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AUDITING AS A TOOL FOR FRAUD RISK ASSESSMENT IN COMMERCIAL BANKS (CASE STUDY OF SELECTED COMMERCIAL BANKS IN ILORIN KWARA STATE)

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AUDITING AS A TOOL FOR FRAUD RISK ASSESSMENT IN COMMERCIAL BANKS (CASE STUDY OF SELECTED COMMERCIAL BANKS IN ILORIN KWARA STATE)

Abstract

With an upsurge in financial accounting fraud in the current economic scenario experienced, financial accounting fraud detection has become an emerging topic of great importance for academic, research and industries. In this age of high technology, fraud investigators can no longer be satisfied with just auditing or accounting skills, these investigators should be trained as forensic accountants and this training should include an extensive knowledge of accounting information. Despite the independence of auditors, fraud is still in the increase and most organizations has internal control system that checkmates the operations of the organization but fraud still exist within the organization. In order to protect our banking sector, it is crucial to examine the level of assessment of fraud risk with respect to financial statement audits.

The study is on auditing as a tool for fraud risk assessment in commercial banks within Kwara State.The researcher employed both primary and secondary data in collection of information, and correlation analysis for testing of hypothesis, SPSS package was also used for analysis of questionnaire.

it is therefore required to note some areas of improvement that, The organization should put in place policies and procedures that will help in reducing fraud and also provide Conducive working atmosphere must be ensured for staff members.

Keywords: Auditor, Fraud, audit report, risk assessment, objectivity, integrity.

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The recent global financial crisis, which had its roots in the banking sector, highlighted, except from the existing regulatory gaps, the lack of proper and efficient internal audit functions within the banking institutions in order to mitigate the resulting negative effects. The burst of the credit crunch and the following financial recession resulted in the dramatic increase of bank frauds all over the world, a fact that strengthened the need for the implementation of internal audit techniques.

Moreover, the internal audit function plays a crucial role in the ongoing maintenance and assessment of a bank’s internal control, risk management and governance policies thus, adding value and assisting in the achievement of the management’s goals.

In the intermediation, banks mobilize savings from the surplus units of the economy and channel these to the deficit units, particularly private business enterprises for the purpose of expanding their productive capacity (Adeyemo, 2012). Levi (2001), asserts that corporate financial scandals in the USA such as Enron and Tyco debacles send shockwaves in the corporate world, regulatory authorities, audit fraternity and the economic world society at large. These have led to the erosion of investor confidence in the financial markets.

The incidence of fraud and misappropriation of funds in recent time poses a threat accounting profession because of its perennial nature. This has resulted to questions as to whether accountants actually play any significant role towards the attainment of accountability and prevention of fraud especially that which is currently happening in our major or key financial institutions.

Fraud imposes numerous costs to organizations that experience it. The banks might suffer loss in terms of monetary, reputation, human capital as well as the exposure to the risk of bankruptcy. In a wider scope, fraud does not only threaten our country’s economic condition with the loss of investors and resources, but it is in fact endangers the serenity and political stability of the nation. Nevertheless, while banks are active in the quest to reduce costs of fraud, it is important to make sure that they do not immensely deteriorate the effectiveness of current functioning key fraud controls.

Having committed a large sum of funds and resources as a shareholder to financial institutions, the expectation is to generate a high level of profitability but this has been thwarted by the high index of fraud perpetrations in the industry. Financial statements produced can no longer be relied upon except audited.

1.2 STATEMENT OF THE PROBLEM

Fraud is a challenge in organizations regardless of which type. Research has shown that inability of assessing fraud risk with accuracy can cause fraud not being detected, also improper recording of financial statement have accounted for the rise of irregularities and some acts usually perpetrated by some staff and members of management in a financial institution (Olowookere, 2001).

Furthermore, despite the independence of auditors, fraud is still in the increase and most organizations has internal control system that checkmates the operations of the organization but fraud still exist within the organization. In order to protect our banking sector, it is crucial to examine the level of assessment of fraud risk with respect to financial statement audits.

1.3 OBJECTIVES OF THE STUDY

The main objective of this research work is to evaluate audit as a tool for fraud risk assessment in a financial institution.

The specific objectives are stated as follows:

i. Determine whether independence of auditors reduces fraud risk.

ii. Evaluate the effect of managerial integrity in reduction of fraud risk.

iii. Examine internal control framework in reducing fraud risk.

iv. Identify the constraint faced in minimizing fraud risk in commercial banks.

v. Suggest possible recommendation for auditors in combating fraud risk in commercial banks.

1.4 RESEARCH QUESTIONS

The following research questions were answered based on the stated objectives of the study.

i. Does the independence of auditors reduce fraud risk?

ii. What is the effect of managerial integrity in reduction of fraud risk?

iii. What are the internal control frameworks in reducing fraud risk?

1.5 HYPOTHESES OF THE STUDY

Based on the research questions and for the purpose of this study, the following hypotheses were formulated.

Ho1: Independence of auditors has no significant relationship with fraud risk reduction.

Ho2: There is no significant relationship between managerial integrity and fraud risk reduction.

Ho3: Internal control framework does not significantly correlate with fraud risk reduction.

1.6 JUSTIFICATION OF THE STUDY

The impact of auditing in the assessment of fraud risk cannot be over emphasized. As such a lot of research works have been carried out on it both internationally and nationally which include assessment of the adequacy of external auditing in disclosing fraud in Nigerian commercial banks (Zachariah, Musa & Ibrahim, 2012), however the researcher is not aware of any research work carried out on this topic in Kwara State. This research will be of significance to the banking sector in Ilorin, Auditors and students who are willing to carry out further research in this area.

1.7 SCOPE OF STUDY

The study is on auditing as a tool for fraud risk assessment in commercial banks within Kwara State. However, due to time and financial constraint, the study focused on some selected banks within Ilorin metropolis, Kwara State, Nigeria.

