Effective Tax Management

Topics: Audit, Financial audit, Auditing Pages: 8 (1787 words) Published: June 18, 2013




MATRIC NO.:P/HD/10/3610072




SUPERVISOR:Dr. S. F. Akinbuli

1. Background to the Study

Who would invest in a company without reliable financial statements? Integrity is the hallmark of the accounting profession and stakeholders rely on their work product.

For a long time, there has been controversy over the role of the auditor with respect to the detection of fraud. There are different perceptions to the auditor’s duty regarding fraud.

In today’s technological age, fraud has become very complicated, and increasingly difficult to detect, especially when it is collusive in nature and committed by top management who are capable of concealing it. Consequently, auditors have argued that the detection of fraud should not be their responsibility rather the auditor sees his duty as the independent examination of, and expression of opinion on the financial statements of an enterprise by an appointed auditor in pursuance of that appointment and compliance with any relevant statutory obligation. However, the public including many business communities tend to see an auditor’s duty in terms of the detection and prevention of fraud.

Although, the most misunderstood and hence maligned aspect of the accounting functions is auditing as it is thought to be a fraud-preventing mechanism, and it produces a measure of the quality of health of corporate entities, the economic and social dislocations which the fore closure of corporate concern has caused and is exerting great negative pressures on the goodwill of the whole profession as the dividing line between the different areas of specialization in the discipline is now blurred. A little wonder, that the pages of the newspapers are daily filled with diverse views that tend to cast aspersions on the hard-earned credibility and depth of technical knowledge of professional auditors.

Even in market places, the question is being asked as to where the auditors were, during the mismanaging and plundering of the terminally distressed banks in the country now under liquidation by the Government. In fact some have ignorantly called for the arrest and prosecution of the auditor of the failed banks and other financial institutions, because the view is rife in many quarters that the auditors do not report everything he sees during an audit exercise. These are legitimate developments in dynamic environment. Thus, given the magnitude of pecuniary losses associated with the spate of insolvency of enterprises whose financial statements were certified to have presented a true and fair view in both the developing countries and developed countries the complaints of the investing public have become inevitable protests which have manifested in litigations. While it can be argued that the society has become litigious as a result of improved literacy and consciousness levels, what best explains the trend is the gradual loss of faith in the audit system based on an unfulfilled societal expectation which is founded on the wrong premises that audit exercises do not only give rise to financial statements, but are synonymous with fraud-detection and prevention, the feeling is that an audit exercise that does not detect fraud is not worth its salt and should be viewed with disdain, in fact whistle blowing is viewed as the hall mark of auditors.

2. Statement of the Problem

By the nature of his job, the work of an auditor is subjective to various books of account and sometimes conflicting with related regulations such as the Companies Acts, Memorandum and Article of Association, other corporate governance and professional code of ethics. The numerous regulatory bodies have made it impossible for the nature,...
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