The Role Of Auditors With Their Clients And Third Parties (A Case Study Of Adebayo Bankole & Co Chartered Accountant)

Project and Seminar Material for Accountancy / Accounting

The Role Of Auditors With Their Clients And Third Parties (A Case Study Of Adebayo Bankole & Co Chartered Accountant)

Chapter One

1.0 Introduction

1.1 Background of the Study

A series of companies acts and decree commencing in 1844 due to the full amount of debt of the companies so that they will meet the needs and the account should subject to examination by independent people who claim to be expert, i.e. auditors, who report the result of their findings to the shareholders and consequently to their parties.
The auditor should have a recognize qualification as a mark of competence. Before (1948) act, auditors even public companies required no external professional qualifications.

The companies Decree of 1967, 1968 and companies and allied matters decree CAMD of 1990, in Nigeria have however moved steadily towards a stipulated that auditors of all limited companies should be professionally qualified.

This is done through a professional in Nigeria called institute of chartered accountants of Nigeria (ICAN). Progress in auditing has been measured by the institute during the past away decades in terms of development. This is quite natural and should continue since such abilities are needed in Nigeria business but this form of progress should no longer more initiative skills a lack of which has become alarming evident of late and such skills can only flourish in a situation of late of time independence.

In the country, in the early days of auditing the prime qualification for the position of auditors was reputation. A man of integrity and independence of mind would be sought for this honoured position, the matters of the technical ability being entirely secondary and consequently his function in those days was never confused with that of an accountant.

However, as accountancy in the country gradually become more complex and concerned with technically become increasingly dependent upon the expertise provide by the accountants until eventually the audit function itself become totally dominated by the accounting profession.

1.1 Statement of the Study

The ICAN in 1961 issued its first statement on auditing which is referred to as UI. General principle of auditing. These statements tend to outline what is considered as an applicable general principle to be followed in the conduct of auditing. This have been subsequently withdraw may be for the reasons of inadequacy some of the relevant ones currently in uses are:

  1. V7 – Verification of debtors balance confirmation by direct communication.
  2. V9 – Attendance of stock taking
  3. V11 – Stock in trade and working progress
  4. V14 – Internal control is a computer based accounting system
  5. V15 – The auditor computer based accounting system auditing standard and guideline publication starts in 1980 by the auditing practice committee.

It consist of the following : –

a. As explanatory forward:

This describes the basic principle and practices which members are expected to follow in the conduct of an audit.

b. Auditing failure:

Auditing failures by members to observe this standard may result an enquiry by appropriate committee of the institute and which may lead to disciplinary action against an erring member.

1.2 Aims and Objective of the Study

The main objectives of this research work are to look into the roles of auditors with their clients and third party. This project is design to enlighten the public that the work done by the qualified verification of financial statement. Auditors need to exercise duty of care to the client and third parties. Also, the independence of an auditor is also important is this issue and this shows that work of professional auditor can not be over emphasis in every sector.
In such situations, auditors, their clients and third party generally seek ways to resolve their disagreements.

1.3 Significance Of the Study

The study would increase the stock of professional auditors in terms of know ledge and professional skills on how to relate and operate with their clients and third party. The study would also serve as a useful reference material to students of accountancy and future research would find this work valuable.

1.4 Limitation of the Study

The research of this nature involved spending on stationary, transportation and many others. There is a problem of insufficient capital in term of money, materials and time. Despite this constraint, enough will be put into the write up to justify the time and resources that would be spent.

1.5 Definition of Terms


This means the possession of integrity, ability to be self reliant and honest, freedom from bias and avoidance of the relationship which to a research observer would suggest a conflict of interest on the part of the auditor.


This means information acquired in the course of professional work should not be disclosed except where consent has been obtained from the client, employer or other proper to discharge or public duty to disclose.


An auditor is not responsible for preparing accounts. He does not guaranteeing their accuracy. An auditor does not maintain and control the business. He does not assess the efficiency of business operations.


Errors are generally agreed in auditing as unintentionally mistakes. It makes clients account unreliable and if very predominate in occurrence and value can impact or affect the truth and fairness of the accounts.


Every intentional distribution of financial statement for whatever purpose, which includes misappropriation of assets, whether or not accompanied by distortion of financial statements (such as missing vouchers, payment disputes, imbalance figure) undoubtedly constitute irregularities.


Fraud is used only to refer to irregularities involving the use of criminal deception to obtain an unjust or illegal advantage such as stating stock value higher than obtainable, in a deceptive manner to be able to declare profit (when loss is actually sustained) and go ahead to declare dividend wrongly. In order words “Fraud” refers to intentional misrepresentations of financial information by one or more individuals among management, employees, or third parties.