1.8. DEFINITION OF TERMS

1. Auditor: Auditor is a qualified accountant who also passed a professional examination. Such a person must be of good conduct and have a vast knowledge and able to understand a practical business, endeavor always to grasp the technicalities and business, methods of any concern whose account he undertakes to audit.

2. External Audit: This is an audit carried out by an independent person who is not an employee of the enterprise.

3. Audit: Audit can be define as the independent examination of a financial statement and expression of opinion on the financial statement of enterprise by an appointed auditor in pursuance of that appointed and in compliance with any relevant statutory obligation.

4. Objectivity: refers to the need to maintain impartial judgment (e.g. not developing analysis to support a decision that the accountant knows is not correct.

5. Qualified Opinion report is issued when the auditor encountered one of the two types of situations which do not comply with generally accepted accounting principles, however the rest of the financial statements are fairly presented.

6. FRAUD is an act or course of deception, deliberately practiced to gain unlawful or unfair advantage; at the detriment of another, it is also defined as a conscious premeditated action of a person or group of persons with the intention of altering the truth and or fact for selfish personal monetary gain

7. FORENSIC AUDITING: as the utilization of specialized investigative skills in carrying out an enquiry conducted in such a manner that the outcome will have application to the court of law.

8. TRADITIONAL AUDITOR or statutory auditor is appointed to carry out statutory audit.

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HOW TO IDENTIFY SCAM/FRAUD

As a result of fraud in Nigeria, people don’t believe there are good online businesses in Nigeria.

But on this site, we have provided “table of content and chapter one” of all our project topics and materials in order to convince you that we have the complete materials.

Secondly, we have provided our Bank Account on this site. Our Bank Account contains all information about the owner of this website. For your own security, all payment should be made in the bank.

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Tags: AUDITING AS A TOOL FOR FRAUD RISK ASSESSMENT IN COMMERCIAL BANKS (CASE STUDY OF SELECTED COMMERCIAL BANKS IN ILORIN KWARA STATE)

7 years ago 0 Comments Short URL

ASSESSMENT OF IMF LOAN POLICY ON ECONOMY DEVELOPMENT OF NIGERIA. CIVILIAN RULE (1999-2015)

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BEFORE YOU READ THE CHAPTER ONE OF THE PROJECT TOPIC BELOW, PLEASE READ THE INFORMATION BELOW.THANK YOU!

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ASSESSMENT OF IMF LOAN POLICY ON ECONOMY DEVELOPMENT OF NIGERIA. CIVILIAN RULE (1999-2015)

CHAPTER ONE

INTRODUCTION

1.1. BACKGROUND TO THE STUDY

Development is a universal attribute of man and matter, of society and nature, but the direction and speed of the process in man and society can effectively be controlled, and in nature, considerably influenced, by him. However, development involves areas of economic, political, sociocultural, technological and individual.

Sustainable economic growth is a major concern for any sovereign nation most especially the developing countries which are characterized by low capital formation due to low levels of domestic savings and investment (Adepoju, Salau and Obayelu, 2007). It is expected that these DC when facing a scarcity of capital would resort to borrowing from external sources so as to supplement domestic savings, thus, the constant need for governments to borrow in order to finance budget deficit has led to the emergence of IMF loan.

IMF Loan Policy as a technique of economic management to bring about Sustainable economic growth and development has been the pursuit of nations and formal articulation of how money affects economic aggregates dates back the time of Adams Smith and later championed by the government. Since the expositions of the role of IMF Loan Policy in influencing macroeconomic objectives like economic growth, price stability, equilibrium in balance of payments and host of other objectives, monetary authorities are saddled the responsibility of using this policy to grow their economies. In Nigeria, IMF Loan Policy has been used since the Central bank of Nigeria was saddled the responsibility of formulating and implementing IMF Loan Policy by Central bank Act of 1958.

The International Monetary Fund (IMF) was conceived and nurtured at Bretton Woods Conference (USA) in 1944 by representatives of forty-four (44) countries. These countries include among others, United States of America, Japan, Canada, Britain and few Latin American countries. The conference was called to discuss the international trade and payment problems that were causing monetary upheaval and inducing many countries to adopt protective and restrictive trade practices. The conference was also called to reconstruct and restructure many European economies, which have been ravaged by the Second World War.

For Nigeria the prospect of international loans offers a mixed blessing, for the country economic development. With Nigeria seeking international loans to help ease their oil pain, investors are hoping that any loans will lead to a revision of their worrisome economic policies, Moreso, looking at recent reports suggesting low oil prices are here to stay, major producers are pulling out a number of stops in order to outlast a devastating slide that has seen many pushed to the brink.

Reconstruction and restructuring a war-ravaged economy is extremely an expensive task. The countries involved obviously could not foot the bill of such huge expenditure without foreign assistance. The united states of America was ready to protect these European economies from communist temptation thus, quickly devised what came to be known as the Marshal plan, which essentially brought in resources to finance the reconstruction and restructuring programmes of the war ravaged Western European countries. The United States of America also considered it necessary to establish a strong and lasting trading relationship and to strengthen the relation and interest of alt the Western European countries.

Therefore, to facilitate and promote such international trade, it was considered very important to set up an international organization with adequate resources and control to facilitate the payment and provide short-term balance of payment facilities for countries suffering from balance of payment deficit caused by temporary and non-structural economic dislocations. This conception gave birth to international monetary fund as an institution suitable for this purpose.

Just recently, the Managing Director of International Monetary Fund, IMF, Christine Lagarde has asked Nigeria and Nigerians to brace up for harder times, following the massive fall in the price of oil globally, just as she said that the country since inception recorded the slowest pace of growth in the year 2015, thereby calling for increase in Value Added Tax(VAT),as a result of the federal government finding it hard to broaden the country’s tax base against the backdrop that Nigeria has the lowest VAT rate in the African continent.

