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This audit report reassures management that it is carrying out its stewardship and accountability responsibilities. It allows the organization’s owners, for example, the shareholders of a firm, to engage with management competence and determine whether or not to explain the scope of their investment in such organisation.

Thus, the audit report provides a strong indication to investors, advising them on investment decisions in their lending decisions to creditors and organisations, and it provides tax authorities with an initial level of confidence in the tax returns filed by organisations.

This study seeks to investigate the level of confidence displayed by members of Nigerian society, as well as the implications of such psychological attitude towards audit findings. This study will be divided into five chapters.

The first chapter includes an introduction, a summary of the research problem, the aims of the research, its importance, scope, the necessary hypotheses, and restrictions. The second chapter will be a thorough examination of the audit and audit report of financial statements.

The third chapter is about research methodologies. The fourth chapter demonstrates the process of data collecting and analysis of the information acquired, while the fifth chapter contains findings, recommendations, and a conclusion to the topic.



The transfer of funds from surplus to deficit units of the economy is a major function of the banking system. This is accomplished through deposit mobilisation and subsequent lending to consumers in the form of loans and advances.

Most money deposit banks in Nigeria today cannot say unequivocally that they have been unaffected by the problem of loans certainty; it is a way of life in these turbulent times of investing that nearly all investors are confronted with problem loans.

The type of loan used by commercial banks in each particular situation is determined by the borrower’s goal and the conditions of the transaction. The crucial point to remember is that regardless of the form investment lending takes, a debt is formed between the bank and the clients.

The bank becomes both the creditor and the debtor. Loan facility reviews cover all stages of service, from the request stage through repayment and when the facilities fail.

The goal of this research is to establish the prerequisite for lending, warning signals, management of problem loans, and debt recovery tactics, as well as the impact of the credit and debt collection department on recovering such debt.

It appears that the assessment of debt recovery structures should be linked to the review of credit facility analytical tools towards restructuring, developing a feasible game plan or pay out plan.

The following chapters in this project will look at problem debt prevention and various ways for reclaiming credit facilities.

The volume of good loans and advances heavily influences the profitability of commercial banks. As a result, profitable commercial banks must reduce or eliminate the quantity of bad debts in their lending portfolio. It is important to highlight that all funds held in poor and questionable accounts are not eligible for further lending.

Furthermore, with the implementation of CBN prudential requirements, nonperforming loans and advances with outstanding interest are not shown in commercial bank earnings,

but are charged to interest suspense and charged revenue when realised. Bad debt is viewed as a negative contributor to commercial bank profitability.

So, unless it is inevitable, banks should be expected to be the most significant in providing for bad debts.

However, opponents are quick to point out that the high bad or doubtful debt statistics in commercial banks’ final accounts could be realistic. It is also claimed that banks might exploit such a clause to avoid paying taxes.

It also demonstrates the inefficiency of lending bankers in the management of loanable funds; yet, it is believed that this provision demonstrates the level of convenience provided by the bank officer system. Mr. Akintunde Asaw, president of the Wema Bank Association of Shareholders, voiced these sentiments.

He said that some Wema Bank officials acted outside of their jurisdiction and on time by improperly authorising loans. As a result, he granted the bank until 1990 to recover all illegal loans while promising those involved in “regular disbursement” of shareholder funds that they would be penalised.

Most commercial banks in Nigeria have provisions for bad and doubtful debts of varied amounts in their final accounts, while the funds of the level of such provisions is dropping in the case of some commercial banks and increasing in the case of others.

This was reflected in the Chairman of the Board of Directors of such commercial banks’ comments. Provision for bad and doubtful debts at the Bank of the North was N6.8 million in 1993, N6.7 million in 1994, and N213.5 million in 1995. This demonstrates an increasing tendency from 1992 to 1995, which may or may not be related to the President of Wema Bank’s shareholder complaint.

The country’s banks’ provisions for bad and doubtful debts have demanded an in-depth investigation into the basic issues causing such losses.

As a result, the primary goal of this research is to discover the causes of bad and questionable debts, as well as the measures used by banks to reduce or eliminate such loans.

We will be able to establish the efficacy of the control otherwise in the banks lending system by doing so. As a result, relevant recommendations for improvement might be given.


