ABSTRACT

The study investigated the effect of auditing on financial performance of an organization. The major objectives of the study were; to determine the effect of auditing on fraud detection, prevention and control, to examine the effect of auditing on accountability of an organization and to determine the effect of auditing on reliability of financial statement. To achieve the objectives of the study, survey research design method was adopted. The researcher adopted primary data in getting the required information. In testing the hypotheses, simple regression was used. The findings revealed that auditing has a significant effect on fraud detection, prevention and control.  The findings further revealed that auditing has a significant effect on accountability of an organization. The researcher recommends that banks should consult auditors to audit their financial statement for proper management and investment decision. The study also recommends that independent auditors should demonstrate skill, care and competence in the discharge of their responsibilities, stakeholders expect auditors to perform beyond their statutory responsibilities due to their own perception. This scenario can be corrected through insurance of engagement letter that defines the auditor’s responsibilities

TABLE OF CONTENTS

Title                                                                                                                                         i

Declaration                                                                                                                              ii

Certification                                                                                                                            iii

Acknowledgements                                                                                                                iv

Table of Contents                                                                                                                   v

List of Tables                                                                                                                          vi

Abstract                                                                                                                                  ix

CHAPTER 1: INTRODUCTION

1.1       Background to the Study                                                                                           1

1.2       Statement of the Problem                                                                                           4

1.3       Objectives of the Study                                                                                              5

1.4.1        Research Questions                                                                                                     5

1.5       Research Hypotheses                                                                                                  6

1.6       Significance of the Study                                                                                           6

1.7       Scope of the Study                                                                                                     7

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1       Conceptual Framework                                                                                               8

2.1.1    Concept of Auditing                                                                                                   8

2.1.2    Audit committee quality and internal control                                                             11

2.1.3    Audit committee characteristics and quality of earnings                                            11

2.1.4    Audit Quality definition, Framework and Indicators                                                            13

2.1.5    Internal Control system and Financial Performance                                                   15

2.1.6    The concept of Internal Audit                                                                                    17

2.1.7    Scope and Objective of Auditing                                                                               18

2.1.8    Benefits of Auditing                                                                                                   20

2.1.9    Internal Audit and Management                                                                                21

2.1.10 Concepts of Financial Control                                                                                    22

2.1.11 Concept of Internal Control System                                                                           24

2.1.12 Qualifications of the Chief Audit Executive and Firm Performance                                     25

2.1.13 Auditing Classification                                                                                               27

2.1.14 Objectives of Audit in Banking Sector                                                                      28

2.1.15 Roles of Auditing in Banking Sectors                                                                        30

2.1.16 Need for Effectiveness and Efficiency of Audit                                                       31

2.1.17 Factors Militating against Effective and Efficiently of an Audit                              33

2.2       Theoretical Framework                                                                                               34

2.2.1    Agency theory                                                                                                            34

2.2.2    Stewardship theory                                                                                                     35

2.2.3    Stakeholders Theory                                                                                                   37

2.3       Empirical Review                                                                                                        38

CHAPTER 3: METHODOLOGY

3.1       Research Design                                                                                                         40

3.2       Area of the Study                                                                                                       40

3.5       Methods of Data Collection                                                                                       40

3.5.1    Personal interview                                                                                                       41

3.3.2    Questionnaire                                                                                                              41

3.3       Population of the Study                                                                                              41

3.4       Sample Size and Sample Size Determination                                                             42

3.6       Validity of instrument                                                                                                43

3.7       Reliability of the instrument                                                                                       43

3.8       Method of Data Analysis                                                                                           44

3.9       Model Specification                                                                                                    44

CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND DISCUSSION

4.1.      Presentation of Data                                                                                                   46

4.2.      Analysis of Data on Hypothesis one                                                                          47

4.2.1.   Test of hypothesis one                                                                                                50

4.3.      Analysis of Data on Hypothesis two                                                                          50

4.3.1.   Test of hypothesis two                                                                                                53

4.4.      Analysis of Data on Hypothesis three                                                                                    54

4.4.1.   Test of hypothesis three                                                                                              57

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1       Summary of Findings                                                                                                 58

5.2       Conclusion                                                                                                                  58

5.3       Recommendations                                                                                                      59

REFERENCES

APPENDIX B: Regression