -        -        -        -        -        -

3.3    Area of the Study       -        -        -        -        -        -        -        -

3.4    Population of Study   -        -        -        -        -        -        -        -

3.5    Sample size and Sampling Techniques        -        -        -        -        -

3.6    Instrument for Data Collection   -        -        -        -        -        -

3.7    Validity of the Instrument -        -        -        -        -        -        -

3.8    Reliability of the Instrument       -        -        -        -        -        -

3.9    Method of Data Collection  -        -        -        -        -        -        -

3.10  Method of Data Analysis    -        -        -        -        -        -        -

CHAPTER FOUR – DATA PRESENTATION AND ANALYSIS

4.0    Introduction       -        -        -        -        -        -        -        -        -

4.1    Data Presentation and Analysis -        -        -        -        -        -

4.2    Characteristics of the Respondents     -        -        -        -        -

4.3    Data Analysis    -        -        -        -        -        -        -        -        -

4.4    Testing Hypothesis    -        -        -        -        -        -        -        -

4.5    Summary of Findings          -        -        -        -        -        -        -        -

4.6    Discussion of Findings        -        -        -        -        -        -        -

CHAPTER FIVE – SUMMARY, CONCLUSION AND RECOMMENDATION

5.0    Introduction       -        -        -        -        -        -        -        -        -

5.1    Summary  -        -        -        -        -        -        -        -        -        -

5.2    Conclusion         -        -        -        -        -        -        -        -        -        -

5.3    Recommendations      -        -        -        -        -        -        -        -

          References -       -        -        -        -        -        -        -        -        -

Appendix  -        -        -        -        -        -        -        -        -        -

 

 

 

 

 

 

CHAPTER ONE

INTRODUCTION

1.0 BACKGROUND TO THE STUDY

In the wake of the financial crisis of 2007–2009 and the failure of a number of global corporate entities, investors, analysts and regulators continue to wonder exactly what happened, what could have prevented it, and what measures can be taken to ensure it doesn’t happen again. With companies collapsing on the heels of financial reports that sounded no alarm bells for current or potential investors, it’s understandable that the quality of financial reporting is coming under scrutiny. While there are numerous discussions and activities underway around auditing standards, judgments, estimates and other technical reporting components, audit committees may find it valuable to consider the connection between audit report and the quality of financial reporting. If sound and relevant financial reporting is one of the direct results of a quality audit report – and I believe that it is – then the immediate questions to ask may be: what does “audit report” mean? Will current audit reform proposals improve the quality of audit reports? And how can the audit committee help the process?

A reliable audit report is imperative in corporate organizations where the retention of public confidence remains of utmost importance.  In this regard, the auditors are the essential fulcrum upon which the concepts of objectivity, fairness coupled with independence and integrity of financial reporting rest.  This assertion, notwithstanding, it suffices to say that reports from statutory auditors are still challenged.  Financial scandal is an undesirable occurrence that had threatened the going concern status of many corporate organisations in Nigeria.  In spite of frequent development in technology such as computer assisted audit technique, internet, automated accounting system etc, financial scandals in both public and private organisations still top the headlines of Nigerian newspapers on daily basis.

The auditor's report is a disclaimer thereof, issued by either an internal auditor or an independent external auditor as a result of an internal or external audit or public]], among others) as an assurance service in order for the user to make decisions based on the results of the audit.

An auditor's report is considered an essential tool when reporting financial information to users, particularly in business. Since many third-party users prefer, or even require financial information to be certified by an independent external auditor, many shareholders rely on auditor reports to certify their information in order to attract investors, obtain loans, and improve public appearance. Some have even stated that financial information without an auditor's report is "essentially worthless" for investing purposes.

Stakeholders too often see the audit report as a relatively discrete document when, in fact, the processes and controls that ensure the broader integrity of the audit report comprise much more than the audit opinion itself. These processes and controls range from the company’s collection and recording of financial information to the actual audit, through to the issuance of the annual financial report. As a result, the quality of financial reporting – so critical to investor confidence and transparency is directly dependent on the quality of the audit report. The value of an expert, independent opinion on a company’s financial statements simply can’t be underestimated. And the simple knowledge that the audit team is coming, combined with the requirements and internal controls that exist around it, exerts a preventative, quality-control pressure on financial statement preparation – even before the audit takes place.

Effective audit report starts with a thorough understanding of the context within which the client and other key stakeholders operate. This context involves both the governance and management process, and the accountability arrangements that bind them together, In Nigeria, the spate of corporate failure witnessed in the financial sector in early 1990’s brought auditors into focus and caused the Nigerian public to question the roles of auditors (Ajibolade, 2008) Also, an emerging body of literature argues that accounting professionals have increasingly used their expertise to conceal and promote anti-social practices (Bakre, 2007), study by Bakre (2007) also documented various cases in which accountants and external auditors in collaboration with management and director of companies falsify and deliberately overstate accounts.  Investigation into financial report of Afribank (Main street plc) implicated Akintola Williams and Deloitte in facilitating an over statement of the banks account by the management.  Other Nigerian cases have also been documented in which a number of professional accounting firms were involved and indicted for anti-social  practices such as issuing fake and unqualified audit report in conflict with their professional claims in  an attempt to be acting in public interest and it was suggested that the matter needed further investigation (Bakre, 2007). 

The finality of the auditor’s work is made by writing a report, by the help of which it expresses an opinion over the audit financial situations so that any user of this information is able to take decisions based on it. “The report represents the means by which the auditor tells the holders and to any other interested users, the  way in which it is satisfied by the way in which the financial situations have been made”(Dobro?eanu, 2002).

Audit report is a commercial document in which it is shown the length of the done audit papers by the auditor and the professional opinion that he/she has reached as a result of analyzing financial situations. It represents the final product of the auditor’s work and the only document through which can be appreciated the professionalism. Moreover, the purpose of an audit is “to improve the degree of trust of the users across the financial situations. This thing is obtained by expressing an opinion by the auditor. ”(Manual of  International Standards, 2009). The problem is that, most of the times it is expected for an answer from the auditors which shouldn’t be given according the law. “The opinion of the auditor concerning the financial situations treats the way in which the financial situations are prepared, in all significant aspects, according to the general frame of applicable financial report”(Manual of  International Standards, 2009).

It is important to note that auditor's reports on financial statements are neither evaluations nor any other similar determination used to evaluate entities in order to make a decision. The report is only an opinion on whether the information presented is correct and free from material misstatements, whereas all other determinations are left for the user to decide.It is also important to get conscious of the fact that the audit does not mean remaking all the accounting documents. It uses sample techniques and significance thresholds in verifying the transactions or analyzing the indices so that a professional opinion could be formed. This way can be expressed the opinion of “reasonable” and “solid” or “clear image” even if the firm has some financial difficulties.

EFFECT OF AUDIT REPORT ON ANNUAL FINANCIAL REPORTING QUALITY OF ORGANIZATION

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  • CATEGORY : ACCOUNTING
  • TYPE : PROJECT MATERIAL
  • FORMAT : MICROSOFT WORD
  • ATTRIBUTE : Documentation Only
  • PAGES : 57 Pages
  • CHAPTERS : 1 - 5
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The study was intended to examine the effects of audit report on annual financial reporting quality of organization (a case study of Enugu metropolis). This study was guided by the following objectives; Determine the cause of issuing unprofessional audit report by professional auditors, Ascertain the benefits and limitations associated with this auditing concept, Determine the perceived roles of audit report on financial reporting... accounting project topics

EFFECT OF AUDIT REPORT ON ANNUAL FINANCIAL REPORTING QUALITY OF ORGANIZATION