Get the complete project »
- The Complete Research Material is averagely 55 pages long and it is in Ms Word Format, it has 1-5 Chapters.
- Major Attributes are Abstract, All Chapters, Figures, Appendix, References.
- Study Level: BTech, BSc, BEng, BA, HND, ND or NCE.
- Full Access Fee: ₦4,000
1.1 Background to the study
It is widely acknowledged that the accounting profession is an important facet of our society (Wyatt, 2004). Accounting emerged from the society. Hines (1988) stated that accounting is socially constructed and socially constructing. This implies that accounting influences society and accounting is influenced by society. The public rightfully expects accounting profession to be practical, intellectual and to have regard for the public. Cogan (1953) cited in Adeyemi, & Fagbemi (2011) stated that these characteristics have been essential in defining any profession and according to Goode (1957) cited in Adeyemi, & Fagbemi (2011) upholding these characteristics is how the accounting profession has been expected to serve the public interest. It becomes imperative that accounting practitioners demonstrate the attributes of objectivity and integrity and keep abreast of developments that have impact on the profession.
In the last decade, studies have shown that the auditing profession has had to deal with a lot of challenges than it has done in its lengthy history which spans over one hundred years (Smith, 2002; Mactosh, Francis, & Ongocho, 2010). Failures of businesses in which deficiencies of financial reporting and corporate disclosure have figured prominently in auditors disclosures are not new phenomena. This has been characterized by series of business failures, ethical negligence and accounting scandals both in developed economies and developing economies.
The International Federation of Accountants (IFAC) has supported the formulation of auditing guidelines to enhance the reliability of corporate financial statements. The International Accounting Standards Board has consistently stressed the need for global adoption of the International Financial Reporting Standards. However, in developing economies, including Nigeria, there have been little or no efforts at positively addressing the challenges posed by non-adherence to corporate governance principles and ethical guidelines. For example, Nigeria is yet to review its Companies and Allied Matters Act 1990 (as amended) which has become more or less anachronistic in view of dynamic corporate events, globalization and the impact of information technology. Pragmatic solutions should normally be research-driven (Adeyemi, & Fagbemi, 2011). It was reported by Bakre (2007) that investors in Nigeria have lost several billions of dollars through the collusion of accountants and external auditors with companies’ management and directors to falsify and deliberately overstate companies’ accounts profitability.
The Board of directors of companies is responsible for accounting for the daily activities in organisations and rendering proper stewardship on how the financial resources of the shareholders were managed. Towards this end, shareholders, at Annual General Meetings, appoint an external auditor to provide assurance services that the financial statements prepared by Management represent the underlying financial transactions of the organization for the period covered. The reality facing stakeholders of financial reporting is that corporate financial reporting failures have been on the increase, especially in the past decade (Adeyemi, Okpala, & Dabor, 2012).
Auditor choice process is important to recognise that auditor choice emerges from the client’s characteristics, potential auditors’ characteristics and the auditing environment. A significant change in one (or more) of these three areas is required for a client to decide to change their auditor, since the costs of switching are material, (DeAngelo, 1981b, p. 188).
The auditor change process is usefully separated into two stages, as suggested by Francis and Wilson (1988, p, 668), since the reasons for displacement of the former auditor might be unrelated to the specific choice criteria used in selecting the new auditor. Companies first decide to change auditors and then make a reselection. Auditor displacement may be motivated by a change in company circumstances (i,e, by factors unconnected with the current audit firm's performance) such as a change in top management or by specific problems and disagreements. The reasons for change are, therefore, not necessarily related to generic audit firm characteristics and also not necessarily involved in the choice of a new auditor. Although, there a common set of factors underlying change and choice decisions, both decisions also have unique factors.
Auditor choice, therefore, can be viewed as a self-regulatory mechanism instituted by a client to supplement corporate governance mechanisms in place within the firm. Rezaee (2004), Fan & Wong (2005), Choi & Wong (2007) find that the audit, in general, performs an important monitoring role in countries characterized by weak corporate governance. By choosing a higher quality auditor, a client, directly or indirectly, binds itself to higher standards of financial reporting and assurance qualities.
