The Role of Auditors in Nigerian Banking Crisis.

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.