Abstract
Ability to report back the conclusion of an assignment of the
progress made so far to the person(s) who delegated the authority to the
performer of an assignment, duty or function, has for decades eluded
this nation both in the private and public responsibilities to be
performed and performed and reported back has been carried out as
accomplished. The lack of accountability leads to many vices in our
social and economic system. The objectives of this study therefore are:
(a) To ascertain the determine the role of independent audit towards
accountability in an organization (b) To determine if independent audit
can control fraud and embezzlement. The primary data sources (the
questionnaire) collected response from thirty two (32) respondents out
of forty (40) that was sampled. Data collected through primary sources
were analyzed on tables using percentages, three hypotheses were stated
in null form and ere tested using the X2 statistics, simple percentages
and the test revealed that audit enhances accountability in an
organization and also help in controlling fraud, embezzlement and
defalcation in an organization.
CHAPTER ONE
1.0 INTRODUCTION
Accountability in both public and private section has being an
issue that is worth discussing due to its paramount and colossal impact
to the overall performance of an organization.
It (Accountability) has to do with reporting back action, task
carried out by an individual to the authority who apportioned such
function.
1.1 BACKGROUND OF THE STUDY
Accountability is the process or act of reporting back to a higher
authority, body or individual the actions taken by a steward. It enables
the person or persons reported to determine if the steward has acted or
performed the assigned duties properly and satisfactory. It plays a
major role in the success or failure of any business, particularly when
the business is not managed by its owner.
Initially most business set-ups were managed by their owners. The
owners’ manager was the sole financial contribution to the enterprise.
But with the development in the scale and scope of business, a huge
capital beyond that affordable by the sole individual or a family was
needed. Consequently contributors (hereafter called shareholders) were
required to raise the funds for the business. The emergence of these
shareholders led to the divorce of the owner managers from the
management of the business as all of them cannot be directors at the
same time. This the management of business was entrusted to the hands of
people who have no financial claims to the business and the
shareholders were sceptical about this particularly as the law does not
permit them individually to go through the books of the company in
their desire to keep abreast of the performance of the directors.
This skepticism aroused the need for surveillance over the activities
of the non-owner managing directors. This bid to fulfil the later led
to the engagement of third-party (an Auditor) to perform an audit of the
company’s accounts.
Audit has since them received a lot of definitions and/or then
received a lot of definitions and/or interpretations both from
accounting bodies and auditors and their non-the-like. Justifiable is to
say that audit has suffered a lot of misinterpretations. Most of the
misgiving interpretations see it as being armed at fraud and error
detection. But audit essentially involves much more than that. One of
the most involved and of course the most acceptable definitions so far
is that issued by the consultative council of accountability bodies
(CCAB) which sees audit as “the independent examination and expression
of opinion on the financial statement of an enterprise by an appointed
auditor in pursuance of statutory obligation (Howard 1982:1).
Deductively, an audit is the objective scrutiny of someone’s work or
presentation by a third party (an auditor) who is different from the
users and the preparing of the presentation. The general essence of
audit is to ascertain compliance of the firm’s records and operational
policies with usefulness of acceptability of and the dependability on
the firm’s financial statements.
Accountability as explained above has suffered some misconceptions,
surprisingly in the hands of those who should have understood it better.
Most of the lay men conceptual understanding of accountability relates
it to „communicating about monetary matters (Odon, 1999:7) but
accountability goes beyond that. According to the Webster encyclopaedia
dictionary of English language (1995:110), accountability is defined as
“the state of being accountable, answerable, liable or responsible” the
same dictionary goes further to define accountable as “liable to pay or
make good in case of loss; responsible to a trust, liable to be called
to account, put in another way an much more related to the context in
the articles Aba times of fourth September 1999 captioned
“accountability in the third republic” it says
Accountability connotes answerability and stewardship, by
answerability is meant answering for one’s actions and decisions
(odon1999:7)
Stewardship according to the article means service; it means that
every leader should be responsible to the people who reposed trust in
him.
For accountability to be accorded its rightful place in an
organization the writer believes that there is a high need for proper
internal control measure and in addition, efforts should be made to
ensure that company accounts are subjected to external and independent
audits after each financial period.
The bible also records in chapter 25 verse 14-30 of saint Matthew
gospel, the story of a rich man who went on a far journey entrusting the
affairs to his servants and who when he returned, required the servants
to answer individually, for their stewardship to the business while he
was away. It in the same manner that it is required of the chief
executives and directors of a company who are quite different from the
real owners of the business to answer for their stewardship of the funds
and property entrusted to them by the shareholders. It is desire for
accountability that gave rise to what we know today as audit- a
mechanism through which the shareholders are made abreast of the true
and fair picture of the activities of the directors and chief executive
of the company
THE HISTORICAL BACKGROUND OF SHEFFIELD RISK MANAGEMENT LIMITED, OWERRI
Sheffield risk management limited is located within the
industrial layout area of Owerri, it is established as a private limited
liability company, it is an incorporated company.
The company is an insurance brokerage firm that serves as an
intermediary between the insurer and the insured; they also serve as
underwriter of insurance policies. The insurance policies in which
Sheffield risks management limited act as intermediary between the
insurer (insurance company) and the insured (client) or consultant to
each or both include Life insurance, Car insurance, Burglary insurance,
Motor vehicle insurance etc.
OWNERSHIP STRUCTURE
According to the memorandum of understanding signed by the
stake holders of Sheffield Risk Management, the company has its
ownership structure as shown below out of the start-up capital of twenty
two million naira
(?22,000,000).
Shareholders
% Of shareholding
Nominal value (?)
Mr. David Okolie
Barr Obumneme
Okonkwo
Mrs. Mary Nwosu
Barr O. Oluchukwu
Mr Okey Elendu
50
22
18
6
4
11,000,000
4,840,000
3,960,000
1,320,000
880,000
BOARD OF DIRECTORS
Going by the memorandum and article of association of the company,
it has provision for six member board which comprises of the chairman,
general manager, company’s secretary, marketing manager, company’s
accountant, company’s P.R