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CHAPTER ONE
INTRODUCTION
The use of auditing had been in use since ancient times. Mesopotamian relics
pertaining to 3600- 3200 BC have been found with tiny marks, dots, ticks and
circles placed on sides of the figures. It indicates that those figures had been
checked. Ancient Egyptians got their financial transactions recorded by two
separate persons and another person was appointed for conducting their audit.
Greeks also used to appoint officials who checked the accounts of public officials
at the expiry of their term. Romans developed an effective system of financial
administration and there was a system of checks and counter-checks. Signs of
audit are also found in early Islamic history. A Muslim official, called Mubtasib
was appointed by the government in those days to oversee the functioning of the
trader’s in order to prevent from exploiting the consumers. He would also deal
with complaints of bribery and misappropriation of public funds. In the times of
Mughals as well, officials responsible for the accounts and audit of the state were
appointed (htt:bizcovering.com/accounting/evolution-of-auditing-from-ancient-
times).
The period 2000 through 2006 has been a very turbulent time for the
auditing profession, a period that witnessed numerous scandals and their
aftermath (Enron, WorldCom, Parmalat), strident calls for changes in the way the
profession is governed. Long held attitudes and customary practices have been
challenged and found to be deficient by the media, the investing public and those
charged the regulating financial reporting and auditing. Issues of auditor’s
independence the role of corporate governance, the responsibilities of
management, the appropriateness of consulting services and the overall
professional obligations of auditors have been discussed and debated by a broad
array of interested groups and individuals. The theme linking these debates has
often been ‘what is wrong with the auditing profession?’ As a result, this period as
probably resulted in more substantive changes to the auditing profession than
any other period in modern day business history.
On the other hand, management normally has a special interest in preparing
financial statements that report favorable results of operations and financial
position. (Jack.E and James H, 1994).
1. Find out the problems associated with independent auditors and financial
statements.
2. Assess the effectiveness of independent audit on financial statements.
3. Make recommendation.
1.4 RESEARCH HYPOTHESIS
The research will help the stakeholders and store holder to be able to
distinguish the role-play by both the auditor and the management in ensuring
accountability. Also by exploring the effectiveness of independent audit in
ensuring financial accountability, students gain an understanding of both the
auditing and accounting principles.
The significant of this study is to appreciate the role independent audit plays
in ensuring that companies present financial statements in accordance with the
generally accepted accounting principles. In addition, how it focuses
management’s attention on the strength and weaknesses of her internal control
system. This study will also help the auditors to plan and perform their audits with
due care. Again, this study is significant to the auditing profession in that it helps
them assess the degree to which Certified Public Accountants (CPA) adhere to the
established professional standards. Moreover, this study is important to the
government in that, it helps them identify the various means which the
independent auditors take to ensure that companies meet the statutory and legal
requirements, such paying their taxes when it is due.
The focal point of concern is not just the studying of Auditing in its entirety per
say, but rather the perceptions of the effectiveness of auditing in ensuring
financial accountability around the Bamenda municipality. The study however, is
limited only to a selected sample of firms, MFI around Bamenda. Issues other
than the effectiveness of auditing in ensuring financial accountability will be of
less concern.
The main reason for streamlining this work only to the Bamenda municipality
is to get an in depth understanding of how firms, banks in this area perceive the
effectiveness of auditing in ensuring financial accountability.
This study will be organized in five chapters as follows. Chapter One gives an
overview of the study including the background to the study, research problem,
objectives of the study, hypothesis, significance of the study, scope and limitation,
organization of the study. The second chapter entails definition of relevant key
terms and then reviews relevant literature on the subject matter. Chapter Three
provides an insight into the procedures the researcher would use in carrying out
the study. This includes the description of the study type and design, Area of
Study, data collection methods and analysis among others. Chapter Four focuses
on the analysis of the results of the findings. This will consist of tables and charts
to give more meaning to the data that would be collected from the field. Chapter
Five will provide summary of the study findings and draw the final conclusions
and recommendations to ensure that possible area for further studies.