THE ROLE OF AUDITORS IN BANK FAILURE IN NIGERIAN BANKS, A RESEARCH PROJECT TOPIC ON ACCOUNTING
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Bank’s managements are saddled with the responsibility of preparing the accounts and financial statements of a bank. An Audit is expected to be carried out annually to ensure that the statements of accounts that have been prepared and presented as required by law. (CAMA 1990)
According to Webster’s English Dictionary, an Audit is “an examination intended to serve as a basis for an expression of opinion regarding the fairness, consistency, and conformity with accepted accounting principles of statements prepared by a corporation or other entity for submission to the public or to other interested parties”.
In another way, an Audit is defined as “an independent examination of the books and records of an entity in order to express an opinion as to whether the accounts and financial statements represents a true and fair view of the state of affairs of the entity” (Clinton, 2006). From these definitions, it is clear that an Audit is an independent examination and expresses an opinion on the fairness, conformity and truth about the statements as to the state of affairs of an entity.
The Auditor therefore plays a fiduciary role in the running of a bank, as such; they owe the bank and its stakeholders a duty of care in the performance of their duties. The Nigerian law made giant strides in guaranteeing the independence of the Auditors which is important for his position as a trustee. Such strides have been made in the area of Appointment, Remuneration, Rights, Powers and renewal of tenure section 359, 360, 361, and 363 respectively of company and Allied Matters Act (CAMA 1990) .
Auditing in Nigeria is regulated by various statutes and standards of Accounting and Auditing. But inspite of this, accusations has been made against the professional Auditor as to it failure to express a truly independent opinion as to the true and fail view of financial statement of banks presented before her. The veracity of these allegation is the object of this study.
1.3 IN THE LIGHT OF THE ABOVE THE RESEARCH QUESTIONS ARE
Do the existing laws permit the auditors to do what the stakeholders expect of them?
Have banks auditors actually contributed to the distress and failure of their client banks?
To what extent may an auditor be held responsible for a banks failure?
1.4 OBJECTIVE OF THE STUDY
The objective of this study is to establish an independent opinion on the argument that banks auditors have contributed to the failure of their client banks
- To examine the effect of fraud on a bank performance
- To find out the effect of managers exploitation on the investors in bank..
- To determine policies, laws and institutions necessary to regulate and sanitize the Nigeria banking industry
· To Ascertain whether the auditors have any role to play in checking the abuse of powers and ensuring efficient reporting Ascertain whether auditors collaborates in bank failure
· STATEMENT OF THE RESEARCH HYPOTHESIS
Hypothesis one
H0:it is not true that auditors have collaborated to the distress and failure of their client banks
H1: it is true that auditors have collaborated to the distress and failure of their client banks
Hypothesis two
H0 it is not true that auditors have contributed the failure of their client banks
H1 it is true that auditors have contributed the failure of their client banks
HYPOTHESIS THREE
H0: The relationship between auditor and bank management enhances
bank failure.
H1: The relationship between does not enhance bank failure.