When the International Monetary Fund was established in 1944 (World Bank Report 1996), most of the developing countries were under colonial rule and their economies were simply under imperial control with nothing but simple agricultural products and raw materials which were regarded as products of imperial countries. The International Monetary Fund was therefore essentially set up to address short-term balance of payment deficit of western industrial countries. The articles establishing International Monetary Fund stipulated that as developing countries are becoming independence they could join the International Monetary Fund since they might also experience short-term balance of payment crises for which they could seek and perhaps get assistance.

Nigeria became signatory to World Bank Articles of Agreement in 1961, shortly after her independence in 1960. This is exactly 17 years, after the World Bank came to existence. Since then, the World bank assisted projects in Nigeria amounts to not less than 120 projects and over 121 International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA) credit Nigeria’s inability to service her debts and failure to strictly implement the loan conditionalities (i.e. economic reform programme) the World Bank disengaged from Nigeria. The recent re-engagement with Nigeria since 1999 was not merely as a result of the de-militarization and democratization of the Nigerian polity, but also as a result of the willingness and determination on the part of Obasanjo’s Administration to pursue and fully implement a world Bank Sanctioned and approved economic reform as encapsulated in the National Economic Empowerment and Development Strategies (NEEDS) document. as of July, 2006, the World Bank assistance to Nigeria involves 20 active (on-going projects with the commitment value of about US $1.9 billion. These 20 active projects cover all the major sectors of the Nigerian economy including privatization programme; community – based projects; health – care system; educational sector (i.e UBEP); urban development projects and power sector reform. For example, World Bank Supported the privatization programme with the sum of US $100 million, urban development programme (i.e. Lagos metropolitan projects) with US $ 200 million. As of January, 2010, over 1600 communities in the first phased states of the community-based development project have successfully completed 1,017 sub-projects that include 348 school projects, 350 water projects, 90 road projects, 90 health projects, 72 electricity projects and 67 other projects such as environmental protection, training centres and commercial markets.

Long before the onset of civil rule in 1999, the lack of electricity to power Nigeria’s development has been a much discussed subject. First, the problem was to be solved in six months, then in 18 months, then by the end of 2007, when Nigerians were assured of constant power supply. President Muhammed Buhari in his inaugural address in 2015 also made the provision of electricity a major priority in his agenda, yet it is clear that without electricity there can be no industrial development and all those grand visions of becoming one of the World’s leading economies by 2020 cannot be realized.

It is widely recognized in the international community that excessive foreign indebtedness in most developing countries is a major impediment to their economic growth and stability (Audu, 2004; Mutasa, 2003). Developing countries like Nigeria have often contracted large amount of external loan grants that has led to the mounting of trade debt arrears at highly concessional interest rates. Gohar and Butt (2012) opined that accumulated debt service payments create a lot of problems for countries especially the developing nations reason being that a debt is actually serviced for more than the amount it was acquired and this slows down the growth process in such nations. The inability of the Nigerian economy to meet its debt service payments obligations has resulted in debt overhang or debt service burden that has militated against her growth and development (Audu, 2004). The genesis of Nigeria’s debt service burden dates back to 1999 till date, yet there’s a fall in world oil prices, and prior to this occurrence Nigeria had incurred some minor debts from World Bank in 1958 with a loan of US$28million dollars for railway construction and the Paris Club debtor nations in 1964 from the Italian government with a loan of US$13.1 million for the construction of the Niger dam. The first major borrowing of US$1 billion known as the ”Jumbo loan” was in 1978 from the International Capital Market (ICM).

Furthermore, the rise of IMF lending and crisis mediation since the early 1980s reflects, in large part, the development of dysfunctional relationship between lenders and borrowers in international finance. Referring the relationship requires that moral hazard be reduced and that crises prevention and management be more effective. The IMFs new initiatives to deal with crises, however are likely to be ineffective. An approval based on greater reliance on two-party negotiation holds more promise in stabilizing the international financial system than current approach, in which the IMF too often becomes a burdensome third party.

Finally, it is no exaggeration that this is the major challenge faced by the Nigerian economy. The inability of the Nigerian economy to effectively meet its IMF loan repayment requirements has exposed the nation to a high debt service burden. The resultant effect of this debt service burden creates additional problems for the nation particularly the increasing fiscal deficit which is driven by higher levels of loan grants. This poses a grave threat to the economy as a large chunk of the nation’s hard earned revenue is being eaten up. Nigeria’s external debt outstanding stood at US$28.35 million in 2001 which was about 59.4% of GDP from US$8.5 million in 1980 which was about 14.6% of GDP (WDI 2013). The debt crisis reached its maximum in 2003 when US$2.3 billion was transferred to service Nigeria’s external debt.

1.3. OBJECTIVES OF THE STUDY

The broad objective of this study is to assess and examine the effect of IMF Loan Policy on the growth and development of Nigeria.

Other specific objectives include:

Examine causality between IMF Loan policy and economic development in Nigeria.

Ascertain the effectiveness of IMF Loan Policy on the Nigerian economy.

Determine whether there is a positive relationship between the level of implementation of loan conditionalities and increase in development loan assistance to Nigeria by World Bank.

Determine whether there is a positive relationship between Nigeria’s economic growth and development loan assistance to Nigeria by World Bank.

To examine the impact of IMF loan policies on developing nations

To analyze the challenges faced by developing nation in accessing and paying back IMF loans.

1.4 RESEARCH QUESTIONS

To achieve the objectives of this study the researcher tries to find out solution to the following research questions

What are the IMF loan policies?

Has the IMF loan policies any adverse effects on the economy of developing nations?

Are there any causality between IMF Loan policy and economic development in Nigeria?

The effectiveness of IMF Loan Policy on the Nigerian economy?

Are there any positive relationship between the level of implementation of loan conditionalities and increase in development loan assistance to Nigeria by World Bank?

Any positive relationship between Nigeria’s economic growth and development loan assistance to Nigeria by World Bank?

