THE ROLE OF EXTERNAL AUDITORS IN THE DETECTION OF FRAUD IN NIGERIAN SECONDARY SCHOOLS (A STUDY OF GIRLS SECONDARY SCHOOL EMENE, ENUGU)
A RESEARCH PROJECT
SUBMITTED TO
DEPARTMENT OF ACCOUNTANCY
SCHOOL OF BUSINESS
MAURID POLYTECHNIC, MBIASO, NSIT IBOM L. G. A
AKWA IBOM STATE
IN PARTIAL FULFILLMENT ON THE REQUIRMENTS FOR THE AWARD OF HIGHER NATIONAL DIPLOMA (HND) IN ACCOUNTANCY
APRIL, 2023.
ABSTRACT
This study was aimed at appraising the role of external auditors in detection of fraud in Nigerian Secondary Schools (A Study of Girls Secondary School Emene, Enugu). There has been significant attempt by the researcher to examine whether the various roles carried out by external auditors are being introduced and adopted as required by the guiding legislative. The result of this study will educate external auditors in the secondary school level of education. The researcher made use of both primary and secondary data, structured questionnaires were the methods used for the collection of primary data, and secondary data were also collected from textbook and various research materials. The research population comprised of 200 staff, auditors and account officers of Girls Secondary School, Emene, Enugu.
The sample of 113 was determined with Taro Yamani formular and 115 was collated from questionnaires distributed and therefore was used for analysis of data. Based on the data collected and analyzed some findings were made as follows: That external auditors plays meaning role towards the protection of the school funds from fraudsters, that the external auditing performed in Girls Secondary School Emene is adequate in revealing fraud, that there are challenges facing external auditors which hinder their performance in Girls Secondary School Emene, Enugu, that the external auditors perform well in detecting fraud and fraudulent practices in Girls secondary school, Emene, Enugu among others. The researcher concluded that auditing helps to reduce incorrectness, weakness, fraud and errors through improvement in internal control system and recommended that government intervention has a direct influence in the educational sector accounts and that Nigeria government should as much as possible reduce in advance of considering policy projection of gross earnings and savings of school funds and allocations.
The Role of External Auditors in the Detection of Fraud in Nigerian Secondary Schools
TABLE OF CONTENTS
Title Page
Approval Page
Dedication
Acknowledgement
Abstract
Table of Content
CHAPTER ONE: INTRODUCTION
1.1 Background of the Study
1.2 Statement of the Problem
1.3 Aim/Purpose/Objectives of the Study
1.4 Significance of the Study
1.5 Scope of the Study
1.6 Research Questions
1.7 Hypotheses
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.0 Conceptual Framework
2.2 Theoretical Framework
2.3 Empirical Framework
2.4 Summary of Literature Review
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Research Design
3.2 Area of the Study
3.3 Population of the Study
3.4 Sample and Sampling Techniques
3.5 Instrument for Data Collection
3.6 Validity of Instrument
3.7 Reliability of Instrument
3.8 Method of Data Collection
3.9 Data Analysis
CHAPTER FOUR: PRESENTATION AND ANALYSIS OF DATA
4.1 Results
4.2 Data Analysis and Presentation of Data
CHAPTER FIVE: DISCUSSION OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
5.1 Discussion
5.2 Conclusion
5.3 Implication of the Study
5.4 Recommendations
5.5 Limitations of the Study
5.6 Suggestions for Further Studies
References
Appendix
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Fraud is an act of deception intended for personal gain or loss to another party. Fraud as a crime embraces all the multifarious means which a human ingenuity can device which are resorted to by an individual to get an advantage over another by false representation. This means that fraud can be perpetrated in the course of personal relationship in religious organisations, social clubs etc. Seetharaman, Sentivelmurugan & Periyananyagam (2004) Fraud causes tremendous loss to the business world and creates morale problems in the work place. When we are stripped of our money by fraudulent means the consequences can be devastating. Fraud losses are serious problems to organizations that need to be managed, controlled and monitored.
The Association of Certified Fraud Examination (ACFE) identifies three main categories of fraud that affects organisations; the first of these is asset misappropriations, which involves the theft or misuse of an organizations asset. Examples include theft of inventory or cash, false invoicing, accounts receivable fraud and payroll fraud. The second category of fraud is fraudulent financial statements which are the most costly with median loss of $2million among the 99 financial misstatements included in the 2008 ACFE study. The final of the three fraud categories and most common is corruption occurring in 27 percent of all fraud cases (AICPA, 2009). Corruption includes activities such as the use of bribes or acceptance of ‘’Kickbacks” improper use of confidential information, conflicts of interest and collusive tendering.
Fraud has been cited as Nigeria‘s biggest single problem both in public and private sectors. It has not only snapped public trust in government but it has cost the government and people of Nigeria billions, due to corrupt management of public companies unrealized public projects and deteriorated infrastructure caused by looted maintenance budget. It is against this background that the researcher intends to analyze the issue of fraud and strategies to manage it.
Adeyemi and Uadiale (2011) opined that the existing duties and responsibilities of auditors are inadequate and are not clearly defined. Also, the expectation of the people on the issues of the auditors’ responsibilities in detecting and curtailing fraudulent act are high. As a result, a significant number of people or respondents believed that auditors’ responsibilities should be widened.
The term audit is derived from the Latin word “audited” which means to hear the origin of audit dates from ancient times when the land owners allowed tenants, farmers to work on their land while the land owners themselves did not become involved in the business of farming the land owners relied upon an given by the tenants. At this period the word audit is described as: According to Eneh (2014) auditing is defined as critical and independent examination of an entry financial statement and underline records in a given period in such a manner that the statement and accounts are carefully and diligently examined and there is a confirmation of structure compliant with relevant statutes law and policies.
