AUDITORS CONTRIBUTION TOWARDS EFFECTIVE MANAGEMENT OF BUSINESS ORGANISATION IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1    BACKGROUND TO THE STUDY

Auditing, the financial statement of companies and organization has been a long time practice.

Auditing the account of limited liability companies of qualified independent auditors for which provisions are made in the companies and allied matters Decree 1990 previously the companies act 1966 will be the main area of focus in this research.

In section 345 (2) of the companies and allied matter act 1990. It is provided that the auditor’s report shall be read before the company in a general meeting and opened to the inspection of any member of the company.

The auditors report on the financial statement will show his opinion as to the true and fair view of the financial statement as prepared and presented by the directors and the assertion of section 359  (1) of the company and allied matter Act 1990.

In order for an auditor to perform his duties diligent as required by law, his appointment, qualification, duties, power remuneration and removal were provided for in the companies and Allied Matter Act of 1990. According to Odion A. Olawani A.O. one of the qualities of an auditor is to be independent so as to remove any element of bias in his opinion which may occur in the process of performing his duties.

This research tends to examine auditors independent and the extent of reliance placed on his report. The study will look into the relationship that exist between the auditor and his clients and the general benefit of auditing books of account of both corporated and incorporated companies.

1.2    STATEMENT OF PROBLEMS

          Most organizations and individuals employ the services of external auditors in order to comply with the legal requirement of the act. They may be unaware of the usefulness of the auditor to the organization, as a result of this ignorant; the auditor is bound to encounter some inherent problems in carrying out his duties. To put an end to this problem, the auditor on his own view needs extra care in forming an independent opinion which can be wholly relied upon by the financial users.

1.3    RESEARCH QUESTIONS

1.           Should auditors contribute towards the growths of an organization?

2.           Does auditors have a role to play in the internal control system of an organization?

3.           Should auditors contribute to the effective management of an organization?

4.           Do auditors contribute to the economic development of a country?

5.           Are auditors changes with the responsibility of detecting fraud?

1.4    OBJECTIVES OF THE STUDY

The study of the auditors role in the business environment is of relevance to sole proprietors as well as share holders and management alike. A society where the importance of the auditor is not cherished by those he serves, the auditor may not achieve his goal of expressing an independent opinions on the financial statement of his client because of insufficient information supplied by the client.

The objective of this study therefore is to appraise the contribution of external auditor to the stability or viability of both corporate and incorporated companies on which account he forms an opinions.

The second objective of this study therefore is to evaluate the importance of an external auditor towards the growth of an organization

 The third objective of the study therefore is to evaluate the effectiveness of an external auditor in an organization.

1.5    SCOPE OF THE STUDY

          The auditor and how he perform his role in business environment will be reviewed and evaluated. The role played by the Nigerian Bottling Company Benin City to the society will be looked at questionnaires will be given to some staffs and employees of the firm.

1.6    SIGNIFICANCE OF THE STUDY

          At the end of the study, we shall get to know the need and importance of an external auditor to business organization and its financial statement.

1.7    HYPOTHESIS

1.           HO: Auditors do not contribute towards the growth of an organization.

HI: Auditors contribute towards the growth of an organization.

2.           HO: An auditor should not contribute towards an effective internal control system within an organization

HI: An auditor should contribute towards an effective internal control system within an organization

3.           HO: An auditor should not contribute towards an effective management of an organization.

HI: An auditor should contribute towards an effective management of an organization.

4.           HO: An auditor should not contribute towards the economic development of a action or country.

HI: An auditor should contribute towards the economic development of a nation or country.

1.8    LIMITATIONS OF THE STUDY

The study despite its vigour is faced with several limitations which vary in different stages that hindered the easy and duly completion of the study.

1.           Briefly, the time period of nature is rather too short by some officers to keep their appointment.

2.           The researcher was faced with serious financial difficulties which serves as a constraint to meet as many interviews as wanted.

3.           Some staffs of organizations are not willing to let the information within the organization go out.

4.           Another limitation faced by the study is the prompt completion and return of the questionnaire

5.           Withdrawal of essential information that are relevant to the study from the researcher.

6.           Another limitation faced on the study is the prompt completion and return of the questionnaire. The tight schedule of the employee does not allow that to be done in time.