It is critical to clarify as clearly as possible some of the current loan and debt collection issues, how they have hampered the smooth operations of financial institutions, and therefore the banking sector’s chances of accomplishing its objectives.

The idea is to recognise the enormity and critical roles that the investment firm performs as a lubricant to the economy; as a sector, it is the economic pillar.

As a result of these critical roles, the researcher has taken the time to conduct an in-depth investigation into the impact of the credit and debt recovery department in an investment company,

with the goal of identifying not only the problem loan, but also the possible causes of this loan becoming a bad debt, and possibly making recommendations that will aid in the resolution of these issues.


The study’s major goal was to look into the debt recovery practises of Nigerian money deposit institutions. The following are the study’s specific objectives:

To learn about the debt recovery tactics used by Nigerian money deposit banks.
To identify debt recovery difficulties faced by Nigerian money deposit banks.
To investigate the relationship between bank profitability and loan and asset returns.
Recommend methods for reducing bad debts in money deposit banks.


The following research questions will lead the study in order to fulfil the study’s stated objectives:

What debt collection strategies can money deposit institutions in Nigeria use?
What are the debt recovery issues in Nigerian money deposit banks?
What is the link between bank profitability and loan and asset returns?
What approaches can be used to reduce bad debts in money deposit banks?


The relevance of this study, like with all research work, is as follows:

a) To supply new materials for future research in this field.

b) To broaden and deepen the researcher’s understanding.

c) Educate and enlighten the public on the importance of the credit and debt recovery department in achieving the organization’s goals.

d) To assist the investment business in identifying some of its pressing loan problems so that it can take efforts to recover such loans and achieve its overall goals.


The first hypothesis

Ho: bank customers rarely transfer borrowed monies to purposes other than those for which the loan was sought.

Hello, bank clients frequently transfer borrowed funds to purposes other than those for which the loan was sought.

The second hypothesis

Ho: CBN credit rules have little effect on bank liquidity and profitability.

Hi: CBN loan guidelines affect bank liquidity and profitability.


Due to the nature of its activities, particularly the department of Credit and Debt recovery division, the researcher has decided to limit the area of coverage to three (3) Money deposit banks in Warri Delta State, considering that they perform similar activities in the head office, other branches in the industries.

Covering the entire investment business will be tough, if not impossible, because it will necessitate travel in order to have access to materials for information and other logistics, which may stymie the researcher’s efforts.


The researcher has several constraints when performing research. The following are the major constraints encountered as a result of the research:

i) Financial restraints, the researcher’s movement for this purpose has been constrained due to the current economic difficulty exacerbated by the increase in gasoline price.

ii) Time limits; academic work for the semester took up the majority of the time needed for research, leaving only a limited amount of time for research.

iii) Secret facts and crucial information are withheld from the research, limiting the amount of information required.

iv) Time constraints, rescheduling scheduled appointments, receiving phone calls, and unscheduled meetings.


The terminologies used in this study are clarified below for the readers’ clarity and understanding.

SECURITY – A cash or fixed asset commitment by clients to secure a loan.

DOCUMENTATION – This includes any written and endorsed paperwork that pertain to the lending transaction in some form.

DEMAND NOTICE – This is a reminder to the Client that a specific amount is required for payback and that he should come forward and meet his commitment.

STATUTORY notification – This is a legal notification delivered to the Client stating that he has a specified amount of time (typically three months) to pay back his loan.

FULL BACK ON GUARANTEE – This condition arises when the loan is guaranteed by a third party.

LEASES – A contract between a lessor (the owner) and a lessee (the user) for the hiring of a specific asset chosen by the lessee from a manufacturer or vendor of such assets.

LOAN – Is a facility provided through loan accounts for medium and long-term investment products, with amortisation occurring at predetermined intervals or in full at the conclusion of an agreed time.

SYNDICATE – Is essentially a group of banks or lending institutions lending to one borrower.

CREDIT – Money given to a consumer to be paid back later.

CREDIT MANAGEMENT – The arrangement for the repayment of credit facilities.

DEBT – Credit obtained by a borrower from a prime lender, which could be a formal or informal financial institution.

BAD DEBT – Is your debt unrecoverable?

FINANCIAL INSTITUTION – This term refers to the banking sector and other investment firms in this study.

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