Audit choice to a company is sacrosanct to the growth of the establishment. In recent time past, auditors declare the growth of some banks in Nigeria (United Bank for Africa and the defunct Oceanic Bank) yet within 6 months the central bank of Nigeria declared the banks to be distressed. The seemingly persistent bank failures in Nigeria raised some fundamental issues on the quality of audit and the independence of the external auditor amidst others (Ilaboya, & Ohiokha, 2014). In particular, regulators have often expressed their concern that the length of the auditor-client relationship (or auditor tenure) and executives association with auditors could impair auditor independence and thus audit quality (Daris, Soo &Trompeter, 2003). The quality of an audit depends simultaneously on several audit firm features such as auditor specialty, auditor independence, auditor tenure, audit firm size, audit fee, auditor enterprise, and audit company type, (Abedalgader Ibrahim & Baker, 2010). Hence, the issue of audit choice has received increased attention due to highly publicized audit failures culminating in corporate scandals, corporate fraud, and corporate failure. The objective of study therefore is aimed at finding the factors affecting the choice of auditors in Nigeria.
1.2 Statement of the research problem
An audit is a systematic and independent examination of books, accounts, statutory records, documents and vouchers of an organization to ascertain how far the financial statements as well as non-financial disclosures present a true and fair view of the concern.
An Auditor expresses their audit opinions on a financial statement presented to them based on audit evidence. The objective of an audit, therefore, is to plan and perform the audit to obtain appropriate audit evidence that is sufficient to support the opinion expressed in the auditor’s report. Insufficient or inappropriate audit evidence may lead to wrong conclusions and this may affect the quality of the report. Hence, the issue of audit quality has received increased attention due to highly publicized audit failures culminating in corporate scandals, corporate fraud, corporate failure etc.
The various corporate collapses have led to increased scrutiny of deficiencies in the financial reporting process and corporate disclosure requirements of corporate organizations. This has had a negative and cumulative impact on the perceived credibility of financial reporting.
Independent audits which enhance the reliability of accounting information are vital for the development of capital markets and economy. The independent audit information is considered to be a kind of public product, and has higher extensibility. The stakeholders will suffer loss if they use audited accounting information which contains fraudulent accounting information. This can be regarded as a kind of negative extensibility of audit information. The negative extensibility of audit information could prejudice the functioning of the capital market and, at least, adversely affect the efficiency of the market. Thus, just as high-quality audit is necessary for the growth and development of strong capital markets, also poor quality of audit cumulating from poor auditor’s choice may lead to collapse of business organisation.
In the last decade, studies have shown that the auditing profession has had to deal with a lot of challenges than it has done in its lengthy history which spans over one hundred years, such as failures of businesses in which deficiencies of financial reporting and corporate disclosure have fixture prominently are not new phenomena to the Nigerian society as most banks went into distress even when the auditors declares it financially buoyant. Currently, this period is characterized by series of business failures, ethical negligence and accounting scandals both in developed economies and developing economies.
This scenario presented implies the urgent needs in exploring the factors that will positively improve the auditor’s choice in Nigeria. Thus the implication is to help directors of companies to make a quality choice of auditors in the auditing of the financial and nonfinancial disclosure of the company. The aim of the study therefore is to identify the factors affecting the auditor’s choice in Nigeria.
1.3 Research Questions
The effectively undertake this study, the following research question were formulated to guide the research:
1. What is the relationship between firm’s size and auditor’s choice?
2. To what extent does industry type of a company impact on auditor’s choice?
3. What is the relation between return on total assets and auditors choice?
4. To what extent does size of audit firm impact on auditing of a firm?
5. To what extent does Board of Directors gender mix composition influence auditor’s choice?
1.4 Objective of the study
The main objective of the study is to explore the factors affecting auditor’s choice in
Nigeria. In order to achieve the main purpose of the study, the researcher is set out to:
1. Determine if there is any relationship between firm’s size and auditor’s choice.
2. Ascertain to what extent industry type of a company impact on auditor’s choice.
3. Determine the relationship between return on total assets and auditors choice?
4. Ascertain to what extent size of audit firm impact on auditing of a firm.
5. Ascertain to what extent does Board of Directors gender mix composition influence auditor’s choice.
1.5 Research Hypotheses
In order to answer the research questions and achieve the research objectives, the following hypotheses are hereby stated in the null form:
Ho1: There is no significant relationship between firm’s size and auditor’s choice.
Ho2: There is no significant difference between industry types and auditor’s choice.
Ho3: There is no significant relationship between return on total assets and
Ho4: There is no significant difference between size of audit firm and impact on auditing of
Ho5: There is no significant difference between Board of Directors gender mix compositions on the influence auditor’s choices.
1.6 Scope of the study
The scope is targeted at the shareholders/directors of companies who are responsible for auditor’s choice and the audit firms. The study was significant to the users of financial information who want more transparent information and in understanding the nature, significance, and limitations of auditor choice and to focus debate on, and provide a common language for auditor choice issues. The research provided important insights into the factors affecting auditor choice and contributes towards better understanding on the ways to improve the confidence in financial reporting and credibility of the auditing profession.
