ROLE OF EXTERNAL AUDITORS ON FINANCIAL ACCOUNTABILITY OF MANAGERS IN NIGERIA ORGANIZATIONS
This study used the Lagos branch of the Union Bank of Nigeria PLC as a case study to empirically evaluate the impact of external auditors on managers' financial responsibility in Nigerian organisations.
Examining how external auditors affect the calibre of financial reports and how they affect deposit growth were the two main goals of this study. The Lagos branch of Union Bank of Nigeria PLC is the subject of the study, and contingency theory was employed as a framework.
The population of interest in this study is the staff of the Lagos branch of Union Bank of Nigeria PLC, and the research design employed is survey research. The sample size was 20 employees, and the cluster sampling method was used.
A questionnaire was utilised as the study's primary tool. Primary sources were used to gather the data. According to the data analysis, external auditors have contributed to ensuring the accuracy of financial reports, but their efforts have no bearing on the increase of deposits.
Following the findings, it was advised that the majority of organisations adopt the use of external auditors and that these individuals carry out their responsibilities effectively. The study comes to the conclusion that having external auditors on staff improves an organization's financial responsibility.
Key words: Union Bank of Nigeria PLC, organisation, external auditors, financial responsibility.
1.1 BACKGROUND OF THE RESEARCH
The hiring of an accountant to conduct a periodic audit of the organization's financial accounts is mandated by law or policy in many organisations. An audit report that identifies flaws in the organization's financial systems is qualified or warned about by auditors.
Academic scholars and accounting professionals are very interested in the economic value of an audit opinion to users of financial statements, especially at a time when auditing is heavily regulated and scrutinised by the public. DeFond and Francis (2005); Francis (2004).
The majority of bank management is independent of the owners (Principal-Agency Theory). Stakeholders need validation or assurance from an outside party known as the external auditor since they may be sceptical of what the management may offer to them as a report on the organization's performance because they are not involved in the day-to-day activities of the business.
The quality of the audit and the integrity of the auditor determine the value and dependability of the bank's audited financial statements. The auditor's report, which provides crucial details for stakeholders concerning the accuracy of the financial statements as well as some hints about the performance of the banks,
is one of the indicators of audit quality. Although audit quality is hard to gauge, Chen et al. (2005) found that the auditor's willingness to offer qualified opinions frequently gives some indicator of audit quality.
An independent external auditor conducts an audit of the financial statements of a business, governmental entity, other legal entity, or organisation in line with particular laws or regulations. Most organisations' main goals are long-term survival and financial success.
In order to guarantee an organization's financial responsibility, external audits is essential. Accountability refers to the process of holding a person or organisation accountable for carrying out a particular task.
It is reasonable to anticipate that external auditors will serve as a means of promoting accountability given their significance to organisational success. It has been suggested that the connection between accountability and external auditors has a role in accomplishing organisational objectives.
Therefore, the purpose of this study is to evaluate how external auditors affect managers' financial responsibility in Nigerian organisations, using the Lagos branch of Union Bank of Nigeria PLC as a case study.
1.2 STATEMENT OF THE problem
The goal of every organisation is accountability. Functions of external auditing are thought to be strong tools that could improve company performance. The sensitive nature of banks, particularly in Nigeria, has increased demand for reports from external auditing firms.
Nearly eighty percent (80%) of Nigeria's first generation banks failed in the early 1990s. In Nigeria, external auditors' assistance is necessary to guarantee organisational accountability.
The overall role of external auditing in areas of fraud prevention has been the subject of numerous research, but few, if any, studies have focused on the role of external auditors in ensuring that managers in Nigerian organisations are held financially accountable.
In light of this, the researcher took Union Bank of Nigeria PLC into consideration when examining the impact external auditors have on managers' financial accountability in Nigerian organisations.
1.3. OBJECTIVES OF THE STUDY
The purpose of this study was to evaluate the impact of external auditors on managers' financial responsibility in Nigerian organisations using the Union Bank of Nigeria PLC, Lagos branch as a case study. The precise goals are to:
Analyse how external auditors affect the financial reporting quality.
Analyse how external auditors affect the increase of deposits.
1.4 RESEARCH QUESTIONS
The following research questions will serve as a guide for this study:
What effect do outside auditors have on the accuracy of financial reports?
How much do external auditors affect the increase of deposits?
1.5 RESEARCH HYPOTHESES
The following premise serves as the study's compass:
H0: There is no discernible connection between the calibre of financial reporting and external auditors.
H0: There is no appreciable connection between deposit growth and external auditors.
1.6. SIGNIFICANCE OF THE RESEARCH
The importance of accountability in organisations cannot be overstated because it ensures growth. Organisations in Nigeria will be able to evaluate the external auditor's framework and determine whether it needs to be updated and modified thanks to the study.
This study is being conducted empirically to determine the impact external auditors have on managers' financial accountability in Nigerian organisations.
Due to the fact that it will offer policy suggestions to the many Nigerian stakeholders taking appropriate steps in the banking industry for quick capacity expansion, this study will be of the utmost relevance to investors, the government, and the researchers.
Recent changes in the banking sector have had an impact on the sector and will require new evidence for research on the usefulness of external auditing as a tool for guaranteeing accountability. It will add to the body of knowledge already available on the subject. This investigation will be helpful to;
The Academic Community: The study will be useful to academics because it will serve as a foundation for future research and a source for their written work.
Government: This study will make banking industry developments known to the government. The creation and application of policies based on these findings would guarantee the area's development.
Investors: This study will also be helpful to investors, particularly those who may be interested in research, as it will help them make judgements about their own investments.
1.6. SCOPE OF THE STUDY
The goal of this study is to analyse how external auditors affect managers' financial accountability in Nigerian organisations, with a focus on Union Bank of Nigeria PLC in 2020.
1.7 OPERATIONAL DEFINITION OF TERMS
The terms listed below have operational definitions.
Accountability is the quality or act of being responsible.
A person or thing's role is the responsibility they take on or the part they perform in a certain circumstance.
A person who performs an audit of a company's
, a government agency's, or an organization's financial statements in accordance with specific laws or standards and who is not affiliated with the subject of the audit is an external auditor.
Organisation: A group of people working together for a common goal, such as an institution or association.
1.9. ORGANIZATION OF THE STUDY
There are five chapters in this research project. The background of the study, the statement of the problem, the research questions, the research hypotheses, the aims of the investigation, the significance of the study, the scope and restrictions of the study, and ultimately the organisation of the study are all included in the first chapter, which is the introduction.
The literature review, which is covered in Chapter 2, includes conceptual literature as well as theoretical literature, empirical literature, and theoretical framework. The research methodology is covered in detail in Chapter 3,
including the research design, sample size, sampling procedure, data collection method, data analysis instrument, and validity/reliability of the instrument.
In chapter four, data are presented, analysed, and conclusions are discussed. The summary, conclusion, and recommendations are presented in Chapter 5.