1.9    DEFINITION OF TERMS

          The following terms defined below are used in the research work  

AUDIT

This is a word derived from Latin which means “he hears” audit is a process carried out by a qualified person called auditor whereby the account of business organization including charities, trust and professional firms are subjected to be scrutinized to ensure accuracy, truth and fairness (Grand Bernard).

Audit standard defined it “as independent examination of opinion on account of companies as presented by management to a dully appointed auditor, in pursuance of that appointment and in keeping with all relevant legislation and other requirement whether in his opinion the account shows a true and fair view and has been in accordance with all relevant laws.

FINANCIAL STATEMENT

The term financial statement covers the balance sheet income statement or profit or loss account, statement of changes and explanatory materials such that has been Identified as being part of financial statement.

INCORPORATED/REGISTERED COMPANIES

          These are companies incorporated under companies Act 1968 and as mended by companies and allies matter Act 1990 (2004).

AUDIT REPORT

          This is a statement made by the auditor expressing his opinion as to the true and fair view of financial statement whether or not it complies with the relevant act or not.

INTERNAL CONTROL

          This is defined by auditing standard as the whole system of control, financial and other wise established by management in order to carry on the business of the enterprise in an orderly and efficient manner and ensure adherence to management policies to safeguard the asset secure as possible the completeness and accuracy of the records.  

CHAPTER TWO

LITERATURE REVIEW

INTRODUCTION

2.0    ORGANIZATION OF WORK

          This research work is organized into five chapters. Chapter one deals with the introduction of research work, statement of problem, research question, objectives of study, significance of study, hypothesis, limitation of study and definition of terms.

          Chapter two will be dealing on literature review. In this chapter, the literature and thoughts of previous writers revolving around the auditors, including his independent principles and practices of auditing generally. The sources of the review include text books and internet. Chapter three will highlight the research methodology, testing sources of data, sampling procedures, questionnaire circulation process and problems encountered in data collection process and the limitation. While chapter four will be on the analysis of data collection. Lastly chapter five will consist of the findings, recommendation, conclusion and summary.

2.1    INSIGHT AND HISTORY OF THE FIRM UNDER STUDY

The first glass of coca-cola was first served in Jacobs pharmacy in May 8 1886. The new soft drink produced from syrup by a pharmacist Dr. John Pemberton in a bass put in his back yard sold for five cents. One hundred and twenty two years later more than a billion serving of coca-cola company products are consumed every day. The wal qual coca-cola formula simply known as “merchandise IX” is an Atlanta Bank vault. The stylish “Coca-cola” script was coined by one Frank M. Robinson, a business partner to Dr. John Pemberton study shows that the RED AND WHITE coca-cola 1090 is among the most admired and best known trademarks recognised by more than 90% of the world’s population.

          Coca-cola today is not just the most widely available  consumes product sold in nearly over 200 countries in the world, but also the most recognized in the world.

The multi-national company came into Nigeria in 1953 with the 1st plant at APAPA. Currency, NBC has about is plants in Nigeria, with the most current at Abuja (commissioned on 4th September, 2007) which boast of one of the best facility in Africa.

Benin plant came on stream on May 24th 2001, it has about seven depots namely: Auchi, Ekpoma, Sapele, Okene, Ughelli, Warri and urban depots, the plant was established in 1999, commissioned in 2001 precisely May 24th by the vice president of the federation republic of Nigeria. The plant has in the last two years progressed and developed and it is becoming a unique example to other NBC plant.

Every action taken has continually be guided by policies and principles with focus of the use of the best management practices to deliver desired result.

Plant Manager

IT

Production

Quality

Finance

HR

Supply Chain

DEPARTMENT

MISSION OF NIGERIA BOTTLING COMPANY BENIN CITY TO BE COME THE BEST BOTTLING PLANT IN AFRICA

2.2    AUDITORS INDEPENDENCE

According to John (19690 Auditors independence is fundamental to the reliability of auditors reports. Those reports would not be credible and investors and creditors would have little confidence in them, if auditors were not independent in both fact and appearance.

To be credible, an auditor opinion must be based on  an objective and distinctive, rested assessment of whether the financial statement are presented fairly in conformity with generally accepted accounting principles (GAAP) as expressed by council of the America Institute of Certified Public Accountant (AICPA) in a statement adopted in 1947 independence, both historical and philosophical, is the foundation of the public accounting profession and upon its maintenance depends the profession’s strength and its stature.