What is the variation of the International Monetary Fund loan policy from developed nations and the developing ones?

1.5 RESEARCH HYPOTHESES

The hypotheses to be tested in the course of this study include:

HYPOTHESIS 1

H0: There is no significant long run relationship between IMF Loan Policy and economic growth and development in Nigeria.

H1: There is a significant long run relationship between IMF Loan Policy and economic growth and development in Nigeria.

HYPOTHESIS 2

H0: International Monetary Fund loan policy has negative impact on Nigeria economy development

H1: International Monetary Fund loan policy has positive impact on Nigeria economy development.

1.6. SIGNIFICANCE OF STUDY

The issue of IMF Loan Policy has been a matter of great concern to the Government of Nigeria and the nation as a whole which has resulted in embarking upon drastic actions like dividing the nation’s scarce resources in servicing of debts annually. This action has thus led to disinvestment in the economy, and as a result a fall in the domestic savings and the overall growth of the country.

The significance of this study is in two fold, that is, theoretical and empirical.

Theoretically, this study would be of immense benefit to scholars. Indeed, it will serve as a source of materials for related field or provide the needed materials for scholars who are interested in going into further studies. The study shall also make some useful theoretical contributions to knowledge specifically liberal political economy paradigm in explaining the role of IFIs like World Bank in fostering or facilitating development, and perhaps otherwise, in developing countries such as Nigeria. Empirically, the study would be of tremendous benefit to policy advisers/makers/executors, the Nigerian government (both at the federal and the state levels), and politicians and as well as World Bank.

Therefore, the significance of this study stems from, one, the need to avoid or prevent Nigeria from allowing herself into debt crisis of the 1990’s again, which could be avoided through efficient debt management and effective loan negotiation.

The study will also be useful to those other countries wanting to borrow from the fund or seeking other economic measures to revive their ailing economies, and will also concretely explore various ways through which Nigeria can raise her credit portfolio from the bank to be in tandem with her development needs, which would enable her to meet these development needs of the country and for sustainable development.

Finally, this study will be of great benefit to bankers, investment analysts, government agencies, academics, private and public sectors more so, it will be useful to government (Economic committee) and policymakers in the attempt to fashion out dynamic and reliable Loan policy measure for controlling government spending and ability to create money and thereby influence the effective growth and development of the economy.

1.7. SCOPE OF STUDY

In order to fully capture its effect on the economy, a thorough empirical investigation will be conducted with data covering a period of 16 years i.e. ranging from the 4th republic era during the civilian era 1999-2015.

This period was chosen to cover the period after the oil collapse and also the post debt relief era. Though it is aim at examining the performance of IMF Loan policy is on the Nigerian economy, the effects, the appraisal, and possibly the solution to the problems facing it implementation in Nigeria.

1.8. LIMITATION OF THE STUDY

1. One of the major limiting factors encountered by the researcher in the course of research work is the inability of the researcher to generate adequate data and relevant information’s, apparently due to the reason being that the research was carried out in a developing country like Nigeria, are usually inhibited by inadequacy of data.

2. The researchers encounter the difficulty of adequate and timely secretarial assistance, including computerial assistance. This causes unnecessary delays in the completion of research studies.

3. Library management were not functioning enough for acquisition of research materials, this is not satisfactory enough and most of the time and energy of researchers are spent in tracing out the books, journals, reports, etc., rather than in tracing out relevant material from them.

4. Finally insufficient of funds for research study.

1.9. DEFINITION OF TERMS

Loan: A business transaction between two entities whereby one party (the lender) agrees to rent fund to the second party (the borrower). The fund may be rented with or without a fee. This fee is called interest or discount.

Long-term debts: Are liabilities that become due more than one year after the signal of the agreement? Usually these are formal legal agreements demanding periodic payments of interest until the maturity date at which the principal amount is repaid.

Monetary Policy: That part of economic policy which regulates the level of money or liquidity in order to achieve some desired policy objective such as control of inflation, an improvement in the balance of payment position, high level of employment and growth in the economy.

IMF: International Monetary Fund

Balance of Payment: It is defined as the statistical record of all economic transaction that takes during a specific period of time between the country resident and the rest of the world.

Economic development can be defined vices as efforts that seek to improve the economic well-being and quality of life for a community by creating jobs and supporting or growing incomes and the tax base.

IBRD : International Bank for Reconstruction and Development

Structural Adjustment Programme (SAP): an economic measure aimed at revamping the economy. It is based on a policy of privatization and commercialization of public utilities, removal of subsidies, liberalization and self-reliance.

HOW TO GET THE FULL PROJECT WORK

PLEASE, print the following instructions and information if you will like to order/buy our complete written material(s).

HOW TO RECEIVE PROJECT MATERIAL(S)

After paying the appropriate amount (#5000) into our bank Account below, send the following information to

08068231953 or 08168759420

(1) Your project topics

(2) Email Address

(3) Payment Name

(4) Teller Number

We will send your material(s) immediately we receive bank alert

BANK ACCOUNTS

Account Name: AMUTAH DANIEL CHUKWUDI

Account Number: 0046579864

Bank: GTBank.

Account Name: AMUTAH DANIEL CHUKWUDI

Account Number: 2023350498

Bank: UBA.

HOW TO IDENTIFY SCAM/FRAUD

As a result of fraud in Nigeria, people don’t believe there are good online businesses in Nigeria.

But on this site, we have provided “table of content and chapter one” of all our project topics and materials in order to convince you that we have the complete materials.

Secondly, we have provided our Bank Account on this site. Our Bank Account contains all information about the owner of this website. For your own security, all payment should be made in the bank.

No Fraudulent company uses Bank Account as a means of payment, because Bank Account contains the overall information of the owner

CAUTION/WARNING

That you ordered this material shows you have agreed not to copy word-to-word.

