THE PROBLEMS ENCOUNTERED BY EXTERNAL AUDITORS IN AUDITING NIGERIAN COMPANIES (A CASE STUDY OF AKINTOLA WILLIAMS AND CO. CHARTERED ACCOUNTANT, ENUGU)
This research is on the problems encountered by external auditor in
auditing Nigeria companies with particular reference to akintola
Williams and company chattered accountant Enugu, the main aim of this
research work is to ascertain the nature of the problem the external
auditors encounters in auditing Nigerian companies and also to identify
the causes of these problems. The sources from which the from which the
necessary data were collected for the purpose of this research work are
from primary and secondary source of data collection. The primary data
were gotten through the use of questionnaire and oral interview. The
secondary data were gotten through news papers, magazines Government
Journals and also text books. Then data collected were analyzed using
simple percentage analysis. Hypothesis were formulated and tested using
chi-squire (X2) method. From the data collected and analysed some of
the major findings of this research work includes auditors in Nigeria,
even the more successful once find it very difficult to audit Nigerian
companies as a result of business activities, illiteracy moral laxity,
lack of adequate technical skill and training. Based on the findings of
this research work, it is recommended that the Government, the auditors
the users of auditors service, the public at large have the important
roles to play to reduce this problems to its minimum rate.
1.1 BACKGROUND OF THE STUDY
Auditing has been a very important aspect of the accounting profession
since the statement of business activities from a sole proprietorship to
large public enterprises. Experts rank, if the number one instrument of
financial reporting. It forms the bedrock of placing reliance on the
report presented by the stewards of companies on the state of affairs of
Many groups are interested to be assured of their interests being
protected in the business organizations. The owners of the business
(shareholders) having been concern to be guaranteed the management is
performing its duties effectively and efficiently. Their ultimate aim
is to receive as much returns as possible from the capital they invested
in the business.
On its own part, the government is interested in knowing whether the
profit & loss shown in the financial statement is correctly done for
the purpose of tax assessment.
The companies advisers (the legal, financial analysts) also make use
of the auditors report to advice the management. The legal adviser
interprets the legal implications of some information disclosed in the
financial statement. Also, the financial analyst uses the result shown
by the auditors to advise the clients on the best source of fund to
embark on, where to invest and how much to invest in each
alternative. The competitors may also be attracted to merge with the
auditors clients through the report issued by him.
However, the auditors can always be seen as the watchdog of the
entire economy by representing the interest of all these groups. Their
peculiar position therefore calls for a conducive atmosphere, but, it is
unfortunate that most external auditors face serious problems in
performance of their duties. In any case, this research work tends to
investigate into the nature and causes of these problems and also
solutions to them.
1.2 STATEMENT OF PROBLEMS
There are many problems facing external auditors in
Nigeria. Auditors in Nigeria, even the most successful ones find it
very difficult to audit Nigerian companies as a result of business
activities, illiteracy, moral laxity lack of adequate technical skill
and training. This work studies these problems, their causes, effect
1.3 PURPOSE OF THE STUDY
The aims of embarking on this study are:-
1. To ascertain the nature of the problems the external auditors encounter in auditing Nigerian companies.
2. To identify the causes of these problems
3. To ascertain the effects of these problems on the work of auditors.
4. To recommend measures that could enable external auditors to overcome the problems identified.
5. To recommend measures to be adopted by Nigeria to enhance the auditing of their business organizations.
1.4 RESEARCH HYPOTHESIS
There are different opinions about the problems of external auditors
in auditing Nigerian companies. Some experts are of the view that they
do not have any problems in auditing Nigerian companies while others
contend that they do have. As a result of these opposing ideas, two
types of hypothesis were employed to facilitate this research
work. They are started as follows:
i. Null hypothesis (H0) external auditors do not have problems in auditing Nigerian companies
ii. Alternative hypothesis (Hi) external auditors have problems in auditing Nigerian companies
1.5 RESEARCH QUESTIONS
In carrying out this work, the following questions were in the mind of the researcher.
2. What is the nature of the problems of external auditors in auditing Nigerian companies?
3. What are the causes of these problems?
4. What are the effects of such problems in the work of external auditors?
5. What are the possible measures to be taken to overcome these problems?
1.6 SIGNIFICANCE OF THE STUDY
It is a true saying that people can suffer for lack of knowledge. If
auditors are not aware of the problems they will encounter in the
performance of their duties they will invariably not be able to guard
against them. This work saves as an eye opener to draw their attention
to these problems and the ways to tackle them.
Again, it enables the government to know how it can play its role in
crating better auditing atmosphere in the Nigerian companies.
Furthermore, it is expected that this should study the contributions
of directors of the Nigeria business enterprise towards a better
auditing environment in their companies.
This study will also form a good reference material for any other student who wants to write on a related topic in future.
1.7 SCOPE AND LIMITATION OF THE STUDY
The study does not exceed the problems encountered by external
auditors in auditing Nigerian companies and their effect on the work of
The auditors considered here are those in all the different forms of
business organizations in Nigeria. There were, however, a lot of
constraints facing the researcher who is doing her study. They
a. Time factor:- The period of time available
for carrying out this research was very short. Moreover, the short
period is filled with other academic programmes.
b. Shortage of finance:- Some research
procedures, techniques, methods and processes will not be applied in
this work because of the cost involved. There is no sufficient funds to
meet up with them.
c. Scanty of local data:- Most
of the texts that deal with the problem under review are foreign texts
and are not current. There are only few local material available. This
makes the collection of data not to be easy.
d. Non-response problem:-Inspite of all
explanations as to the purpose of this study, some people can still
refuse to answer the research questions that will be passed across
them. This will make some questionnaires to be returned blank.