In an important chronicle of the accounting profession John L. Carey described independence, as a state of mind and a matter of character. In the early part of the twentieth century, the concepts of integrity, honesty and objectivity were so familiar and ingrained that it was not considered necessary to naive formal independence rules. The profession felt that written rules merely would have stated the obvious.

In 1932, AICPA council considered prohibition against auditors serving as officers or directors of clients and rejected them as unnecessary. However, the proposal indicated the first concern over a need to preserve the appearance of maintaining objectivity as  well as being independent. After the Securities Act of 1933 was enacted, the federal trade commission issued regulations starting that it would not consider auditors to be independent if they served as officers or directors or had any direct or indirect interest in public audit client. The concern was that those clients relation might be subconsciously impair the auditors objectivity. This in effect introduced the appearance as well as t he fact of independence as an independence concept. Carey later noted no one would accuse an auditor who owned a few shares in a client company of losing integrity, “but what would other people think, what would the public think” in 1941, the AICPA adopted similar prohibitions application to all client not just public companies only John (1969).

2.3    BRIEF HISTORY OF INTERNAL AUDITING

          According to Picket (2006), the internal audit profession evolved steady with the progress of management since after world war two. It is conceptually similar in many ways to financial auditing by public account. Internal auditing is derived from management consulting and public accounting profession with the implementation in the Unites States of Sarbanes Oney act of 2002 the profession growth accelerate as many internal auditors posses he skill required to help companies meets their requirement of the law. According to Odion Lawani (2004), “Process in establishing interest audit department are as follows:

1.           Educational qualification

2.           Responsibility

3.           Protection

4.           Comfort etc.

QUALITIES OF AN INTERNAL CONTROL ARE

1.           Diplomacy and tactfulness

2.           Objectivity

3.           Confidentiality

4.           Integrity

2.4    THE ROLES OF EXTERNAL AUDITORS AND THEIR RESPONSIBILITY IN AN ORGANIZATION

According to John (1969), an external auditor is an independent service provider whose impact can provide significant influences on the organization being audited and its stakeholders, even though they are not part of the organization they play a key role in developing an internal controls system. Auditors can comment on weaknesses in the accounting record and control system reviewed in the audit. They provides a statistical analysis on the clarity and effectiveness of the accounting policies put in place by the company. They also help management audit. They can give advice to management through recommendation in t heir audit not or discussion. Constructive suggestion can improve the procedure for documentation more efficiently ethical or fairly presentable. 

The role or process of an external audit can vary from country to country due to the significant developments of FASB merging with IASB perhaps soon enough, experts from around the world can follow another work without discrepancies until that time, auditors must have knowledge of the particular countries audit procedures as well as the business they are working with: the primary purpose of an audit is to review and verify the company’s financial statement of form an opinion about the company’s financial statement they may give a qualified or unqualified advice, opinion or even a disclaimer.

2.5    DEVELOPING THE PLAN OF ENGAGEMENT

          According, to Picket (2006), Internal auditing standards require the development of a plan of audit engagement (project) based on risk assessment, updated at least annually. The input of senior manager and the board is typically include in these process. Many departments update their plan of engagement throughout the year as risk or organization priority charges. This effort help to ensure that the audit activity is aligned with the organizational objectives by answering two key questions: First, what goal is the organization trying to accomplish in the upcoming period? Secondly, how can the internal audit department assist the organization in achieving these goals? Internal auditors often conduct a series of interview of senior managers to identify potential engagement. Charges in people, process, or system often generate audit project ideals various document are review such as strategic plans, financial report consulting studies etc furthermore, the result of prior audit and resolution of open issues are considered. The preliminary plan of engagement is documented and prioritized. Audit resources and expertise are then considered and a final plan is presented to senior management and the audit committee.

2.6    COMPLIANCE OF OPERATIONAL AUDIT

According to Area (1997), “A compliance audit assures that the company’s activities comply with relevant laws and regulations. An operational audit explores the effectiveness and efficiency of the firms activities seeking to reduce the risk faced by the specific firm. In performing an operational audit, performance standard may include a variety of criteria other than monetary measures such as the percentage of late deliveries or idle and labour time. It is the responsibility of the internal audit to determine appropriately measure on the basis of experience and insight into the integrated function of the company’s activities.