FOR MORE INFORMATION, CALL:

08068231953 or 08168759420

Tags: ASSESSMENT OF IMF LOAN POLICY ON ECONOMY DEVELOPMENT OF NIGERIA. CIVILIAN RULE (1999-2015)

7 years ago 0 Comments Short URL

AN INVESTIGATION ON RELIANCE OF AUDITOR’S INDEPENDENCE ON THE CREDIBILITY OF FINANCIAL REPORTING QUALITY OF CORPORATE ORGANIZATION (CASE STUDY OF FIVE AUDITING FIRM IN ILORIN METROPOLIS)

ATTENTION:

BEFORE YOU READ THE CHAPTER ONE OF THE PROJECT TOPIC BELOW, PLEASE READ THE INFORMATION BELOW.THANK YOU!

INFORMATION:

AN INVESTIGATION ON RELIANCE OF AUDITOR’S INDEPENDENCE ON THE CREDIBILITY OF FINANCIAL REPORTING QUALITY OF CORPORATE ORGANIZATION (CASE STUDY OF FIVE AUDITING FIRM IN ILORIN METROPOLIS)

CHAPTER ONE

INTRODUCTION

1.1. BACKGROUND TO THE STUDY

The auditing profession performs a role in giving reasonable assurance to the public and users’ of financial statements, specifically investors and creditors, of the reliability and credibility of a firms’ financial statements. To fulfil this role, there are several principles that auditors should espouse. One of the most important principles is independence. By demonstrating their independence, auditors’ opinions on financial statements will be valued by the users. In essence, auditor independence refers to an absence of interest by the auditor in the auditing assignment, thereby avoiding material bias that could affect the reliability and credibility of the financial statements. The auditing profession promotes the principle of independence to define, defend, and extend the profession.

Auditor independence also refers to the independence of the internal auditor or of the external auditor from parties that may have a financial interest in the business being audited. Independence requires integrity and objective approach to the audit process. The concept requires the auditor to carry out his or her work freely and in an objective manner.

Financial statements apart from stating the financial position of an organization, provides other information such as the value added, changes in equity if any and cash flows of the enterprise within a defined period time to which it relates (Iyoha and Faboyede, 2011). This information is useful to a wide range of users making informed economic decisions. The quality of financial reporting is indispensable to the need of users who requires them for investment and other decision making purposes. Financial reports can only be regarded as useful if it represents the “economic substance” of an organization in terms of relevance, reliability, comparability and aids interpretation simplicity (Penman, 1984). Ahmed (2003), stated that useful accounting information derived from qualitative financial reports help in efficient allocation of resources by reducing dissemination of information asymmetry and improving pricing of securities. The user of financial statement which include: shareholders, government, creditors, investors, etc. All rely on the audited financial statement in other to make informed decision. Therefore the credibility and reliability of this statement is necessary.

The basic purpose of financial statements in the view of Meigs and Meigs (1981) is to assist decision makers in evaluating the financial strength, profitability and the future prospects of a business entity. The basic objective for preparing financial statement is to provide information useful for making economic decisions. The objective of an audit of financial statements is to enable the auditor express an opinion whether the financial statements are prepared in all material respects and also in accordance with auditing standard.

In recent times, auditors have been put under pressure to ensure that their reports constitute assurance to investors that their funds are put into good use and properly accounted for. In Nigeria, every incorporated company is required to appoint an external auditor, who is required to render an independent opinion on the financial statements; whether or not they show a true and fair view. The Companies and Allied Matters Act (1990) states that every auditor of a company shall have a right of access, at all times, to the books, accounts and vouchers of the company and to such information and explanations as may be necessary in the course of an audit. The auditor shall make a report to the members of the company on the accounts examined by them. The auditor in performing his duties is expected to exercise all care, diligence and skills as is reasonably necessary in each particular circumstance.

Furthermore, there has been much discussion about the independence of Auditors; the leadership of the auditing standards board, the public oversight board, the independence standards board, and most recently the proposed independence rules promulgated by the Securities and Exchange Commission (SEC) have all attempted to clarify and strengthen auditor independence. Also in the medieval era financial reporting were not necessary and hence financial statements were not prepared neither used to make decisions. But with the recent development every firm are expected to prepare and report their financial statement in order to know the financial position of the organisation so that stakeholders can make decisions.

Audit report is the medium through which the auditor expresses his opinion on the financial statement examined by him. Due to familiarity, threat of replacement of an auditor, provision of book-keeping services by the auditor and many other factors, the auditor may want to issue an unqualified audit report even when the situation on ground proved otherwise. This situation raises doubt about the independence of an auditor. Independence is the cornerstone of accountability. The challenge is that corporate management hires, fires, and pays both their internal and external auditors. Auditors, therefore, develop good relationships with management to keep the job of the client. They may not, therefore, be independent of the corporate management.

Most studies on Auditor independence have concentrated on it as a financial reporting issue. But financial reporting is one aspect of the total impact of auditor independence. Much more significant is the impact of a set of standards on a company’s organisation, philosophy, business structure compliance to the standards, performance management, and internal control and so on.

1.2. STATEMENT OF PROBLEM

In Nigeria, there have been a number of audit failures, some leading to the restatement of figures in the financial statements. For example, Lever Brothers, African Petroleum and Cadbury, just to mention a few important ones. Although, it has not been proved by any detailed investigation that these audit failures were due to impairment of auditor’s independence it could reasonably be suspected to be a contributing factor (Adelaja, 2009).

Financial reports as stated in Igben (1999) are meant to be a formal record of business activities and these reports are meant to provide an overview of the financial position and profitability in both short and long term of companies to the users of these financial statements such as shareholders, managers, employees, tax analyst, banks, etc. But in recent times, the financial manipulations, weak internal control systems, ignorance on the part of the board of directors and audit committee, manipulation on the part of the reporting auditor and other fraudulent activities that occur within companies, creating a negative goodwill to the general public. A typical example of a financial statement malfunction is the popular case of Enron.

