This study is designed to provide knowledge to a layman on the problem encountered by external auditors in auditing Nigeria companies. An external auditor is a qualified professional accountant that is engaged in an organization to examine, review companies business activities and reconcile them the study attend to determine all this problems encountered by external auditors in auditing Nigeria companies which includes not having a standard internal control system, lack of proper recording of financial transaction and lack of proper account keeping of business activities in the companies, in the study therefore the following means were used in collecting data and administration of this research work which include primary data through all interview and design questionnaire while secondary data was through Journals, textbooks etc. some of the major findings of the research work are that company balance sheet is published for public consumption indicating mostly the unqualified report that has been issued by the companies. Again daily reconciliation of the accounting balance are followed to ensure that arithmetical accuracy of the ledger is recorded. Internal auditor should be encouraged in Nigeria companies for effectiveness of auditors work and also external auditors should be engaged from time to time to check the companies performances

TABLE OF CONTENTS

Title page i

Approval page ii

Dedication iii

Acknowledgement iv

Abstract v

Table of content vi

CHAPTER ONE

INTRODUCTION

1.1 Background of study 1

1.2 Statement of problems 3

1.3 Objective of the study 3

1.4 Research Question 4

1.5 Research hypothesis 5

1.6 Significant of the study 5

1.7 Scope and limitation of the study 6

1.8 Definition of terms 8

CHAPTER TWO

2.0 REVIEW OF RELATED LITERATURE

2.1 Definition of auditing 15

2.2 History of auditing 18

2.3 Objectives of auditing 20

2.4 Qualification of auditors 24

2.5 Institute of Chattered Accountants of Nigeria 27

2.6 Association of National Accountants of

Nigeria (ANAN) 30

2.7 Appointment of auditors 31

2.8 Removal and resignation of auditor

under companies 35

2.9 The problems of external auditors in

Nigerian companies 42

2.10 Types of Evidence in Auditing 48

2.11 Internal audit Efficiency 49

CHAPTER THREE

RESEARCH DESIGN AND METHODOLOGY

RESEARCH DESIGN AND METHODS

3.1 Research design 51

3.2 Area of study 53

3.3 Population of study 53

3.4 Sampling method 54

3.5 Determination of sample size 54

3.6 Research instrumentation 56

3.7 Validity reliability of research instrument 56

3.8 Source of data 57

3.9 Method investigation 59

CHAPTER FOUR

4.0 DATA PRESENTATION AND ANALYSIS

4.1 Presentation and analysis of data 61

4.2 Test of hypothesis 72

CHAPTER FIVE

SUMMARY OF FINDINGS, RECOMMENDATION AND CONCLUSION

5.1 Summary of finding 87

5.2 Recommendation 95

5.3 Conclusion 97

Bibliography 99

Appendix I 102

Appendix II 103

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Auditing has been a very important aspect of the accounting profession since the statement of business activities from a sole proprietorship to large public enterprises. Experts rank, if the number one instrument of financial reporting. It forms the bedrock of placing reliance on the report presented by the stewards of companies on the state of affairs of the companies.

Many groups are interested to be assured of their interests being protected in the business organizations. The owners of the business (shareholders) having been concern to be guaranteed the management is performing its duties effectively and efficiently. Their ultimate aim is to receive as much returns as possible from the capital they invested in the business.

On its own part, the government is interested in knowing whether the profit & loss shown in the financial statement is correctly done for the purpose of tax assessment.

The companies advisers (the legal, financial analysts) also make use of the auditors report to advice the management. The legal adviser interprets the legal implications of some information disclosed in the financial statement. Also, the financial analyst uses the result shown by the auditors to advise the clients on the best source of fund to embark on, where to invest and how much to invest in each alternative. The competitors may also be attracted to merge with the auditors clients through the report issued by him.

However, the auditors can always be seen as the watchdog of the entire economy by representing the interest of all these groups. Their peculiar position therefore calls for a conducive atmosphere, but, it is unfortunate that most external auditors face serious problems in performance of their duties. In any case, this research work tends to investigate into the nature and causes of these problems and also solutions to them.

1.2 STATEMENT OF PROBLEMS

There are many problems facing external auditors in Nigeria. Auditors in Nigeria, even the most successful ones find it very difficult to audit Nigerian companies as a result of business activities, illiteracy, moral laxity lack of adequate technical skill and training. This work studies these problems, their causes, effect and remedies.

1.3 OBJECTIVE OF THE STUDY

The aims of embarking on this study are:-

1. To ascertain the nature of the problems the external auditors encounter in auditing Nigerian companies.

2. To identify the causes of these problems

3. To ascertain the effects of these problems on the work of auditors.

4. To recommend measures that could enable external auditors to overcome the problems identified.

5. To recommend measures to be adopted by Nigeria to enhance the auditing of their business organizations.

1.4 RESEARCH QUESTIONS

In carrying out this work, the following questions were in the mind of the researcher.

1. What is the nature of the problems of external auditors in auditing Nigerian companies?

2. What are the causes of these problems?

3. What are the effects of such problems in the work of external auditors?

4. What are the possible measures to be taken to overcome these problems?

1.5 RESEARCH HYPOTHESIS

There are different opinions about the problems of external auditors in auditing Nigerian companies. Some experts are of the view that they do not have any problems in auditing Nigerian companies while others contend that they do have. As a result of these opposing ideas, two types of hypothesis were employed to facilitate this research work. They are started as follows:

i. Null hypothesis (H0) external auditors do not have problems in auditing Nigerian companies

ii. Alternative hypothesis (Hi) external auditors have problems in auditing Nigerian companies