2.7    CO-OPERATIVE BETWEEN INTERNAL AND EXTERNAL AUDITOR

According to Odion, Lawani (2004), there is no doubt that the external auditor has a wide  range of experience. This is true because he deals with many organizations, and so he is exposed to their diverse problems emanating from the operations of the business. He could advance useful suggestions to the internal auditor to enable him improve on his work. However, the internal auditor is better placed in rending assistance to the external auditor since he is well acquainted with the activities of the business.

REFERENCES

Jacob’s Pharmacy (1886). The First Glass Served of Coca Cola Soft Drink

John L. Carey (1969). Auditors Independence Fundamentals to the reliability of Auditors Report.

Frank M. Robinson. Discovery of Rod and White Coca-cola Logo, the most admired and debt Trade Mark Recognized

Picket K.H. Spencer. Audit Planning

Odion, Lawani (2004). Process of Establishing Internal Audit Department 

Areas (1997). Exploration of Effective and Efficient Firm Activity.

CHAPTER THREE: RESEARCH METHOD AND DESIGN

3.1    INTRODUCTION

This chapter is focused on research and design methodology that would help the auditor to perform their services in organization and contribute their own quarter to the society at large.

Information necessary to address the study were selected, and analysed and summarized to arrive at the conclusion and re commendation that was made. This information was from both the p rimary and the secondary sources, the summarized information was then interpreted and conclusion was drawn by bringing the substance of a set related findings to light.

Recommendations were made as a guide to the auditors services and this will make the public to appreciate the contrition of the auditors to the society.

3.2    RESEARCH DESIGN

          This chapter is concerned with the research design used and how it would be apply, it also include the population and sampling technique.

The sources of data collection and data analysis procedures will also be stated and interpret existing condition on the area of interest.

3.3    DESCRIPTION OF POPULATION OF THE STUDY

The description of the population of this study is on all the members of the organization i.e. all members of the Nigerian bottling company Benin City are learned with the exceptions on the cleaners and the gate man. There are about 255 workers of the Nigerian Bottling Company Benin-City where 3 are managers 2 assistant managers 1 personnel manager 5  cleaners 2 gate men 5 security men and the remain are staffs of the organization.

3.4    SAMPLING SIZE

The sampling size was gotten from four selected bottling companies in Nigeria to actually assess the true ability of the independent auditor and now their duties are been carried out by them and also how the account audited by them lead to a general opinion about the organization to both shareholders and non shareholders of the organization.

3.5    SAMPLING TECHNIQUES

The information in this research work was obtained through random sampling. Due to time constraint it was not convenient enough for all members of staff to give or leave what they were doing to give audience, hence some members of the organisation under studied were asked some question at random and their response formed part of the information in this project work.

Through this sampling techniques, auditors can specify the sampling risk that they want in their sample result and then compute a sample size that controls sampling risk at the desired level (Whittington & Pany, 2001; Arens, Elder, & Beasley, 2006).

3.6    SOURCES OF DATA COLLECTIONS

In gathering the data required for this research work, the researcher made use of two major sources of information.

Data that were generated from the use of questionnaire and terminal interview which constitute the primary sources of data for the research work are as follows:

Questionnaires

These are papers administered to some persons to get information about something. Questionnaires were administered to some staff of the Nigerian Bottling Company Plc, Benin City, they were design to find out the respondent opinion about the independent auditors.

Personal Interview

          This is a one-on-one interview. Apart from questionnaire, personal interview was also conducted with some staff of the company with a view to knowing their notion about the independent auditors contribution to the economic development as could necessitate the auditors services and their relationship with client.

Secondary Sources

          In other to be more comprehensive, the researcher made use of data collected from textbooks journals, partners report and firms domestic report of various professional accounting bodies.

          The researcher also made use of open ended questionnaire, the respondent is given freedom to decide the detail and the extent of his answers to enable the respondent give adequate presentation of his particulars.

3.7    METHODS OF DATA PRESENTATION

          The data which has been collected will be presented for analytical, purpose by the use of tabular presentation, this enable any person with see the table to be inform about what the research is taking about and what is trying to pass across to the users of the information.

3.8    METHODS OF DATA ANALYSIS

          The data collected will be process manually because the researcher will find it better and more easy by the way of self help approach, percentages and decimals will be an analytical tools that will be employed, also tables will be used.