Secondly, concerns have been expressed about the conflict of interest between the statutory role of the auditor and the other services it may undertake for a client (UK House of Common Treasury Committee, 2008). Also, a number of worrisome audit failures have been recorded across the world: Enron, in the US, Northern Rock in the United Kingdom, Metagelshaft in Germany, Parmalat in Italy; Lever Brothers and Cadbury in Nigeria. Audit firm tenure has also been linked with fraudulent financial reporting. If empirical studies are not carried out with respect to specific environmental factors and necessary policies are not implemented to address shortcomings, the problem of auditor independence may be exacerbated with likely grave consequences for the nascent Nigerian Capital Market.

Finally, it is widely accepted that independence is the most priceless asset in the auditing profession and the basic principle that underpins the reputation of the auditing profession in the public eye. By conducting an auditing work independently, auditors protect the public’s confidence in such services. Despite this, several firms’ scandals, directly or indirectly involving auditors, have damaged public confidence in auditor independence. These scandals have taken place not just in one country but across the world, these scandals have caused the public suffering huge losses and have also damaged the reputation of the auditors and the auditing profession. Although these scandals cannot solely be attributed to the failures of the auditors, the public perceived that a large part of the responsibility lay with them. This is because the public expects the auditing profession to perform not just as watchdogs that give them reasonable assurance but also as bloodhounds that track out everything even when there is nothing to provoke auditors’ suspicion. Moreover, it is also widely believed that these scandals took place because of the auditors’ lack of independence, as a result of accommodating their clients’ interests during audits.

1.3. OBJECTIVES OF THE STUDY

The aim of this study is to evaluate and investigate the extent of reliance on auditor’s independence on the credibility of financial reporting quality of corporate organization.

Specifically, the study intends to:

To know how auditors’ independence affects the financial statement of a limited liability company.

ii. To assess the factors that affects an auditor’s independence.

iii. To determine an auditor’s right or wrong judgement will affect the credibility of the financial reporting quality.

iv. To identify the acts and standards that regulates the attitude of auditors.

v. To examine the duties, powers, and functions of an auditor.

vi. To assess how a wrongly audited financial statement affects a limited liability company.

vii. Ascertain the adequacy of professional and regulatory stipulations on audit independence in Nigeria.

1.4. RESEARCH QUESTIONS

The following research question were asked to guide the study, whereas answer to the following questions will be sought as a basis for testing the hypotheses:

Does auditors’ independence affect the credibility of a financial statement?

What are the duties, powers, and rights of an auditor?

Does an auditor’s right or wrong judgement affect the credibility of a financial reporting quality?

Are there factors that affect auditors’ independence?

Do auditors always operate within the framework of accounting standard and other regulations?

Are the professional and regulatory stipulations on audit independence in Nigeria adequate?

1.5. STATEMENT OF HYPOTHESIS

The hypotheses proposed in this study are stated in the null as follows:

HYPOTHESIS ONE

Ho: there is no significance relationship between auditor’s independence and credibility of the financial reporting quality.

HYPOTHESIS TWO

Ho: Non-audit services do not have a significant effect on the quality of financial reporting in Nigeria.

1.6. SIGNIFICANCE OF THE STUDY

This research study aims to contribute both theoretically to the literature, and practically to the auditing profession, it shall seeks to provide ordinary insight on area concerned with auditor independence, and explored the possibility of relationship between the levels of auditors’ reputation awareness and their independence. It also aim to contribute to the extant literature on auditor independence by increasing the understanding of situations that potentially threaten auditor independence including social pressures, self-interest, familiarity, and intimidation. In addition, this research study offers factors that may theoretically and practically enhance and protect auditor independence.

The study has the potential of encouraging auditors and users of financial information to see the need for audit independence. It will enable clients appreciate the enormity of the auditor’s job and factors that can affect his job. The outcome of the study will assist audit firms and management or directors of companies to further appreciate the need to comply with the relevant Statement of Accounting Standard (SAS) and the International Financial Reporting Standards (IFRS). This study hopes to provide relevant literature on audit independence.

Finally, this study is also expected to serve as input to regulators and other stakeholders of corporate financial reporting to establish policies relating to corporate financial reporting, particularly in the Nigerian context, since empirical evidence on this issue is limited in the country. It would also be useful to student of tertiary institution writing their final year project as well as lecturers.

1.7. SCOPE OF THE STUDY

The scope of this study covers the reliance of audit independence on the credibility of financial reporting quality in Nigeria. However, due to logistics, this study has been limited to Five auditing companies located in Kwara State, Nigeria. The researcher felt that the findings of the study will be applicable to other Nigerian companies, audit firms and users of financial information which operate in the same social, economic, political and legal environment.

1.8. LIMITATION OF THE STUDY

The following limitations of the study are as follows:

Time: – This is the first limitation that affected the research study badly because carrying out the study requires time and one can’t afford to miss lecture and embark on a journey to the cost study.

Finance: – It is another limitation because the study requires enough funds to carry out the research and without the funds the study will not be fruition.

Uncooperative staff: – Some of the staff was very uncooperative and some even refused to accept my questionnaire and those that accepted, some of them did not summit back their questionnaire.

1.9. DEFINITION OF TERMS

1. Audit independence is defined as an auditor’ unbiased mental attitude in making decisions throughout the audit and financial reporting.

2. Auditor: Auditor is a qualified accountant who also passed a professional examination. Such a person must be of good conduct and have a vast knowledge and able to understand a practical business, endeavor always to grasp the technicalities and business, methods of any concern whose account he undertakes to audit.

3. External Audit: This is an audit carried out by an independent person who is not an employee of the enterprise.

4. Audit quality means how well an audit detects and report material misstatements in financial statements, the detection aspects are a reflection of auditor competence, while reporting is a reflection of ethics or auditor integrity, particularly independence.

