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The Challenges External Auditors Experience During Auditing Nigerian Companies

The Challenges External Auditors Experience During Auditing Nigerian Companies

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Reference ID: PS-21-TM


This research work titled "The Challenges External Auditors Experience During Auditing Nigerian Companies" is dedicated to God for his enabling grace and to all computer enthusiasts who help to make life a pleasant experience.



I owe my indebtedness to my Supervisor (Name of your Supervisor), the Head of Department (Name of your HOD), the Lecturers in the department of Accountancy / Accounting, Book Authors and Profound Scholars of existing/related research material for your moral support that facilitated the successful completion of my (Tertiary Institution level). I am grateful to God Almighty and my parent for their financial support in my career. I really appreciate you all for everything, Thank you very much.


The Challenges External Auditors Experience During Auditing Nigerian Companies




  • 1.0 Introduction
  • 1.1 Background of the Study
  • 1.2 Statement of the Problems
  • 1.3 Objectives of the Study
  • 1.4 Research Questions
  • 1.5 Statement of Hypothesis Hypothesis
  • 1.6 Significance of the Study
  • 1.7 The Scope of the Study
  • 1.8 Limitations of the Study
  • 1.9 Definition of Terms


  • 2.0 Literature Review
  • 2.1 Introduction
  • 2.2 Developing of Auditing
  • 2.3 Types of Auditing
  • 2.4 Qualification of Auditors
  • 2.5 Appointment of Auditors
  • 2.6 Removal of Auditors and Redress Available to them
  • 2.7 The Problems of External Auditors in Nigeria Companies


  • 3.0 Research Design And Methodology
  • 3.1 Introduction
  • 3.2 Research Design
  • 3.3 Sources/Method Of Data Collection
  • 3.4 Population And Sample Size
  • 3.5 Sampling Techniques
  • 3.6 Validity And Reliability Of Measuring Instrument
  • 3.7 Method Of Data Analysis


  • 4.0 Presentation And Analysis Of Data
  • 4.1 Introduction
  • 4.2 Presentation Of Data
  • 4.3 Analysis Of Data
  • 4.4 Testing Of Hypothesis
  • 4.4 Interpretation Of Result


  • 5.0 Summary of Findings, Recommendations and Conclusion
  • 5.1 Introduction
  • 5.2 Summary of Findings
  • 5.3 Conclusion
  • 5.4 Recommendations




This work is designed to examine the problem encountered by external auditors in auditing Nigerian companies, there causes, and there effect on the work of auditors and also the possible solution to eradicate these problems.

Chapter one was designed to give an overview of the research work. This chapter of the project dealt with the background of the study, objectives of the study, research questions, the significance of the study, scope and limitations of the study were also discussed, including the definitions of technical terms.

Chapter two was a review of previous literature and studies. In this chapter, previous literature on theoretical issues of auditing, types of auditing, qualification, appointment, removal and redress available to auditors were discussed. The chapter also covered that problem of external auditors in auditing Nigerian companies.

In chapter three, the procedures or methodology and design adopted in carrying out the research were described. It also highlighted the sources of data and data collection technique, and location of data.

Chapter four explained the actual presentation and analysis of data obtained. The result of the research finding which confirmed that external auditors have problems in auditing Nigerian companies, were presented in tabular form and analyzed.

In chapter five, the summary of the finding, recommendations and conclusion were covered. One of the recommendations was that auditors should help to update the knowledge of the client staff by organizing training and programmes for them. In fact, this work has been interesting one and will be of great help in its audience.


The Challenges External Auditors Experience During Auditing Nigerian Companies


1.0 Introduction

External auditor is an audit professional who performs an audit in accordance with specific law or rules on the financial statement of a company government entity, either legal entity or organization, and who is independent of the entity being audited.

There are problems which external auditor faces such as lack of visible evidence inn the computerized system, the use of unqualified accounting staff by the client, lack of proper keeping of books and records. The auditor also encounters problem in the areas of information supply; problem in the Nigerian business circle is fraud.

1.1 Background Of The Study

The significance of auditing in the accounting profession has been since the inception of business activities from a sole proprietorship to large public enterprises. According to experts, it is a very vital instrument of financial reporting. It forms the bed rock of placing reliance on report presented by the steward of companies on the state of affairs of the companies. The various interest groups in the business organization are to be assured that their interest are being protected. The owners of the business (shareholders) are concerned to be guaranteed that the management is performing its duties effectively.