REFERENCES

Whittington & Pany, 2001 A Technique that help auditor to identify risk

Arens, Elder, & Bealey, 2006. A Technique That hep Auditors to Identify Risk is Advance

CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND HYPOTHESIS TESTING

4.1    INTRODUCTION

          This chapter is mainly concerned with presentation analysis and interpretations of data obtained from the research questionnaires and personal interviews administrated to the members of the Nigerian Bottling Company, Benin City.

4.2    PRESENTATION OF DATA

          The general proposition of this study is that auditing of company is financial statement and book of daunts enhance the overall performance of the company, and that internal auditor contribute immensely to the general social economies development of the business environment. In an attempt to examine the above general proposition, the following specific research question were formulated and directed to the firm under study (Odion and Lawani, 2006).

1.           Should an independent auditor contribute towards the growth of an organization?

2.           Does independent auditors have a role to play in the internal control system of an organization?

3.           Should independent auditors contribute to the effective management of an organization?

4.           Does independent auditors contribute to the economy development of the country?

5.           Are independent auditors charged with the responsibility of detecting fraud?

Questionnaire

          The numbers of questionnaire designed and administered to the staff of Nigerian Bottling Company Benin City are presented below.    

Research Question 1

Should auditors contribute towards the growth of an organization?

Table 1

Option	No of respondent	Percentage
Yes	55	77
No	16	23
Total	70	100

          From the analysis above 77% of the total respondent gave a “Yes” answer while 23% “No” answer. Hence this means that auditors are necessary in an unincorporated organization.

Research Question 2

Does auditors have a role to play in the internal control system of an organization?

Table 2

Option	No of respondent	Percentage
Yes	50	71
No	20	29
Total	70	100

          For the analysis above 71% of total respondent “Yes” while 29% gave “NO”. This simply means that auditors contribute to the efficient and effective management of an organization.

Research Question 3

Should independent auditor contribute to the growth of effective management of an organization?

Table 3

Option	No of respondent	Percentage
Yes	45	64
No	35	36
Total	70	100

         

          This simply imply that auditors can contribute to the growth and effective management of an organization.

Research Question 4

Does independent auditor contribute to the economy development of a country?

Table 4

Option	No of respondent	Percentage
Yes	37	53
No	33	47
Total	70	100

         

          From the analysis above   % respondent “Yes” while   % respondent “No” meaning that independent auditor c an contribute to the growth and development of the country.

Research Question 5

Are independent auditors charged with the responsibilities of detecting fraud?

Table 5

Option	No of respondent	Percentage
Yes	75
No	10
Total	85

          From the above answers, it therefore mean that independent auditor are not charge with the responsibilities of detecting fraud.

Research Question 6

Does the activities of the management any way affect the performance of the auditors duties?

Table 6

Option	No of respondent	Percentage
Yes	48	69
No	22	31
Total	70	100

          From the analysis above 69% responded “Yes” while 31% responded “No” meaning the activities of the management can affect the independent auditors.

Research Question 7

Are auditors report relied upon greatly by an organization?

Table 7

Option	No of respondent	Percentage
Yes	55	77
No	16	23
Total	70	100

Eighty-six percent (86%) of respondent gate a “Yes” answer meaning that auditor’s report are relied upon greatly by the organization.

Research Question 8

Does external auditors have a role to play in setting up an internal audit department in an organization?

Table 8

Option	No of respondent	Percentage
Yes	42	60
No	28	40
Total	70	100

          Forty-two responded “Yes” and 28 answered “No” meaning an external auditor can give help in settling up internal audit department but not statutorily responsible to do so.

Research Question 9

Are auditors objective in discharging of their duties?

Table 9

Option	No of respondent	Percentage
Yes	60	86
No	10	14
Total	70	100

          With the 86% respondent of “Yes” auditors are expected to be objective in the discharge of their duties.

Research Question 10

Is there any relationship between an external auditor and internal auditor?

Table 10

Option	No of respondent	Percentage
Yes	50	71
No	20	29
Total	70	100

          From the above table 71% answered “Yes” while 29% answered “No” this therefore mean that there are relationship between external and internal auditors.

Research Question 11

Is an internal auditor charged with the responsibility to set up an internal control measure within an organization?

