TABLE OF CONTENTS
Title page: i
Table of contents: vi
List of tables: viii
CHAPTER ONE – INTRODUCTION
1.1 Background to the study: 1
1.2 Statement of the problem: 5
1.3 Objectives of the study: 6
1.4 Research Questions: 7
1.5 Research Hypotheses: 7
1.6 Significance of the study: 8
1.7 Scope of the study: 9
1.8 Limitations of study: 9
1.9 Definition of term: 10
CHAPTER TWO – LITERATURE REVIEW
2.0 Introduction: 12
2.1 Conceptual framework: 12
2.1.1 Auditors’ responsibilities in fraud detection: 15
2.1.2 Auditors’ responsibilities in fraud prevention: 17
2.1.3 Auditors’ responsibilities in fraud remediation: 20
2.2 Empirical Review: 24
2.3 Theoretical Framework: 28
2.3.1 Contingency Theory: 28
CHAPTER THREE – RESEARCH METHODOLOGY
3.1 Introduction: 30
3.2 Research Design: 30
3.3 Sources of Data Collection: 30
3.4 Tools for Data Collection: 31
3.5 Population of the study: 32
3.6 Sample and Sampling Techniques: 32
3.7 Instrumentations: 33
3.8 Reliability and Validity of the Data and Test Instruments: 34
3.9 Data Analysis Technique: 35
4.0 DATA PRESENTATION AND ANALYSIS OF RESULTS 36
4.1 Presentation of Data: 36
4.2 Analysis of Data: 36
4.3 Test of Hypotheses: 36
CHAPTER FIVE – SUMMARY OF FINDINGS, CONCLUSIONS
5.1 Introduction: 51
5.2 Summary of Findings: 51
5.3 Conclusion: 51
5.4 Recommendations: 52
5.5 Area for further Research: 53
- Background to the study
Fraud is the International distortion of financial statements or other records by a person (internal or external) to the organizational which is carried out to conceal the misappropriation of assets or otherwise for gain “(Adeniji 2004 and institute of chartered accountant Nigeria – ICAN 2006).
However, auditors have a significant role to play in the detection and prevention of fraud because they are not only agents of shareholders but their access to internal and external information makes them efficient monitor (Dyck, Morse & Zingales, 2008).The existence and in fact, the high incidence of fraud in company brings to mind the question of competence, skills, due care, honesty, and integrity of auditors in company or business enterprise, qualities are expected to be displayed by an auditor in every time in every circumstances (Olofin, 2005 & Agbaje, 2007).
Lorsase (2004) notes that when fraud occurs in work place, the question asked is “where were accountants and auditors? That an auditor has the responsibility for the prevention, detection, and reporting of fraud, and illegal acts and errors is one of the most controversial issues in auditing, and has been one of the most frequently debated areas amongst auditors, politicians, media, regulators and the public (Gay & Roger, 2002) However, there seems to be misconception that auditors duties are largely the preventing, detecting and reporting of fraud (Idris, 2009).
The internal audit unit is vested with the power of independent checks, in order to access compliance with established rules and regulations of the company (Okoya, 2002).Despite the fact that audit exist in various company with internal control system in place, but the act of financial crime still continues e.g. fraud, irregularities and even breaches of other control and no any strong measures being taken to prevent such occurrence.
Auditors are primarily concerned about fraud as it relates to misstatement in the financial statement (Bells &Carcello, 2000). So, auditing has a greater impact in the control of fraud and financial irregularities in companies that make effective use of their auditing system .The study tends to identify financial report users’ perceptions of the extent of fraud in company and to determine their perceptions of the auditor’s responsibilities.
This chapter reviews related literature under the following sub-headings:
2.1 Conceptual Framework
Concept of Fraud
According to Adeniji (2004) and ICAN (2006), Fraud is an intentional act by one or more individuals among management, employees or third parties, which results in a misrepresentation of financial statements. Fraud can also be seen as the truth for the purpose of deception/manipulation to the financial detriment of an individual or an organization which also includes embezzlement, theft or any attempt to steal or unlawfully obtain, misuse or harm the asset of the organization, (Adeduro, 1998 and Bostley and Drover 1972). Fraud has increased considerably over the recent years and professionals believe this trend is likely to continue.
According to Brink and Witt (1982), fraud is an ever present threat to the effective utilization of resources and it will always be an important concern of management. ISA 240 ‘The Auditor’s Responsibilities to consider Fraud in an Audit of Financial Statement (Revised)’ refers to fraud as ‘’an intentional act by one or more individuals among management, those charged with governance, employees or third parties involving the use of deception to obtain an unjust or illegal advantage’’. Aderibigbe and Dada (2007) defined fraud as a deliberate deceit planned and executed with the intent to deprive of whether the perpetrator benefits from his/her actions.
Weirich and Reinstein (2000 and Cited in Allyne& Howard 2005), define fraud as “international deception, cheating and stealing’’. Some common types of fraud include creating fictitious creditors, ‘’ghosts’’ on the payroll, falsifying cash sales, undeclared stock, making unauthorized ‘’write-offs’’, and claiming excessive or never-incurred expenses. Pollick (2006) regards fraud as a ‘’deliberate misrepresentation, which causes one to suffer damages, usually monetary losses’’.
Albrecht et al (1995 cited in Allyne & Howard, 2005) classified fraud into employee embezzlement, management fraud, investment scams, vendor fraud, customer fraud, and miscellaneous fraud. Fraud also involves complicated financial transactions conducted by white collar criminals, business professionals with specialized knowledge and criminal intent (Pollick 2006).