The Role Of Auditors In Bank Failure In Nigerian Banks

Project and Seminar Material for Accountancy / Accounting

The Role Of Auditors In Bank Failure In Nigerian Banks


Abstract


The main focus of this study is to examine the role of auditors in bank failure in Nigeria Banks. The study adopted a survey research design and conveniently enrolled 80 participants in the study who are depositors in selected banks in Benin Metropolis. Well structure questionnaire which provided answer to the research questions was issued to the participant. A total of 77 responses were received and validated for the study. Hypothesis was tested using Chi-Square statistical tool (SPSS). Findings from the study revealed that auditors have play little and insignificant role in checking the abuse of powers of managers and ensuring efficient reporting. And due to the quest of maintaining client relationship they have collaborated with bank managers involved in unethical practices thus leading to crisis and bank failures. The researcher therefore recommends that auditors should adhere strictly to the true and fair view principle so as to give a vivid, truthful, clear and understandable report to their organizations since the risk management and decision making of the organization solely depends on them. More so, The Central Bank of Nigeria, the Nigerian Deposit Insurance Corporation and other regulators should therefore establish their own dedicated teams of auditors to conduct continuous audits of all the major financial institutions.


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

  1. Do the existing laws permit the auditors to do what the stakeholders expect of them?
  2. Have banks auditors actually contributed to the distress and failure of their client banks?
  3. 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

  1. To examine the effect of fraud on a bank performance
  2. To find out the effect of managers exploitation on the investors in bank..
  3. To determine policies, laws and institutions necessary to regulate and sanitize the Nigeria banking industry
  4. 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

1.5 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.

1.6 Scope of the Study

The study examines the existing legal provisions in Nigeria on auditing particularly. (CAMA 1990, NDIC Decree of 1998 and BOF1A 1991 as amended to date). The study questionnaire is administered on owners and depositors within Benin metropolis to ascertain their opinion on the allegation against the auditors

Secondary data on bank distress from the NDIC publications are used in the study


1.7 Relevance and Significance of the Study

The significance of this study are numerous. The result of the study could be useful to the following due to the accompanying reasons;

The result of the study will assist professional like ICAN, BOFIA and CBN in drawing up more stringent codeof ethics and robust professional requirements for members.

The professional accountants will find the outcome of the study helpful in that he will become fully aware of the consequences of his actions or inactions on his integrity more so as me ac- a is now a global village. If the assertion is found true, it will help to improve their supervisory efforts and place less reliance on auditors report.

These set of stakeholders will be enabled to evaluate the existing legal provisions and make necessary amendment or enactment of further law if necessary


1.8 Limitation of the Study

The limitations of this study reveal certain problems that was encountered during the information gathering process to problem of the data itself. They include

  1. Insufficient and scare related materials to make the work more robust
  2. Time constraints: there was equally the problem of time constraints which inhibits the period of study or investigation ought to have been done.
  3. Un co-operative and intimidating attitude of respondents during the course of interview militated against the speed of time
  4. Absence of uniformity in financial year endings of financial institutions is another constraints

Chapter Five


Summary, Conclusion and Recommendation

5.1 Summary

The main focus of this study is to examine the role of auditors in bank failure in Nigeria Banks. It examined the effect of fraud on a bank performance. It find out the effect of managers exploitation on the investors in bank. It determined policies, laws and institutions necessary to regulate and sanitize the Nigeria banking industry. It ascertained 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.

The study adopted a survey research design and conveniently enrolled 80 participants in the study who are depositors in selected banks in Benin Metropolis. Well structure questionnaire which provided answer to the research questions was issued to the participant. A total of 77 responses were received and validated for the study. Hypothesis was tested using Chi-Square statistical tool (SPSS).


5.2 Conclusion

Auditors have been indicted for the crisis in the banking sector in Nigeria. There have been considerable concerns about audit quality, especially when companies experience unforeseen financial difficulties or collapse soon after receiving unqualified audit reports. The contemporary auditing model makes auditors dependent on companies and their directors for fees and profits. As a result, auditors may become too subservient to directors and even ‘bend the rules’ in order to accommodate directors. Private sector auditors cannot be independent of the companies they audit. The auditing model in practice is further complicated by the fact that auditors are permitted to sell other accountancy services to their audit clients. This increases auditor fee dependency upon companies and can impair their perceived and actual independence.

Findings from the study revealed that auditors have play little and insignificant role in checking the abuse of powers of managers and ensuring efficient reporting. And due to the quest of maintaining client relationship they have collaborated with bank managers involved in unethical practices thus leading to crisis and bank failures.


5.3 Recommendation

From the findings of the study, the researcher recommends that auditors should adhere strictly to the true and fair view principle so as to give a vivid, truthful, clear and understandable report to their organizations since the risk management and decision making of the organization solely depends on them. The Central Bank of Nigeria, the Nigerian Deposit Insurance Corporation and other regulators should therefore establish their own dedicated teams of auditors to conduct continuous audits of all the major financial institutions. This should go beyond narrow market concerns about profits and should address questions about the financial institutions’ business models, viability, social accountability and their capacity to cause financial deficits. To combat unethical practices by accountants and professional firms there is a need to educate company executives, policy-makers and the public about the human costs of anti-social and unprofessional practices, as they deprive ordinary Nigerian citizens of their human and social rights. Nigerian citizens suffer when banks and financial institutions collapse, causing depositors and investors to lose their investments.


Complete Material For The Role Of Auditors In Bank Failure In Nigerian Banks


Project Material Download

3,000 Naira


The Complete Material will be Sent to You in Just 2 Steps

Quick & Simple…


Step One Purchase

Make a Mobile Transfer or POS Payment of ₦3,000 to any of the Account Below

Access Bank PlcAccount No.: 0811003731
Name: Samphina Academy
Account Type: Current
Zenith BankAccount No.: 1225513212
Name: Samphina Academy
Account Type: Current

Or CLICK HERE To Pay With Debit Card

FOR CLIENTS OUTSIDE NIGERIA
CLICK HERE To Pay With Debit Card ($15)
GHANA – Make Payment of 60 GHS to MTN MoMo, 0553978005, Douglas Osabutey 

Step Two Purchase

Send the Following Details on WhatsApp ( 08143831497) After Payment

  • Payment Details
  • Email Address 
  • The Role Of Auditors In Bank Failure In Nigerian Banks

The Complete Material Will Be Sent To Your Email Address After Receiving Your Details
T & C Apply


  Contact Our Help Desk


⚠️ Need a different topic? Perform a quick search



Get A Complete Business Plan For Any Business In Nigeria

Business Plan for Businesses in Nigeria

  Business Plans in Nigeria


Disclaimer


This research material “The Role Of Auditors In Bank Failure In Nigerian Banks” is for research purposes and should be used as a guide in developing your research project / seminar work. For no reason should you copy word for word (verbatim) as samphina.com.ng will not be liable for any who copied the material.

The aim of providing this material is to reduce the stress of moving from one school library to another all in the name of searching for research materials. This service is legal because, all institutions permit their students to read previous projects, books, articles or papers while developing their own works. According to Austin Kleon “All creative work builds on what came before”.

samphina.com.ng is only providing this material “The Role Of Auditors In Bank Failure In Nigerian Banks” as a reference for your research. The paper should be used as a guide or framework for your own paper. The contents of this paper should be able to help you in generating new ideas and thoughts for your own research. Use it as a guidance purpose only.

Samphina Academy

Samphina Academy is an Online Educational Resource Center that is aimed at providing students with quality information and materials to aid them in succeeding in their academic pursuit.