Table 11

Option	No of respondent	Percentage
Yes	15	21
No	65	79
Total	70	100

          From the above table, it is shown that auditors are not charged with the responsibility of setting up an internal control measure in an organization as represented by    % of “No” answer.

Research Question 12

Should an auditor be held liable for the failure of an organization?

Table 12

Option	No of respondent	Percentage
Yes	5	7
No	65	93
Total	70	100

          Ninety three percentage (93%) respondent agreed that auditors should not be held reliable for the failure of an organization except he is responsible for the failure as represented by 7% respondents.

Research Question 13

Are auditors properly secured by their client?

Table 13

Option	No of respondent	Percentage
Yes	48	69
No	22	31
Total	70	100

          Sixty nine percent (69%) respondents gave a “Yes” answer to the question and 31% gave “No” answer. Hence, auditors are relatively secured by their client.

Research Question 14

Has the qualified privilege granted to auditors by the laws improved the performance of auditors?

Table 14

Option	No of respondent	Percentage
Yes	45	64
No	25	36
Total	70	100

          Forty five (45) respondents, responded “Yes” while twenty-five (25)  respondents gave a “No” answer. To an extent the qualified privilege granted to the auditors has improve their performance as illustrated by the table above.

Research Question 15

Are auditors meeting their responsibility to the public?

Table 15

Option	No of respondent	Percentage
Yes	60	87
No	10	14
Total	70	100

          Eighty-seven percent (87%) respondents gave a “Yes” answer meaning that the services of auditors are appreciated by the public.

Research Question 16

Should an auditor carry out audit work in the organization in which he is a shareholder?

Table 16

Option	No of respondent	Percentage
Yes	5	7
No	65	93
Total	70	100

          The analysis shows that an auditor should not carry out audit work in the organisation where he is an shareholder. This is represented by 93% “No” given by the respondent.

Research Question 17

Are external auditors more experienced than the internal auditors?

Table 17

Option	No of respondent	Percentage
Yes	60	86
No	10	14
Total	70	100

          External auditors are more experienced than internal auditors are represented by 86% respondent.

Research Question 18

Are auditors necessary in an unincorporated organisation?

Table 18

Option	No of respondent	Percentage
Yes	55	77
No	16	23
Total	70	100

          From the analysis above, 77% of the total respondents gave a “Yes” answer while 23% a “No” answer. Hence, this means that auditors are necessary in an unincorporated organisation.

Research Question 19

Should an auditor be condimental in the  discharge of his duties irrespective of what is involved?

Table 19

Option	No of respondent	Percentage
Yes	55	79
No	15	21
Total	70	100

          Seventy-nine percent (79%) of respondents responded “Yes” to the question against 21%. Hence, auditors should not be sentimental in the discharge of his duty.

Research Question 20

Is an external auditors charged with the responsibility to set up an internal control measure within an organisation?

Table 20

Option	No of respondent	Percentage
Yes	15	21
No	55	79
Total	70	100

          The auditor is not charged with the responsibility of setting up an internal control measure in an organisation as represented by 79% of “No” answer.

4.3    DATA ANALYSIS

          This analysis was carried out to serve as a supplement to the questionnaire that was already been administered this analysis was directed specifically to the managers of the Nigerian bottling company Benin-City other to get the correct information.

          The following fact where revealed from the analysis that was consulted.

1.           The interview revealed that as an auditor or and independent auditor in an organization, the report given by the is greatly relied upon the members of the organization, investors, shareholders and been individuals etc.

2.           It was gathered also that auditors are not to detect fraud in an organisation but in the cause of performing their duties that if they discover fraud, they must relate it to the managers of the organisation.

3.           It was also gather that an auditors should be condimental in the discharge of their duties irrespective of what is involve.

4.           It was also gathered that auditors try as much as possible to meet their responsibilities to the public.

5.           It was also gathered that the activities of them the managers affect the performance of auditor’s duties.

4.4    HYPOTHESIS TESTING

HO: Auditors do not contribute towards the growth of an organisation  

Auditors contribute towards the growth of an organisation

Question	Respondent		Total
	Yes	No
6	62	8	70
8	37	33	70
	99	41	140

Chi-square formula (X²)

fo = observed frequency

fe = expected frequency

= summation of the square of the difference between observe and expected frequency

Df = degree of freedom = (R-1)(C-1)

Where: R = Number of rows

          C = Number of columns

This chi-square (X²) at 95% confidence interval is employed to test the hypothesis level of significant which is 5%

