THE AUDITOR AS AN INDISPENSABLE PART OF A PROFITABLE BUSINESS ORGANIZATION

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ABSTRACT

This appears to the business organization that the auditors are the water dog of the company.  To have a profitable business organization, the shareholder should appoint the auditors to act as check and balances for the purpose of giving them a true and fair view of their company at any given time.  Also the auditors are expected to carry out a valid audit work to have effective in internal control.  To have a profitable business organization, the external auditor who is qualified and appointed by the company to audit the financial statement of the company and state opinion on the true and fair view account.   The auditor’s duties related to the achievement of profitable business organization by reliable account records and such records are considered reliable when they are prepared according to the accounting standard and the necessary details are provided etc.  Without the auditors there will be fraud in the management and this will result to unwarranted loss from the management.  Fraud is the main thing to be concerned with the growth and development of financial situations of a business organization.

 

TABLE OF CONTENT

CHAPTER ONE

• Introduction

1.1     Background of the study

• Statement of the problem
• Objectives of the study
• Significance of study
• Scope and limitation of the study
• Definition of terms

 

CHAPTER TWO

• Literature Review

2.1     Definition of Auditing Standard

2.2     How Auditor duties related to the achievements of a profitable business organization

2.3     Relationship between auditing and accounting

2.4     Internal control

2.5     External control

• Auditing procedures

 

CHAPTER THREE

• Summary of Findings, Conclusion and Recommendation
• Discussion of findings
• Conclusion
• Recommendation

Bibliography

CHAPTER ONE

 

• INTRODUCTION

1.1     BACKGROUND OF THE STUDY

The auditor is regarded as the eyes and ears of the records of the organization in order to ensure that the financial statement are a reflection of the organization as appeared in these records since these records are a summary of the transactions for a specific period.  The auditor also goes behind these records to the source documents in order to confirm the accuracy, completeness and validity of the second transactions.

Summarily, therefore, the auditor, shareholder and director have a tripartite relationship in the company.  The shareholders are the owners of the company, the directors or management are employed by the shareholder to manage the business. In turn the shareholders appoint the auditors to act as check and balances for the purpose of giving them a true and fair view of their company at any given time.

The managers, fulfill their accountability to the shareholders and other interested parties by preparing financial statement. It may be in form of balance sheet, profits and loss account source and application of fund statement (VAS) and historical financial summary.

The duty of preparing the financial statement is placed on the directors while that of reporting is on the auditors who is responsible to the shareholders.  All these are aimed towards achieving profit in the business organization.

 

• STATEMENT OF THE PROBLEM:

For the purpose of protecting the shareholders interest, investors and to make sure that there is no room for mismanagement and improprieties of funds, the auditors is appointed to act as eye and ear or watch dogs towards these activities.  The auditor is an accounting expert that is independence of the company’s management.

The problem now is, if the auditor is not responsible for not uncovering fraud act, such duties belong to the management and are only a subsidiary duty to him.  How does he give assurance to the various users of final accounts that the financial statement represent a true and fair view of the company.  If the auditor is not relevant in uncovering fraud, he is probably not relevant to the company at all.  Public expectation is that auditor should and must discover fraud.

 

• OBJECTIVE OF THE STUDY:

The objective of this study is therefore:

• To examine the statutory principles of audit in relation to fraud.