Their ultimate aim is to receive as much returns as possible from the capital which they invested in the business. The government on their own part is interested in knowing whether the profit and loss shown in the financial statement is correctly prepared for the purpose of tax assessment.

Auditors reports are used by the company's advisers (the legal, financial analysts) to give advice to the management. The legal adviser interprets the legal implication of some information disclosed in the financial statement. The financial analyst also uses the result shown by the auditors to advice the clients on the best source of fund to embark on, where to invest and how much to invest in each alternative.

The auditors are always seen as the watchdog of the entire economy by representing the interest of all these various groups. Their peculiar position therefore calls for a conducive atmosphere, but it is unfortunate that most external auditor encounter serious problem in the performance of their duties. This research work therefore tends to investigate into the nature and causes of these problem and also proper solution to them.

1.2 Statement Of Problems

There are various problems facing external auditor in Nigeria. Auditor sometimes find it very difficult fo audit Nigerian companies as a result of expansion of business activities illiteracy, moral laxity, lack of adequate technical skill and training.

This work studies these problems, their causes, effects and remedies.

1.3 Objectives Of The Study

The objectives of embarking on this study include:

  1. To ascertain the nature of the problem which the external auditors face while auditing Nigerian companies.
  2. To identify the cause of the problems
  3. To ascertain the effects of these problems on the work of the auditors
  4. To recommend measures that could enable external auditors to overcome the problem identified
  5. To recommend measures to be taken to overcome those problem.

1.4 Research Question

  • Can the problem which the external auditors face while auditing Nigerian companies be checked?
  • Is there any cause of the problems faced by external auditors?
  • Is there any effects of these problems on the work of the auditors?
  • Can there be any measures that could enable external auditors to overcome the problem identified?

1.5 Statement of Hypothesis

Ho: external auditors do not have problems in auditing Nigerian companies

Hi: external auditors have problems in auditing Nigerian companies

1.6 Significance of the Study

This study will enable the new or intending auditors to be aware of the problems they will encounter in the course of performing their duties and be able to guard against them.

It will also enable government to know how it can play its role in creating a better and conducive atmosphere for auditor who has been engaged to perform any duty in the Nigerian companies.

Again, it is expected that this study will consider contributions of directors in Nigerian companies toward a better auditing atmosphere in their various companies. Furthermore, this study will form a good reference material for any other student who may wish to embark on related topic in future.

1.7 The Scope of the Study

The study will not exceed problems encountered by external auditors in Nigerian companies. It will consider the effects of these problems on the work of the auditors and proffer possible solution to the problem.

1.8 Limitation Of The Study

There are many constraint facing the researcher during her study in this field such constraints include:

Time Factor: The time that is made available for carrying out the study is limited. Most often, it is interrupted by other academic programme and circular work.

Shortage Of Finance: There is an insufficient fund to meet up with financial demand required. As a result some research procedures, methods, techniques and process intended for this study will not be applied because of the cost involvement.

Scarcity Of Local Data: Most of the text book that deal with the problem under review are foreign texts and are no longer current.

Non Available Problem: In spite of several calls, some officers who the researcher wants to interview cannot be reached at because of their office schedule.

1.9 Definition Of Terms

Auditors: An auditor is a person who examines the book of accounts and vouchers of an organization in such a manner as to enable him express an opinion as to whether the accounts show a true and fair view of the state of affairs of the organization at a particular period.

Internal Auditor: This is a person employed in an organization whose responsibility is to review the operations and record of the business of the organization and to keep management informed of its operation on a more continuous basis.

Client: The company or business organization audited by the external auditors.

Permanent File: the permanent file contains information of permanent nature which are of continuing relevance to the auditor as regards to the operation and financial statements of the company being audited.

Current File: The current file (working file) contains documents and working papers which relate to the current years audit.System

File: A system file contains details of an organizations system of accounting and internal control i.e. the system of the organization documentation both manual and computer system.

Internal Check: Internal check is defined as the allocation of authority and duty in such a manner that afford check on the routine transactions of day to day work by means of work of one person being complementary to that of another person.

Auditors Report: This report shall state whether in the auditors opinion the annual account has been properly prepared in accordance with the companies and allied matter decree and whether the account shows a true and affair view of the company's state of affairs.


2.0 Literature Review

2.1 Introduction

This chapter focuses on the review of related literature. A literature review includes the current knowledge as well as theoretical and methodological contributions to a particular topic. It documents the state of the art with respect to the topic you are writing. It surveys the literature in the topic selected. In this research work the literature review includes the …

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