In addition, this study also offered important input to serve as a strong basis for audit profession to establish policies relating to auditor choice, particularly in the Nigerian context. The study formed a fundamental base upon which further researchers into the field of auditing was based as it will act as both reading and secondary source material in such cases.
1.7 Significance of the study
The present study identified various factors that most influence the auditor’s choice among companies in appointing an auditor to audit the financial statements of their companies. Auditors are faced with various challenges as they try to ensure ethical and accurate presentation of the financial reports for the companies for which they work for. The fact that the auditor is employed or contracted by the Institutions for which they are auditing it means they are at the mercy of the employer and the way they present the information is very crucial. This study sought to shed light on various factors and how they can be applied in making the auditing process as appropriate as possible. The outcome of the study will significantly advance the frontier of knowledge and adds to the existing academic literature on auditors’ choice.
1.8 Delimitation of the study
The study is delimited to the factors affecting auditor’s choice in Nigeria. The study will be focused on the companies registered with corporate affairs commissions (CAC) in Delta State. The data for the study will be limited to the directors/Shareholders, audit committee of the companies and audit firm.
1.9 Limitation of the Study
Companies use auditor’s report as a vehicle to highlight the financial position of their companies hence the helping the company to have a high stake for investors to invest in the business of the company thereby revealing the growth rate. However, the lack of standardized auditing reporting information in Nigeria amongst some auditors has been largely attributed to revealing the true financial position of the company’s performances across the country
hence some companies in spite of auditors positive report still goes bankrupt.
Further, a limiting factor of this study is that annual reports for the estimated sample size consists of only companies that are listed on the floor of the Nigeria Stock Exchange
(NSE) whose annual reports are published and made available to the general public CHAPTER TWO
You either get what you want or your money back. T&C Apply
You can find more project topics easily, just search
SIMILAR ACCOUNTING FINAL YEAR PROJECT RESEARCH TOPICS
1. THE IMPACT OF GLOBALIZATION ON THE ECONOMIC GROWTH AND DEVELOPMENT OF DEVELOPING ECONOMIES: THE NIGERIAN EXPERIENCE» vi ABSTRACT This research project studied the impact of globalization on the economic growth and development of Nigeria and other developing economies...Continue Reading »
» CHAPTER ONE INTRODUCTION 1.1 Background of the Study For a long time now Nigeria have been witnessing a down turn in her development efforts. This pri...Continue Reading »
3. INVENTORY CONTROL AS AN EFFECTIVE TOOL FOR COST CONTROL IN AN ORGANISATION (A CASE STUDY OF CADBURY NIGERIA PLC).» ABSTRACT Installation of underground pipes to network the water supply from the borehole to specific point that is soil lab and department main buildi...Continue Reading »
» ABSTRACT The purpose of this study is to examine the impact of Internal Audit on fraud detection and prevention with Power Holding Company of Nigeria ...Continue Reading »
» ASTRACT The main objective of this work is to analyse the determinants of book keeping practices of selected Small and Medium Enterprises in Zaria. Th...Continue Reading »
6. COMPARATIVE ANALYSIS OF ANTIMICROBIAL STRENGTH OF THREE MOST COMMON ANTIBIOTICS USED IN ENUGU (CASE STUDY OF ANTIBIOTICS DRUGS BROUGHT IN OBIAGU.)» INTRODUCTION 1.1 HISTORICAL BACK GROUND Antibiotics are chemicals when the chemical are put into the body; they stop the growth of kinds of germs. The...Continue Reading »
7. EVALUATION OF PREOPERATIVE NURSING INTERVENTION ON ANXIETY STATE AND POST OPERATIVE PAIN AMONG SURGICAL PATIENTS OF OBAFEMI AWOLOWO UNIVERSITY TEACHIN...» ABSTRACT Preoperative anxiety is a challenging concept in the preoperative care of patients and its incidence varies with different settings. The expe...Continue Reading »
8. THE INFLUENCE OF ACCOUNTANT IN THE IMPLEMENTATION OF BEST PRACTICE (ACCOUNTABILITY, PROBITY AND TRANSPARENCY)» CHAPTER ONE INTRODUCTION 1.1 BACKGROUND OF THE STUDY: Corruption and looting of public treasury is a major problem in the public sector accounting. Re...Continue Reading »
» ABSTRACTLucidly written and properly organized, this term paper/project work “THE EFFECT OF CORPORATE TAX ON THE PROFITABILITY OF BUSINESS ORGANISAT...Continue Reading »
» ABSTRACT The topic of this project work on budget and budgetary control as a means of measuring organizational effectiveness in banking industries.One...Continue Reading »