The Impact Of Regular Auditing To The Viability And Organization Effectiveness Of Commercial Banks In Nigeria (A Study Of Selected Banks)

Project and Seminar material for Accountancy

Project and Seminar material for Accountancy


This project is dedicatioted to God Almighty for his love, kindness, mercies and protection throughout these years of my programs and also to my wonderful parents late Mr. Mike MadubuikeMbonu and Mrs. Theresa Mbonu for their fervent prayers and financial support.


Quite a number of people too numerous to mention here who contributed immensely towards the completion of this project work. I am particularly grateful to God Almighty for the provision of life and strength throughout the duration of my stay in the school and during my project work.

My special thanks goes to my supervisor Mr. Chris A. OSONDU who greatly contributed in making this work a success as my project supervisor, sir you’re indeed a father of all, and to my departmental HOD and all the lectures in the department of accountancy Federal polytechnic Owerri.

Moreover, I wish to express my gratitude to all who have contributed in one or the other in making my dreams come true.

My regards goes to my beloved mother Mrs. Theresa Mbonu who has always been there for me from birth, through Challenges, pains, fear hopeless moments. Etc.

Words are grossly inadequate to express my profound gratitude to my beloved brother EmekaMbonu for his love and financial support.

To my siblings sister Chika Mbonu Maureen, Ikenna, Oby, Ifeanyi, Peter and Uchechukwu, God will see us through.
My appreciation goes to my friends Justice Nwaeze, AgustineMorah(OnwaAbotele) and Mr. Sunday Ekpechi (Sunny back) for their financial support and also gratitude goes my formal parish priest Rev Dr or Nathaniel Onyedieke for his seriously support and prayers. I say thanks a million.

This research work could not have been possible without the positive contribution of numbers of persons and organization where the research work was carried out in Union Bank of Nigeria plc.

To my good friends and all HND in Accountancy Department I say a big thanks to you all and God almighty reward you all abundantly for your concern.


Table Of Contents

  • Cover page
  • Title page
  • Approval page
  • Certification page
  • Dedication
  • Acknowledgment
  • Abstract
  • List of tables and graphs
  • Table of contents

Chapter One

  • 1.0 Introduction
  • 1.1 Background of the study
  • 1.3 Purpose of the study
  • 1.4 Research questions
  • 1.5 Research hypothesis
  • 1.6 Scope of the study
  • 1.7 Significance of the study
  • 1.8 Definition of terms

Chapter Two

  • 2.0 literature review
  • 2.1 introduction
  • 2.2 evolution of commercial banking in Nigeria
  • 2.3.1 history of union bank of Nigeria plc
  • 2.3.2 history of first bank of Nigeria plc
  • 2.4 evolution of Auditing
  • 2.5 reason for efficient and effective Auditing system
  • 2.6 distinction between accountancy and auditing function in an organization.
  • 2.7 the impact of audits independence on Business growth
  • 2.8 the impact of audit report of the business.
  • 2.9 merit of auditing to business
  • 3.0 summary

Chapter Three

  • 3.1 Design and methodology
  • 3.2 research design
  • 3.3 area of study
  • 3.4 sample of the study
  • 3.5 population of the study
  • 3.6 source of data
  • 3.7 sample procedure
  • 3.8 the questionnaire distribution
  • 3.9 validation instrument
  • 3.10 reliability of data
  • 3.11 method of data analysis
  • 3.12 the chi-square test

Chapter Four

  • 4.0 data presentation and analysis.
  • Analysis of data collected through questionnaire.
  • 4.1 analysis of respondents
  • 4.2 statistical of testing of hypothesis
  • 4.3 discussion of the rescue /findings

Chapter Five

  • 5.0 Summary Conclusion and Recommendation
  • 5.1 summary of the findings
  • 5.3 conclusion
  • 5.4 area for further study
  • Bibliography
  • Appendix i
  • Appendix ii


The study tries to examine the impact of regular audit to the viability and organizational effectiveness of commercial banks in Nigeria, a study of selected banks. In this study however, we carried out (worth with the housing banks).