5. Financial statements (or financial report) are the formal records of the financial activities of a business, person, or other entity. This is a generic term for profit and loss account, balance sheets, cash flow statement, five year financial summary, value added statement, income and expenditure account, statement of accounting policy etc

6. Audit Committees: An audit committee is a selected number of members of a company’s board of directors whose responsibilities include helping the auditors remain independent of management.

7. Investigative independence protects the auditor’s ability to implement the strategies in whatever manner they consider necessary. Basically, auditors must have unlimited access to all company information.

8. Self Interest Threat: This is a threat to auditors’ objectivity sterns from a financial or other self interest conflict which could result from a direct interest or indirect interest in a client for losing the audit assignment.

Objectivity: refers to the need to maintain impartial judgment (e.g. not developing analysis to support a decision that the accountant knows is not correct.

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Tags: AN INVESTIGATION ON RELIANCE OF AUDITOR’S INDEPENDENCE ON THE CREDIBILITY OF FINANCIAL REPORTING QUALITY OF CORPORATE ORGANIZATION (CASE STUDY OF FIVE AUDITING FIRM IN ILORIN METROPOLIS).

7 years ago 0 Comments Short URL

ASSESSMENT OF AUDIT EXPECTATION GAP IN NIGERIA, AUDITOR’S CONNECTION

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BEFORE YOU READ THE CHAPTER ONE OF THE PROJECT TOPIC BELOW, PLEASE READ THE INFORMATION BELOW.THANK YOU!

INFORMATION:

ASSESSMENT OF AUDIT EXPECTATION GAP IN NIGERIA, AUDITOR’S CONNECTION

CHAPTER ONE

INTRODUCTION

1.0 BACKGROUND TO THE STUDY

As the stakeholders become dissatisfied with the work of the audit profession, their confidence in audited financial statements will erode with time if nothing is done to remedy the situation. Best, Buckby and Tan (2001) claim that society’s trust is the ‘heart-beat of a profession’. Hence, if such trust disappears or is eroded in any way, the outcome is likely to involve skepticism and the depletion of value attributed to such profession. Although fraud detection has been taking out of the primary objectives of the auditing profession, the 5th Global Economic Crime Survey by PricewaterhouseCoopers (2009) reports that fraud remains a pervasive business risk and almost every firm is subjected to occupational fraud in their daily businesses, leading to huge losses for businesses and society.

There is no gainsaying that the audit profession is a social functions which provides services to associated parties and is based on confidence between the professional auditor and those parties.the importance and responsibilities of auditing has increased in recent years due in part to reliance of other parties on the data included in the financial statement and audit reports produced by the auditor. Despite the importance of the audit profession, it has been subjected to increased criticisms in the performance of its role and function, as a result of the challenges the accounting profession has faced a long time, the issue of Audit Expectation Gap (AEG) :which is the “difference between what the public and users of financial statements perceive the role of an audit to be and what the audit profession claim is expected of them during the conduct of an audit (Ojo, 2006).

The AEG has become a serious issue because of the damage it could potentially bring to the essence of auditing profession, this is why it has been increasing in its significance since it was identified in the mid 1970s.

Pierce and Kilcommins (1996) also defined the audit expectations gap as when external auditors’ understanding of their role and duties is compared against the expectations of user groups and the general public. Moreover, Audit as we all know refers to the formal examination, correction, and official endorsing of financial accounts, especially those of a business, undertaken annually by an Accountant., yet the accounting profession in Nigeria has been under intense pressure due to rising public expectations which is as a result of series of financial failures that occurred during the recessionary years of the late 80’s and the early 90’s (Ekwueme, 2013:14). These financial failures happened too quickly after an ‘unqualified’ audit report was issued by the external auditors. Koh and Woo (1998), noted that in recent years, some spectacular and well-publicized corporate collapses and the subsequent implication of the reporting auditors have highlighted the audit expectation gap. In reality, the unqualified opinion is wrongly seen as a certification that the firm or enterprise is solvent, liquid and has the capacity to adapt to the dynamics of the environment. Any subsequent failure of business resulting from management misjudgment, fraudulent practice, economic instability, inconsistency in micro and macroeconomic policies etc are viewed as failures of auditors (Adeniji, 2004:510).

Furthermore, Stakeholders too often see the audit as a relatively discrete event when, in fact, the processes and controls that ensure the broader integrity of the audit comprise much more than the audit opinion itself. These processes and controls range from the company’s collection and recording of financial information to the actual audit, through to the issuance of the financial report. As a result, the quality of financial reporting – so critical to investor confidence and transparency – is directly dependent on the quality of the audit. The value of an expert, independent opinion on a company’s financial statements simply can’t be underestimated. And the simple knowledge that the audit is coming, combined with the requirements and internal controls that exist around it, exerts a preventative, quality-control pressure on financial statement preparation – even before the audit takes place, yet These perceptions draw a line that needs to define the role of the auditor in protecting the interest of shareholders and ensuring that there is good corporate governance. Owners of business need auditors, more than ever, to detect and prevent fraud. Perhaps, this is due to the expanding nature of modern day businesses. Clients need value added and not an auditor that will vouch and does the normal trade test (Nwokolo, 1998:25). Additionally, auditors have been known for high integrity and objectivity as well as their commitment to public interest. In relation to this view, Hillier (2000) stated that diverse clients now expect them to provide more services than just performing statutory audit and attesting to the credibility of financial statements.

1.2. STATEMENT OF PROBLEM

The global search for a solution to the audit expectation gap by auditor has become strident, the credibility of the auditing profession appears to be at it lowest ebb. In the United State of America, the profession has lost its self regulatory status, in these circumstances, the profession is bestirring itself and the result is a welter of fresh suggestion and initiatives aimed at solving the expectation gap problem. Some of the suggestion appears mundane while some appears controversial. However, like a sore thumb, the gap appears to have remained as wide as ever, at the local level, the recent scandal in Cadbury Nigeria Plc whereby profit were overstated by a large sum with the knowledge of auditors, and the subsequent indictment of the accounting firm of Akintola William Deloite for audit failure, has further aggravated the expectation gap conundrum.

