THE IMPACT OF AUDITORS REPORT ON FRAUD PREVENTION AND CONTROL
(A CASE STUDY OF GUARANTY TRUST BANK PLC OGUI ROAD ENUGU BRANCH)
The principle of this study is to investigate the impact of Auditors report on- fraud prevention and control. Early Auditors were in many cases, Non-accountant who were required to state whether the account showed a "true and fair" view of the state of affairs of the company. The shareholder and other investor relied on auditors report as the late authenticates the completeness, accuracy and validity of the financial statement of the organization. In order to make the owners of the business place reliance on members of the management as regards the true and fair view of the financial statement, the shareholders will appoint an .auditor. This study has been undertake to identifies, analysis and examines the problems encountered in financial institutions by both external and internal auditors, this research work also examine the auditors report in fraud prevention and control in Guaranty Trust Bank Plc Ogui Road, Enugu Branch. The information obtained from this study indicates that Banks undertakes various internal control measures to prevent and control fraud. This study further identified some of the measures adopted by the bank in the aspect. Cheaper one of this study is an introduction to the topic of the research, objectives of the study and research question which forms the basics of this research were succinctly illustrated. Chapter two also is a critical and decisive review of this study. Moreover, the approach adopted in this study is the use of survey questionnaires and oral interview for the collection of data relating to the hypothesis designed. The hypotheses were statically tested at the 5% level of significance using the no-parametric chi-square and percentage. The hypothesis were also tested to guide the research work in order to arrive at a conclusion. Chapter five offer the researcher. The chance to summarize entirely on the research work, making recommendation based on the conclusion arrived from the analyzed data.
TABLE OF CONTENTS
Title page ii
Certification Page iii
Approval page iv
Table of contents vii
1.1 Background of study 1
1.2 Statement of problem 4
1.3 Objectives of study 5
1.4 Research Question 6
1.5 Research hypothesis 7
1.6 Significance of study 8
1.7 Scope and Limitation of the study 8
1.8 Definition of terms 11
REVIEW OF RELATED LITERATURE
2.1 Who are Auditors 18
2.2 Historical Development of Audit Report 20
2.3 Scope of Audit Report 23
2.4 Objectives of Auditing 27
2.5 Meaning of Fraud and Errors 28
2.6 The Detection of Fraud 30
2.7 Controls Auditors have in Preventing Fraudulent
2.8 Internal Control and Auditors 34
2.9 Internal Control Measures for Controlling Fraud
in Financial Institution (Guaranty Trust Bank) 36
2.10 Conditions which Increases the Risk of Fraud or
2.11Objectivity and Independence of the Auditor 39
2.12Nature of Audit Report 45
2.13An Unqualified Report 46
RESEARCH DESIGN AND METHODOLOGY
3.1 Research Design 52
3.2 Source of Data 53
3.2.1 Primary Data 53
3.2.2 Oral Interview 55
3.2.3 Secondary Data 56
3.3 Area of Study 57
3.4. Determination of Sample Size 58
3.5 Method of Investigation 60
PRESENTATION INTERPRETATION AND ANALYSIS OF DATA
4.1 Analysis Data 64
4.2 Testing of Hypothesis 74
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
5.1 Summary of Findings 83
5.2 Conclusion 87
5.3 Recommendations 89
Appendix I 94
Appendix I 94
1.1 Background Of The Study
Banks and financial Institutions are the most acceptable versatile, delicate .and popular forms of the present day joint increased capital base and insurance cover has necessitated the demand for more capital . which in must cases has been achieved through issue of shares and subsequently pooling other people's money in agreement for repayment in terms of loans and other credit facilities and periodic dividends for common stocks and shares.
The current day Banks which are now public liability companies have been built on trust, confidence and security of deposits. Right from its inception when the deposit were made in kinds such as gold bars, platinum's and other valuables whose supposed ready availability gave security to the owners who have deposited them for safe keeping. With the improvement in mode of operation, culture and structure one thing has remained unchanged which is confidence (security). Banks has continued to structure their services with a view to provide customer satisfaction which is built on the foundation of security and trust.
Banks and financial institution trade and provide these services of security and trust with other people' s money not their own money because they do not mint money. Therefore, it would only amount to misappropriation of fraud, if these services are not rendered with these funds but something of a more private and adverse nature is accomplished with the funds. The effects of ·these actions (if they are allowed to hatch) have precipitated the regulatory boards to mandate banks to publish audited accounts of their periodic activities for analysis. We should stress clearly that it is the need to forestall, bar and check the incidence of misappropriation that is the regulatory authorities insisted that accounts must be audited and published.
The joint stock company at of 1844 was the first legislation in Great Britain to require all incorporated business to have their annual financial statement examined by an auditor.
Early Auditors are requiring to state whether the accounts owed a true and a fair view of the state of affairs of the company. It was the companies act of 1990 that required the auditor to be professionally qualified (chartered/certified public (accountants) in this case the owner of a business are separated from the administrators of the' business, there exists a relationship called stewardship and the reports as regards the state of affairs of the business within corresponding period of operation is as stewardship Accounting. When stewardship accounts are presented, the owners (shareholders) of a business are perplexed whether the managers/administrators are being honest in their reports or not. In this vein the owners who have to employ an independent skilled individual known as an auditor to carry out an appraisal or investigation and express an opinion as to whether the accounts present a true and fair view of the state of affairs of the business. Various cases of fraud and misappropriation in sectors of the economy especially amongst public liability companies have called for an appraisal as to the efficiency of audit exercise in fraud prevention and control.
1.2 Statement Of Problem
Owners of a business organization need an account of stewardship from the person whom they have entrusted their business to, so as to know whether the business is making and yielding adequate returns, but the owners do not know to what extent the managers are presenting reports as to its fairness. So the owner will require the services of auditors to tell them whether the reports provided by the stewards (managers) present a true and a fair view of the state of affairs as regards the business entrusted in their care.
The Enron Saga put the following doubts in the mind of stakeholders of a business.
i. To what extent do Auditors reports ascertain whether financial statements presented to them, show true and fair view.
ii. Do Auditors reports prevent fraud and financial crimes or do their reports assist them (fraud and financial crimes).
Other may be more specific in their requires and may demand what roles auditors or auditors report play in the prevention and control of fraud.
1.3 Objectives Of The Study
The objectives of this study is to deeply analyse the 'contribution of auditors or their reports in prevention and control of fraud and financial crimes and to what extent have they been successful in fraud prevention and control.
i. To ascertain and establish the relevance of auditors report in an organizational control process.
ii. To ascertain how internal control process can be strengthen to limit the incidence of fraud, effectively
1.4 Research Question
i. Do the role of Auditor report on fraud prevention and control appreciate?
ii. Do auditors have adequate authority to perform their duties?
iii. Is it the duty of an Auditor to state whether micro financial statements are in compliance with statutory end professional requirement?