Union Bank of Nigeria plc.First Bank of Nigeria plc.United Bank for Africa (UBA). However, the work went in depth to evaluate the benefits when accrue to those commercial bank as a result of good audit and internal control system. In order to arrive at a conclusion on the study I carried out an empirical survey and library research questionnaires were administered which so out of 100 were returned.

The information collected was tabulate using percentage system for relevant facts of the study; it was divided into five chapters. To facilitate the work, three hypothesis were tested using the chi-scale are method( x2) and the following findings and or results were obtained.

  1. The regular auditing of the accounts of commercial banks contributes to its viability and organization.
  2. Regular auditing ensures that proper internal control is maintained in banks for efficient management or resources.
  3. Auditing maintains probity and accountability among the management and staff of accountability among the management and staff of business enterprises, which is necessary for business growth. From the study, we were able to make some of the following recommendations.

The director of banks are to take reasonable steps to safeguard the assets of the bank, to prevent and direct fraud and other irregularities.

That contemporary internal auditing should provide a constructive source to all branches of management that auditing should report to members (shareholders) if the matter contained in the directors’ report is inconsistent with the financial statement.

Chapter One:

1.0 Introduction

1.1 Background Of The Study

High performing organization brings Joy to its shareholders stakeholders and directors. Falling organization brings heartache, hypertension and death to all those associated with it.

In any case there should be deaths and survivors in an endeavor be it a game, business or otherwise.
Osuagwu et al(1995) have aptly noted that the desire of man will always remain to win, to perform and be praisedto be among survivors and rejoice with the living.

The world is full of intrigues, political activity, competition, and stress and turbulent. The business community is not an exception that art of testing and checking of an organization accounting and financial records to see whether otherwise known as “Auditing is a coin age from a Latin word Audire” which means to hear.

It is an offshoot accounting, which was believed to have originated in the Italian cities far back in the 13th and 14th centuries credit for earlier words is not complete without mentioning such notable person as Luca Pacioli a Franciscan mathematician Auditing from its beginning had an undertone of internal control Woaf(1982) defined internal control system as the whole system of controls financial and wise established by a management in orderly to carry on the business of the enterprise in an orderly and efficient manner ensure adherence to management policies, safeguard assets and secure as far as possible completeness and accuracy of the record.

According to Davidson etal(1986:61) the goals of any firm are the targets or end result towards which the energies of the firm are the means for achieving those goals. The details in which goals and strategies are stated vary among firms some firms prefer to state goals and strategies in general term only for instance a firm might express its goals as be more profitable than our competitions. Its strategy might be to mechanize produce as a cost lower than its competitors.

Therefore, all levels of management requires information on which to base it decision to organize, to plan and to control while timing is important other factor such as competence accuracy and relevance are equally important in assessing the value of information to the organization.

Johnson(1957) has stated clearly that the quality of management information is directly related to its timing, but this is linked to the particular situation give rise to the need for such information.

1.2 Statement Of The Problem

Auditors role in both the private and public emphasized the main duty of an auditor is to report to the members or shareholder on the accounts examined by him and on every balance sheet and every profit and loss account and all group account laid before the company in a general meeting during his tenure of office the auditors must report positivity that is in his opinion.

The accounts give true and fair view of the company’s account and of its profit and loss accounts.

Complying with requirements of the company’sAllied matters Decree, 1990.If the auditor is not satisfied on the above points. It is the duty to qualify his reports.

Most directors found quit of fraud embezzlement and misappropriation of funds, despite the fact that the audit reports vividly have shown that the accounting records have been fairly kept and therefore display a true and fair view if the operations for the period under review.

The most sticking problem now become how can an investor assured himself that his investment well even yield positive results in the face of this malady and the profit figures that have magnetized him to the business are not fabricated or falsified and misleading.

