COOPERATE GOVERNANCE AND FRAUD MANAGEMENT, THE ROLE OF EXTERNAL AUDITOR PUBLIC QUOTED COMPANY IN NIGERIA

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND TO THE STUDY

In our society where the business culture has been overridden in recent times with fraudulent practices penetrated by management and employees, the lack of clear understanding of the duties of an auditor in relation to fraud detection has often led to unjustifiable criticisms of his role. Auditors are known to be competent, honest and independent professionals who express unbiased opinion on the truth and fairness of the financial statement as presented by management to members of the company. The accounting profession has over the years built a reputation, which encourages others to rely upon the opinions auditors express. If these opinions are unclear or even unreliable, serious consequences may and indeed have resulted.

That an auditor has the responsibility for the prevention, detection and reporting of fraud, other 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 et al 1997). This debate has been especially highlighted by the collapse of both small and big corporations across the globe.

There seems presently to be a misconception that auditors’ duties are largely the preventing, detecting and reporting of fraud, for example, Idris (2009). The aim of this paper is to identify financial report users’ perceptions of the extent of fraud in Nigeria, and to determine their perceptions of the auditor’s responsibilities in detecting fraud and the performance of related audit procedures. The paper also aims to ascertain whether the report users’ perceptions of auditors’ responsibilities on fraud are consistent with those of the auditing profession as expressed in auditing standards in Nigeria.

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