Fraud is an enrichment attained by an individual wrongfully which is detrimental to individual(s) or organization(s). Fraud is either internal (employees, management) or external (customers or non-customers).
In the past ten years, depositors have lost billions of naira (millions of dollars) to fraudsters. Fraud has eaten deep into the fabric of the global financial system and financial intermediation is worst hit. Fraud and fraudulent practices is on the rise. Stakeholders are experiencing increasing losses through fraud while the cost is borne by government. According to Yishau (2013), bank fraud worth N28 billion was recorded in 2011, N4.071 billion was lost to fraudsters in 2010, N7.5 billion in 2009, N17.5 billion in 2008, and N2.9billion in 2007.
In recent years, there considered debate over the extent of the statutory auditor or external auditors liability to the third parties for failing to give enough attention to audit work. It is obvious that failure to debate a major fraud may lead o a loss for the client or some third party to whom a duty of care is owned. The important question is how far what is the extent of auditor’s responsibility? The auditing profession had always held tight to the opinion that the primary responsibility for both prevention, detention of fraud and other regulates for both and rest with management.
The auditor’s duties so not require him specially to search for fraud unless required by status on the specific terms of his engagement in accordance with normal practice, audit will be planned primarily to enable us to express professional opinion and auditor merely obliged plan his work and design his procedure so that he has a reasonable chance of detecting irregularities and illegalness which might impair the truth and fairness or the true and fair view of a given financial statement of an organize and fair view of a given financial statement of an organization.
1.2 Statement of the Problem
It is a test to this research work to investigate on the positive effects and influences the auditors most emphatically the external auditors have in an organization like the educational sector taking the secondary as a case study.
Auditing has the basic means to control the financial system of organization still present fraudulent financial statement, financial reports to the secondary school and certainty there has been persistence gradient practice in the secondary school which at the end gets the secondary school mismanaged and thus lead to misappropriation of fund.
However, it could be questioned how could this situation persist while auditing process which had been in existence? In carrying out this research work, some problems have attracted special attention. It is well known that one of the problems facing the educational sector especially secondary schools in Nigeria is mismanagement of fund or inappropriate accounting for receipt and payments. It is based on this premise that the research is carried out to investigate the role of External Auditors in the Detection of Fraud in Nigeria Secondary School with emphasis on Girls Secondary School Emene, Enugu.
The Impact of External Auditors in the Detection of Fraud in Nigerian Secondary Schools
1.3 Aim/Purpose/Objectives of the Study
The broad aim and purpose of the study is to critically examine the role of external auditors in detection of fraud in Nigerian Secondary Schools. The specific objectives are:
- To determine whether external auditors play any meaningful role towards the detection and prevention of fraud in Girls Secondary School Emene.
- To ascertain whether the external Auditing performed in Girls Secondary School Emene is inadequate in revealing fraud.
- To find out if there are challenges facing external auditors which hinder their performance in the study area.
- To determine whether the external auditors perform well in detecting fraud and fraudulent practices in Girls secondary school Emene, Enugu.
1.4 Significance of the Study
This study will be of great relevance to external auditors, accounting students/accountants, employers of labour/bankers, the school management and future researchers.
To the external auditor, it will enable him/her to improve on his/her techniques of detecting and preventing fraud.
It will expose them to their roles as external auditors who are charged with fraud detection and prevention using key techniques.
To accounting students/accountants, it helps them to come to know and get more acquainted with the role of external auditors as practicing accountants and already professional accountants. This in effect will act as motivating factors for them to put their interest in the study of the course.
For employers of labour /bankers, it will help them to get more familiar with the roles of external auditors as it was coherently and will be subsequently discussed in the next section.
On the part of the school management as well as the school administrators, the outcome of this study can help them discover and understand the meaningful role external auditors play especially in Girls Secondary School Emene, Enugu and at the same time, make it as a law for all the auditors in the school to uphold its standard. To future researchers, this research work will also help them to carry out a research that is similar to this, as it could serve as a reference point or as a material.
1.5 Scope of the Study
The study was centered on the Role of External Auditors in the Detection of Fraud in Nigerian Secondary School (A Study of Girls Secondary School Emene, Enugu).
The Duties of External Auditors in the Detection of Fraud in Nigerian Secondary Schools
1.6 Research Questions
The following research questions guided the study.
- Do external auditors play any meaningful role towards the detection and prevention of fraud in the Girls Secondary School Emene?
- Is the external auditing performed in Girls Secondary School Emene inadequate in revealing fraud?
- Are there challenges facing external auditors which hinder their performance in Girls Secondary School Emene, Enugu?
- Does the external auditors perform well in detecting fraud and fraudulent practices in Girls secondary school, Emene, Enugu?
1.7 Research Hypotheses
The following hypotheses are formulated for the study.
Hypothesis One
H0: External auditors do not play meaningful role towards the detection and prevention of fraud in the case organization.
H1: External auditors play meaningful roles towards the detection and prevention of fraud in the case organization.
Hypothesis Two
H0: The external auditing performed in Girls Secondary School Emene is not inadequate in revealing fraud.
H2: The external auditing performed in Girls Secondary School Emene is adequate in revealing fraud.
Hypothesis Three
H0: There are no challenges facing external auditors which hinder their performance in Girls Secondary School Emene, Enugu.
H3: There are challenges facing external auditors which hinder their performance in Girls Secondary School Emene, Enugu.
Hypothesis Four
H0: The external auditors do not perform well in detecting fraud and fraudulent practices in Girls secondary school, Emene, Enugu.
H4: The external auditors perform well in detecting fraud and fraudulent practices in Girls Secondary school, Emene, Enugu.
Lawson Peter – Chief Editor in Projectvilla Nigeria. A writer and academic researcher.