Df = (R-1)(C-1)

   = (2-1)(2-1)

   = 1x1 = 1

Since the degree of freedom is 1 the critical value using the chi-square Table is = 3.84

TABLE 1: Chi-square table for hypothesis one (1)  

Cells	Fo	Fe	Fo-Fe
R1C1	62	49.5	12.5	3.16
R1C2	8	20.5	-12.5	7.62
R2C1	37	49.9	-12.5	3.16
R2C2	33	20.5	12.5	7.62
			X2	21.56

Decision: Since X² calculated value of 21.56 is greater than X² table value of 3.84, we accept alternative hypothesis (Hi) than auditors contribute towards the growth of an organization.

HYPOTHESIS TWO

HO: An auditor should not contribute towards an effective internal control system within an organisation?

HI: An auditor should contribute towards an effective internal control system within an organisation?

To test the hypothesis, question 7 and 10 were used

Question	Respondent		Total
	Yes	No
7	55	15	70
10	42	78	70
	97	43	140

Chi-square table for hypothesis two

Cells	Fo	Fe	Fo-Fe
R1C1	55	48.5	6.5	0.87
R1C2	15	21.5	-6.5	1.97
R2C1	42	48.5	-6.5	0.87
R2C2	28	21.5	6.5	1.96
			X2	5.68

Decision: Since X² calculated value of 5.68 is greater than table value of 3.84, we accept alternative hypothesis (Hi) that an auditor should contribute towards the effective internal control system in an organisation.

HYPOTHESIS THREE

HO: An auditor should not contribute towards an effective management of an organisation.

HI: An auditor should contribute towards an effective management of an organisation.

To test this hypothesis, question 2 and 4 were used.

Question	Respondent		Total
	Yes	No
2	50	20	70
4	48	22	70
	98	42	140

Chi-square table for hypothesis three

Cells	Fo	Fe	Fo-Fe
R1C1	50	49	1	0.020
R1C2	20	21	-1	0.048
R2C1	48	49	-1	0.020
R2C2	22	21	1	0.048
			X2	0.14

Decision: Since X² calculated value of 0.14 is less than the table value of 3.84, we will accept null hypothesis that auditors should not contribute towards the effective management of an organisation.

HYPOTHESIS FOUR

HO: An auditor should not contribute towards the economic development of a national/country.

HI: An auditor should contribute towards the economic development of a national/country.

          To test this hypothesis question and were used

Question	Respondent		Total
	Yes	No
8	37	33	70
18	55	15	70
	92	48	140

Chi-square table for hypothesis three

Cells	Fo	Fe	Fo-Fe
R1C1	37	46	-9	1.76
R1C2	33	24	9	3.38
R2C1	55	46	9	1.76
R2C2	15	24	-9	3.38
			X2	10.28

Decision: Since X² calculated value of 10.28 is greater than X² table value of 3.84 we accept alternative hypothesis (Hi) than an auditor should contribute toward the economic development of a nation country.

REFERENCE

Odion A.O., Lawani A.O. Hand Book on Auditing (Auditing the Company’s financial statement and book of vaunts enhances the overall performance of the company.

CHAPTER FIVE

FINDINGS CONCLUSION AND RECOMMENDATION

INTRODUCTION

The main focus of this chapter is on the auditions contribution towards the effective management of business organization. A case study of the Nigerian Bottling Company Benin City with specific reference to Areas (1997) auditor contribution to the organization and other business empowerment.

Consequently the last chapter of the study will be developed into research findings, conclusions and recommendation.

1.1    FINDINGS

          Most findings of this study are:

          Auditors are generally seen as a non-necessity in an unincorporated organization despite the benefit associated with the unincorporated organization with regards to partnership, most respondents feel that the partner act or deal is enough guide during the dissolution with respect to sales trade business. Since the business is one man owned, he is accountable to himself and even where he choose not to employ the available fund properly it then means that he is using what he has. This is from a layman’s perspective in that the sole aim of any business organization is to make profit and if this objective is not achieved why then taking the burden of carrying the business.

2.      Some companies especially the small ones still need the assistance of the auditors in preparing their financial statement. This practice may be different for the auditor in that the time taken to audit the account of a small company might have been spent in auditing a bigger company that is very expensive.

