ABSTRACT
This study examines the professional ethics as safeguard against auditors liability, with a view to defining rules capable of facilitating the performance of auditors. The main objective of this research work is to determine the professional and ethical issues in audit assurance engagement. Specifically, the study will in more specific term attain the following objectives: to determine whether ethical issues in auditor affect the quality assurance of audit; to ascertain the extent professional ethics affect auditing standards and to evaluate if the amount of audit fee paid by client influence the auditor’s professional ethics. Research questions and hypotheses were formulated in line with the objectives of the study. Survey research design was adopted. Data were obtained from questionnaires and analyzed with five point likert’s scale and the three hypotheses formulated were tested using t-test statistical tool with aid of SPSS statistical package. The study revealed that the professional ethics significantly affect the quality assurance of audit hence, Professional ethics is essential in quality assurance in audit as it enhance independence of auditor, also that the professional ethics has a significant effect on quality of standards in auditing. Another finding is that the amount of audit fee paid by client can easily influence the auditor’s professional ethics. Based on this, the study recommends among other things that professional accountants should be trained for the task ahead before being deployed to the field and induction training should be provided to new auditors on the fundamentals of carrying out a quality auditing exercise.
CHAPTER ONE
INTRODUCTION
1.1 Background to the study
Ethics in professional Accounting are of utmost importance. Now that widespread corruption in the society and the failure of organization in every parts of the world have once more increased the need for accounting professionals to adhere strictly to the codes of professional ethics prescribe by international Accounting bodies. According to Ogbonna and Appeah (2011), the widespread corruption in the business environment seems to be the order of the day in all societies. Over years, allegations and scandals of unethical conduct have been directed towards managers (in general and accounts/auditors in partial in virtually all segments of the society, including government, business, charitable organization and even in religion Garrison (2003). However, it is observed that globally including Nigeria there is increasing attraction between the accounting firms and companies Idris (2007) that has created a situation which has erode of public confidence in the number of legalized accounting firms and companies. Any organization that lacks ethical considerations may not survive for long time to achieve its desired goals and objectives of its stakeholder. If investors lose confidence in the reliability of numbers that are presented to the market will suffer grievously. It is widely acknowledged that the accounting profession is an important facet of our society (Wyatt, 2004). Accounting emerged from the society. Accounting is socially constructed and socially constructing. It becomes imperative that accounting practitioners demonstrate the attributes of objectivity and integrity and keep abreast of developments that have impact on the profession.
In the last decade, studies have shown that the auditing profession has had to deal with a lot of challenges than it has done in its lengthy history which spans over one hundred years (Mactosh et al., 2010). Failures of businesses in which deficiencies of financial reporting and corporate disclosure have figured prominently are not new phenomena. This period has been characterized by series of business failures, ethical negligence and accounting scandals both in developed economies and developing economies. Publicized cases of the recent past, such as Satyam, Enron, WorldCom, Global Crossing, Adelphia Communications, Tyco, and Vivendi, Royal Ahold and HealthSouth together with a host of companies from Nigeria (such as, Cadbury and NAMPAK), have drawn increasing attention to the auditing profession. This has had a negative and cumulative impact on the way informed opinion views financial reporting and the auditing profession. There has been great apprehension regarding the fairness of the operation of a market system where shareholders, employees in general, and pensioners have lost large sums, while those running companies, and seen as responsible for those losses, have enriched themselves as the businesses collapsed. Accountants and particularly auditors, in economies of the world such as the United States of America (USA), United Kingdom (UK), and India have all been experiencing these challenges which question the trustworthiness and integrity of the profession (Economist, 2002). This, according to Hale et al., (2005), has been eroding the confidence that the public repose on the auditing profession.
