ABSTRACT
The project examines the link between corporate governance and auditors report in Nigeria. The study main objective is for an appointed auditor to express a professional opinion on the financial position of an enterprise as contained in the financial statement prepared by the management so that any person reading or using them can have faith in them. The primary source of data collection was used in gathering data from respondents.
A structured questionnaire was designed by the researcher which was used to capture the relationship between corporate governance and auditors. It concluded that management of companies need to improve their accounting practices and ensure timely and adequate disclosure of information regarding financial position and performance, as this will in turn improve the public’s understanding of such companies and in the long run attract profitable investment.
Finally, it was recommended that the board of directors should be able to check the activities of the internal and external auditors in other for them not to present a fraudulent financial statement that will reduce the image of the companies.
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
The term “Corporate Government” has been identified to mean different things to different people. Magdi and Margret (2002) stress that corporate governance is about ensuring that the business is managed well and investors receive fair return. OECD (1999) provides of more encompassing definition of corporate governance. It defines corporate governance as the system by which business corporations are directed and controlled. The corporate structure specifies the distribution of rights and responsibilities among different participants in the corporation such as, the board, manager’s shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affair.
By doing this, it also provides the structure through which the company’s objectives and monitoring performances. This definition is in line with that of Akinsulire (2010) financial scandals round the world and recent collapse of major corporate instructions in Nigeria recently having shaken investor’s forth in the capital market and the efficacy of existing corporate governance practices in promoting transparency and ‘accountability. This has brought to therefore once again the need for the practices of good corporate governance.Effective corporate governance reduces “control rights” shareholders and creditors confer on managers, increasing the probability that managers invest in positive net present value projects (Shleifer & Vishny 1997; p.78).
Depending on the jurisdiction, different bodies may have responsibility of corporate governance. Board of Directors, Audit committee and other supervisory committees. International standards on Auditing (ISA) 260, requires the auditors to determine those persons charged with corporate governance. The most direct benefit of corporate governance is to shareholders. However, the ultimate benefit is the more efficient allocation of capital to its most productive uses.Where organizations are left to themselves, it can easily deteriorate as a result of individuals seeking for their own interest, therefore not for such organization to be audited. In other worlds no governance system, no matter how well, designed will fully prevent greedy and dishonest people from putting their personal interest ahead of the interest of the company they manage. Many steps can be taken to improve corporate governance and thereby reduce opportunities for accounting fraud; this is where the role of auditing comes into play.Auditing reports is a report by the auditors appointed to audit the accounts of companies the auditors of a limited company are required to form an opinion as to whether the annual accounts of the company give is true and fair view and of its state of affair at the end of the year or period. (Oxford Dictionary of Accounting, (2005).