3.     From the information attain through the use of questionnaire, and personal interview fee change by the auditor for services rendered is seen to commensurate with the work done. On the part of the auditor, the fee charged is not only reasonable but at times a breakeven of the related expenses.

1.2    CONCLUSION

          From the research so far, i have been able to conclude that auditing the books of account of companies increases the efficiency of the company and also, auditors contribute immensely to the economic development of the business environment though these cannot be achieved without some problems which are easily dealt with by the company and allied matter decree 1990.

Finances and time limitation factor, the study was restricted to the Nigerian Bottling Company Benin City.

1.3    RECOMMENDATION

          The following recommendations have been made after taking into consideration the challenges that is surrounded with the Nigerian Bottling company Benin City.

1.           A standard for determining auditors fee should be laid down by the recognized accounting bodies in Nigeria in conjunction with government agencies to maintain uniformity among the practicing firms this becomes necessary since most client still believe that auditors charge more than they should.

2.           The recognized accounting bodies in Nigeria should intensifying their efforts in emphasising on the auditors contribution and role in the economy.

3.           The possible ways by which the auditors independence may be improved, cab be through appointment of auditor by government agencies and through legal prohibition of interest and personal relationship and financial interest. 

4.           In the situation where by the same auditor who prepares client account before auditing, should be so discourage alternatively one auditor can carry out the accounting duties and another should be engage in preparing the audited account so to improve the independent expression of an opinion.

5.           Auditors should be statutorily required to take insurance policy covering their personal safety and liabilities to third parties or the client he is reporting or working for.

6.           The auditors should enlighten companies and organization on the benefit and importance of an effective and functional internal control system.

RESEARCH SUMMARY

          This study has reviewed related literature and analyzed the data collected. Auditors contribution towards effective management in business organization in terms of effective development in business organization.

          However, it is my utmost belief that if this research work is given the required consideration, auditor’s contribution towards effective management in business will increase considerably. It is my candid opinion that the problems discovered in this study are peculiar to other multinational companies. Therefore this recommendation is to be considered by business community and all levels of government in the country.

REFERENCE

Arens ANIM, A. (1997) Auditors Contribution and Business Empowerment

DRAFT QUESTIONNAIRE TO STAFF OF NIGERIA BOTTLING COMPANY BENIN CITY

SECTION A

Name of interviewee:...................................................................................

Phone No...................................................

SECTION B

Please tick (    ) where appropriate

Example are auditors report relied upon greatly in the orgnizaton? Yes ( X )    No (   )

1.           Should auditors contribute towards the growth of an organization?

Yes  (    )    No (    )

2.           Does auditors have a role to play in the internal control system of an organization? Yes  (    )    No (    )

3.           Should independent auditor contribute to the growth of effective management of an organization? Yes  (    )    No (    )

4.           Does independent auditor contribute to the economy development of a country? Yes  (    )    No (    )

5.           Are independent auditors charged with the responsibilities of detecting fraud? Yes  (    )    No (    )

6.           Does the activities of the management any way affect the performance of the auditors duties? Yes  (    )    No (    )

7.           Are auditors report relied upon greatly by an organization? Yes  (    )    No (    )

8.           Does external auditors have a role to play in setting up an internal audit department in an organization? Yes  (    )    No (    )

9.           Are auditors objective in discharging of their duties?

10.       Is there any relationship between an external auditor and internal auditor?  Yes  (    )    No (    )

11.       Is an internal auditor charged with the responsibility to set up an internal control measure within an organization? Yes  (    )    No (    )

12.       Should an auditor be held liable for the failure of an organization?

13.       Are auditors properly secured by their client? Yes  (    )    No (    )

14.       Has the qualified privilege granted to auditors by the laws improved the performance of auditors? Yes  (    )    No (    )

15.       Are auditors meeting their responsibility to the public?

16.       Should an auditor carry out audit work in the organization in which he is a shareholder? Yes  (    )    No (    )

17.       Are external auditors more experienced than the internal auditors?

Yes  (    )    No (    )

18.       Are auditors necessary in an unincorporated organisation? Yes  (    )    No (    )

19.       Should an auditor be condimental in the discharge of his duties irrespective of what is involved? Yes  (    )    No (    )

20.       Is an external auditors charged with the responsibility to set up an internal control measure within an organisation? Yes  (    )    No (    )