The Role of Auditors in Nigerian Banking Crisis.

Olatunde, J. and Lauwo, S. (2010) The Role of Auditors in Nigerian Banking Crisis. Acountancy Business and the Public Interest, 9 . pp. 159-204. (Full text available)

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Abstract

In market societies people routinely have to transact with faceless corporations about whom they have little personal knowledge. In such societies external auditing and auditors are promoted as a trust engendering technology and watchdog with the capacity to promote a particular kind of social order. Investors and depositors in a number of banks and companies in Nigeria have lost several billions of Naira due to the anti-social practices of accountants and auditors, which has resulted in the distress of a number of banks and companies. The purpose of this paper is to stimulate debate about contemporary auditing and the role of accountants and auditing firms in causing the collapse of banks. The paper locates the role of auditors within the broader dynamics of professionalism and the pursuit of profits to argue that major accountancy firms are becoming more and more willing to increase their profits by indulging in anti-social practices that show scant regard for social norms and even legal rules and regulations. Contrary to their claims to be protecting the public interest, accountants and auditors may be partly responsible for cases of distress and the collapse of banks in Nigeria, as they failed to qualify their reports when there were indications of financial difficulties in the banks. There is also evidence to show that auditors have collected large sums in audit and non-audit fees. Such events raise questions about the value of company audits, auditor independence and the quality of audit work. This paper argues that the basic auditing model is flawed since it makes auditors financially dependent on companies. The conventional approach to ‘audit quality’ is also inadequate as it pays little attention to the organisational pursuit of profits and the social context of auditing. The paper encourages reflection on contemporary practices and on the role of accountants and auditing firms in corporate collapse, and offers some suggestions for reform.

Item Type: Article
Subjects: H Social Sciences > H Social Sciences (General)
Divisions: Faculties > Social Sciences > Kent Business School > Accounting and Finance
Depositing User: J. Ziya
Date Deposited: 28 Oct 2010 11:47
Last Modified: 02 Mar 2012 11:14
Resource URI: http://kar.kent.ac.uk/id/eprint/25992 (The current URI for this page, for reference purposes)
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