THE ROLE OF AUDITOR IN CONTROLLING FRAUDS IN GOVERNMENT OWNED ESTABLISHMENT

By

NWACHUKWU CALISTA. O

Presented To

Department of Accountancy

ABSTRACT

This topic that is being treated (The role of a statutory auditor in controlling fraud in government owned establishments) is very important to our present economic condition if people will blend with the results and findings of this research work.

In the chapters of this project, it is clear that an auditor (statutory) is very important in all government establishments. This is because the Nigeria citizens see government properties as "Nobody's property" the trend now is that they perpetrate fraud regularly with the above mentioned motive in the back of their minds.

The auditor is just an impartial critic and observer; he is a "watchdog" and not a "blood hound" He displays all the skills and care which is expected of him as a professional.

The view of other auditors about the topic was also examined. The role of statutory auditors in controlling fraud is a vast topic which has been dealt with by many professionals in different fields and vocations. The work of a statutory auditor is backed up with the provisions of the company and allied matters decree (CAMD) 1990. This means that the auditor has legal rules to follow in carrying out his work. It is compulsory for all government establishments under the provision of the CAMD 1990 or the statute edit of creation to audit their accounts and other financial statement at the end of every financial year.

In summary, the role of a statutory auditor is vital and indispensable in government owned establishments so as to enable sanity and fairness in operations of the government officials and their subordinates.

TABLE OF CONTENTS

Title page

Approval

Dedication

Acknowledgment

Abstract

Table of content

CHAPTER ONE

Introduction

1.1 Background of the study

1.2 Statement of problem

1.3 Objectives of study

1.4 Significance of study

1.5 Scope of study

1.6 limitation of the study

CHAPTER TWO

Literature review

2.1 Origin of Auditing

2.2 Auditing in Nigeria

2.3 Auditors defined

2.4 Independence of auditor

2.5 Classification of audit

2.6 Nature of works

2.7 Who is an auditor

2.8 Qualities of an audit

2.9 Duties of an audit

2.10 Right of an auditor

2.11 Fraud, errors and irregularly defined

CHAPTER THREE

Summary, conclusion and recommendation

3.1 Summary of findings

3.2 Conclusion

3.3 Recommendation

Bibliography.

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The traditional role of financial accounts was to give account of stewardship to the owners of business who were divorced from management of business.

There is always the tendency for the owners to doubt the content of the report presented to them. They fear that the report may contain errors, conceal fraud, deliberately misleading or lack in the informational content.

To solve this problem of credibility in reports and accounts, therefore, auditing can be defined as the independent examination of the books and accounts of individuals, organization etc. With a view to confirming or refusing the assertion in the report. It is for this purpose that the professional bodies such as (ICAN) companies and Allied matters decree 1990, stipulates the mode of appointment of auditors (sec 357) (i) of 1990 and the qualification of auditors, all to ensure a true and fair view of their report on financial matters.

However, every organization sets up accounting techniques and procedure that will suit its purpose with an eye to established accounting principle and guideline. A manufacturing industry introduces such accounting techniques that will take care of every stage of manufacturing firms, medical, clinics, legal parishioners etc run their outfit using such accounting techniques as would adequately take care of money received and expenses paid.

To ensure that the financial position portray true and fair views, that auditor will inquire whether the company is well runned. In particular whether:

i. The directors maybe ineloquent

ii. They may exercise bad judgment

iii. The directors may be incompetent

iv. Board of directors are competent necrotic men tend to appoint as colleagues people who are also competent and energetic. Whole boards of mediocre tend to prefer colleagues who are also mediocre

It is quite surprising that irrespective of all the stipulated roles of the statutory auctions in controlling fraud in government establishment, yet, misappropriation of fraud, fraud of all kinds seem to be taken the iron shame in government owned establishment, to the extent that some of the establishments are put into bankrupt.

The aim of the management audit is therefore to inquire into and report on how well the company has followed the wishes of its member and carried them out completely.

The auditor however, has other secondary roles which will be discussed in the review, but the main aim of this research project is to verify enlighten and analysis expressly the statutory role of a statutory auditor with respect to fraud.

However, the auditor should recognize the possibilities of material, misstatement or irregularities or fraud which state of affair shown by the statement. The auditor should also see the errors which could distort the trueness and fairness of the financial account are not committed. Therefore, a statutory auditor is said to be a watch dog and not a blood bound.

Finally, the basic role for the prevention and detection of fraud on the management who may often obtain reasonable assurance that the duties will be discharge be establishing an adequate system of internal control.

1.2 STATEMENT OF PROBLEM

The issue of the outside world regarding auditors as fraud directors has to be corrected.

The auditor is only expected to express opinion on the true and fair view of the financial statement and not to detect fraud unless specified on the letter of engagement.

He owes the management and share holders a duty to report to them whenever he discovers any fraud in the course of his normal (duties) audit.

1.3 OBJECTIVES OF THE STUDY

The research have set forth in this stud to present fresh insight into the nature and role of an auditor in controlling fraud in government owned establishments with view to enabling the public appreciation the various limitations and weakness inherit in their effort in fraud director control.

As earlier stated, the primary responsibility of a statutory audit is to examine the financial statement presented to him by the management and gives his professional opinion whether or not the accounts shoe a true and fair view of the state of affair of the business.

The research works show the importance of an auditor in any organization, to distinguish between the internal and external auditor and to state the duties, qualities, and qualifications etc. of a statutory auditor.

This research is mostly especially to show the extent of inter-relationship between auditor and management as regards prevention and detection of frauds and other irregularities.

1.4 SIGNIFICANCE OF THE STUDY

The significance of this study is that it will x-ray the inherent disabilities and limitations auditing in government owned establishments.

This study could be beneficial in respect the following categories;

a. As to the academic society

b. As to the auditors

c. As to the society at large.

The significance to academic society will be to broaden the knowledge of the student of Accountancy of the competency of accountability and the extend of versatility of auditors as regards auditing of financial statement. It will also enlighten and encourage accounting students to take the study more serious and will wider their knowledge on the extent to which the impact of auditors are felt and their roles. It will also help them to appreciate the reason for their studies of auditing as a course and will help them to understand the course to the end.

To the auditors, it will enable them to know the limit which ill be liable in the course of fraud being perpetuated and will also enable them to implement their audit work with due care and skill in academic with relevant status and in line with their professional code of conduct instituted by the institute of chartered accountants of Nigeria in 1968. Again it will attempt to define the roles and competence of the statutory auditor in their audit work and professionalism in respect of the fraud detection and irregularities.

To the society at large, the significance is to expose to the public how important auditors are to the society, their integrity and the ability of the auditors to give professional advice.

1.5 SCOPE OF THE STUDY

The auditors will be limited to the statutory roles of an auditor in respect of frauds. This topic helps to clear doubt in the minds of people auditors as fraud detectors.

Auditors role another aspect of their duty my be briefly mentioned but this research work is mainly based on the aspect of fraud and other. Irregularities