  1. Manipulation, falsification or alteration of records or documents
  2. Misappropriation of assets
  3. Suppression or omission of the effects of transaction from records or documents
  4. Recording of transaction without substance
  5. Misapplication of accounting policies

1.6 Organization and Plan of the Study

It spells out the number of chapters into which the researcher wants to divide the work.

It is going to be a four or five chapter work. It has to stated here. This will guide the investigator concern the organization and plan of his written up.

It is usually written such that the topic to be written under each chapter will need to be stated.

  • Chapter 1; Introduction Rend other sub, heading in
  • Chapter 2; Literature Review Break Down into sub-head into Reflect the topic in Question
  • Chapter 3; Research Methodology
  • Chapter 4; Data Presentation, Analysis and Interpretation
  • Chapter 5; Finding, Summary, Conclusion and Recommendation.

1.7 Statement of Research Hypothesis

This research statement is mainly focuses on the effect of management information system on company operation in the organization in which is stipulate on the growth, stability and profitability of the organization. The statement of hypothesis for research work is as follow: –

  1. Hi – management information system has improved the company service by reducing the delay and stree of customers.
    Ho – management information system has not improved the company service by reducing the delay and the stree of customers.
  2. Hi – management system has increased the confidence of customer in company and there by enhanced good company habit of the customers.
    Ho – management information system has not increased the confidence of customers in company and there by discouraged good company habit of the customers.
  3. Hi – management information system has significantly assists in detecting and reducing fraudulent activities in company’s
    Ho – management information has not significantly assists in detecting and reducing fraudulent in company’s

Chapter Five

Summary, Conclusion and Recommendations

5.1 Summary

The research findings show that;

The obligations of auditor to their client and third parties are commendable. These goals include that auditor must have steps to protect the interest of those who will use his report from being misled either on the nature of his opinion.

The audit must exercise in independence, which is considered to be an attitude of the mind and also an important concept is respect of being independent of management influence.

Confidentiality must be maintained with respect to all information and document made available to him in the cost of his professional work.

The auditor should have an independent approach, which is free from bias or prejudice in all matters relating to his audit assignment.

Independence is equally considered as an expression of professional integrity of the individual.

Competence must be exhibited in the performance of his work, this can be achieved through motivation training and re-training top meet the current development of professional requirement in relation to economic statutory expectation.

5.2 Conclusion

The role of auditors with their clients and third parties has a large extent remained commendable. By virtue of the company decree and the companies and Allied matters decree (CAMD) there must be disclosure of all reserves, expected in the cases of special classes of companies specified in part III of the eight schedules.

The auditor must ensure that “secret reserve” are not created. He must verify the existence of assists as reasonably possible and he cannot absolute himself from his duty by accepting the certificate of an official. He must certify what he does not believe to be true his business is to ascertain that position? By examine the books of the company. But he does not discharge his duty by doing this without examine and without taking the trouble to see that the books of the company itself show the company, its true position.

In case of company, an auditor must see that the position of the memorandum and articles of association is carried out. In case of private firms it is of the almost important that the exact scope of the auditors contract with his client be ordered in writing. The question of auditor legal responsibilities is one of supreme importance every practicing accountant. It is however, a most difficult one. The auditor’s roles and the principles involved by case of several directions inflating. In case of a company the auditors to limit the responsibilities by the terms of contract with the event and therefore, has responsibilities can be limited by agreement, but in practice, it is found that in many cases, there is no written evidence of the exalt term of the contract. In conclusion, it may be said that it is very unlikely that an auditor will be held personally liable provided that he possessed such in all case, taking every point before he certifies the accounts.

5.3 Recommendations

However, it is suggested that more research should be carried out in some other accounting firms as it was done in the case of Adebayo Bankole & Co. in the course of this research work, it was discovered that most companies are always trying to avoid the qualification of their accounts by auditors in their audit report and hence to exercise some degree of secrecy while dealing with auditors.

This is characterized by insufficient information being given to their auditor that of all information by top level officers of the company before been available to the auditor. Also most companies treat their auditors term in such a manner depending on their decision or shining of some vital information realer required by the auditor in question, this is always characterized company’s handshake as it is called.

5.4 Suggestion

To obtained in-depth knowledge in various aspects of auditing research works could be carried out in these areas.

  1. The auditor must have a recognized qualification as a mark of competence
  2. The auditor must be independent
  3. Rotation of auditing appointment so that an audit will not be too familiar with their client
  4. Establishment of audit committee.

The Role Of Auditors With Their Clients And Third Parties (A Case Study Of Adebayo Bankole & Co Chartered Accountant)

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The Role Of Auditors With Their Clients And Third Parties (A Case Study Of Adebayo Bankole & Co Chartered Accountant)


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