On the other hand, all auditors involve risk, auditors therefore means the chance of damage to auditors or their firms as a result of giving audit opinion that are wrong. Damage may be in form of monetary damage paid to client or third parties as compensation for loss caused by the conduct (for instance negligence) of auditors or simply loss of reputation with clients or the business community.

1.3 Purpose Of The Study

An audit is a process (carried out by suitable qualified auditors) where by the accounts of business entities including charitable organization, trust and professional firm are subjected to scrutiny in such a detail as will enable the auditors to form an opinion as to their accuracy truth and fairness. The object of medium audit has it ultimate aim of verification of the financial positions disclosed by the balance sheet, and profit or loss of the business. Based on the above the objectives of the study are:

  1. To ascertain the necessity for business entities to hold, periodic appraisals in the form of audits and the effect of such periodic appraised on the organization effectiveness.
  2. To identify the qualities and roles of independent auditors in business process.
  3. To make recommendation based on the findings of the study as to the inevitability or regular auditing of financial statement of organizations.
  4. To verify whether such audits are the credibility for the company.

1.4 Research Questions

The following research questions may be postulated. Is a proper accounting record ideal for effective management of the banking sector?

How independent are the opinions of the auditor based on their audit of the financial statement of the organization? Does the financial statement give the true and fair view of the banks activities over the given period?

1.5 Research Hypothesis

Based on the research question, statement of the problem and the objectives of this study, this research will test and validate the hypothesis that

HO: Regular auditing of accounts of commercial banks does not contribute to the banks validity and organizational effectiveness.
HI: Regulate auditing of account of commercial banks contribute to the banks viability and organizational effectiveness.

HO: Regular auditing does not ensure that proper internal control is maintained in business organization for efficient management of their resources.
HO: Auditing does not maintain probity and accountability among the management and staff organization for business growth.
HI: Auditing maintain probity and accountability among the management and staff organization for business growth.

1.6 Scope Of The Study

Although “AUDTING” means the process carried out by suitably qualified auditors where by the accounts of business entities including charities trust and professional firms are subject to scrutiny in such details as well enable the auditors form an independent opinion as to the accuracy and fairness of the organizational financial records, this study has no intention to review the auditing practice existing in the banking industry selected for this work thus it has no intention to find out who is responsible for such activities as cash preparation of vouchers or cheques purchases, sales, and approvals etc.

However, where anything is found out in this direction it is going to the treated on it merit.

The questionnaires well concentrate on the effects of audit on the management of materials and human resources, and its organization effectiveness on the banks under study. Based on these, the research intends to concern itself with the impact of regular audit to the viability and organizational effectiveness of commercial banks in Nigeria.

A study of Nigeria plc., Union Bank of Nigeria plc.united Bank for Africa, to obtain high degree of viability and organization effectiveness in terms of decision making and. Performing evaluation in order to keep a firm grip in competitive weapons.

1.7 Significance Of The Study

According to Murphy(1963) presidents directors, Creditors, Government etc. use financial data provided by firm accounting system in decision making in such areas as budgeting plant expansion, taxation, among others. To provide a reasonable certainly that this system products reliable figure operates efficiently and effectively and follows company policy regular audit becomes so necessary to perform various checks of the operations. This becomes necessary as punched cards and her methods of internal controls views.


To take for one use property that has been entrusted to one’s care.


External standard of how well an organization and/or stakeholders.


Robertson (1996:2992) described fraud as white-collar crime, that is the mislead carried out by people who wear ties to work and steal will pencil or a computer terminal. In white-collar crime, there are ink strains instead of blood stains. It is the crime of deceiving in order to get money or goods illegal.

Internal Audit refers to appointed auditor in line with statutory provisions to examine the financial statement, document and other book of accounts so as to express opinion on the true and fair view of the state of affairs of the business capture by the financial statements documents and boots of Account against the realistic

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