The criticism of auditors in Nigeria by users of audited financial statements has stirred many a response both from the profession and statutes. It seems the users have a different idea of what auditing should be. This is what has led to the audit expectation gap. The existence of this gap has been caused by many factors [communication factors and audit failures]. In this changing world, business environment requires that auditor’s responsibilities be increased to include fraud detection/prevention. Also, users want to be able to rely on audited financial statements for investment decision making. They also desire the absolute independence of the auditor because absence of it may reduce performance. Users also may have a different interpretation of the nature and meaning of audit report.

The crucial nature of auditing in ensuring the integrity and reliability of financial information cannot be overemphasized. It is for this reason that the canons of many countries require the attestation of financial statements by external auditors.

Unfortunately, there are criticisms of the auditor from which opinions have emerged over the years as a result of companies that have failed. This criticism of auditors in Nigeria by users of audited financial statements has stirred many a response both from the profession and statutes. It seems the users have a different idea of what auditing should be. This is what has led to the audit expectation gap. The existence of this gap has been caused by many factors. Moreover, the business environment is changing and this requires that the auditor’s responsibilities be increased to include fraud detection/prevention. Also, users want to be able to rely on audited financial statements for investment decision making. They also desire the absolute independence of the auditor because absence of it may reduce performance. Users also may have a different interpretation of the nature and meaning of audit report messages. These are some of the factors that contribute to the audit expectation gap.

Finally, the accounting profession in Nigeria and other climes has been under intense pressure due to rising public expectations, this expectation has been fuelled largely by demise of some financial institution as a result of widespread of financial scandals and false reporting rifle in this collapsed institution which in turn has cast the organizational controls and the professional auditors in very poor light.

It has also tended to undermine the confidence of the public in the profession to detect and prevent corporate abuses, yet audit failures are always blamed partly, on greed of the auditors, this lack of confidence on the auditing profession would in time destroy the fundamental nature of auditing, which is ensuring the integrity and reliability of financial information.

1.3. OBJECTIVES OF THE STUDY

The general objective of this study is to elicit and assess the role of auditor’s in audit expectation gap in Nigeria.

From this general objective, the following specific objectives are drawn:

Ascertain the responsibility and reliability factors which contribute to the audit expectation gap problem in Nigeria.

Ascertain the perception of auditors who are ICAN MEMBERS in Nigeria as to the suggestions for bridging the expectation gap.

Identify the opinion of auditors and audit beneficiaries on the statutory role of external auditors in Nigeria.

Investigate the nature of Audit Expectation Gap and users of financial statement in Nigeria.

Understand the perceptions of auditor and users regarding the auditing roles and functions in Nigeria.

Determine the role played by Auditor with respect to audit profession.

Suggest and provides recommendation to improve and enhances auditing professions.

1.4. RESEARCH QUESTION

In order to achieve these objectives, an ethnographic research approach has been used to answer the question of this research. The general research question includes:

What are the responsibility and reliability factors which contribute to the audit expectation gap problem in Nigeria?

Perception of auditors who are ICAN MEMBERS in Nigeria as to the suggestions for bridging the expectation gap?

What are the opinion of auditors and audit beneficiaries on the statutory role of external auditors in Nigeria?

Investigate the nature of Audit Expectation Gap and users of financial statement in Nigeria?

What are the perceptions of auditor and users regarding the auditing roles and functions in Nigeria?

What are the roles played by Auditor with respect to audit profession?

Are there any possible recommendations to improve and enhances auditing professions?

1.5. STATEMENT OF HYPOTHESIS

To achieve the above objectives, the following hypotheses are formulated for the research study, the hypothesis were stated in null forms.

HYPOTHESIS ONE (1):

Ho: There is no significant relationship between audit expectation gap and auditor responsibility relating to fraud detection and prevention, and soundness of internal control structure of the audited entity.

HYPOTHESIS ONE (2):

Ho: Ho: There is no difference between the opinion of auditors and audit beneficiaries on the statutory role of external auditors in Nigeria.

1.6 SIGNIFICANCE OF STUDY

The problem of audit failures globally had tended to exacerbate the problem of audit expectation gap. As a result the search for a solution has become frenetic. ICAN

MEMBERS, especially as auditors, stand at the centre of this effort at a panacea. The motivation for carrying out this study in Nigeria is that auditors are blamed for business failure, perhaps as a result of misunderstanding of the nature of auditing. This study will be beneficial to the following:

1. Audit clients: who form part of the audit beneficiaries will benefit from the results of this study. i.e. the various organization who needs auditing services. They will have a better understanding of the statutory objectives of external audit in order to reduce any unreasonable expectations of the auditor.

2. Auditors: who help to maintain public confidence in financial statements will understand the expectation of the society in view of protecting their interests and remaining relevant.

3. The Accounting Profession: may need to redefine the role of auditors with regards to AEG because of the changing nature of the business environment in Nigeria.

4. Scholars in Auditing, Forensic Accounting and Related Areas: who push the frontiers of knowledge will benefit from this study by developing research interests from the findings of this study. Also, they will have a broader understanding of the audit expectation gap in the Nigerian context.

Academics will also have a field day as this work will open a floodgate for further researches on other aspects of this all important subject matter as it affects Nigeria. Finally, the International community will have the benefit of Nigeria’s experience as the global search for solution to the audit expectation gap cankerworm gathers momentum.

1.7. SCOPE AND LIMITATION OF STUDY

The main focus of this study is to assess the role of auditor’s in audit expectation gap in Nigeria. Since the determinants of the audit expectation gap are numerous. For the purpose of carrying out a detailed analysis of research study, the research was restricted to the auditors who are mostly ICAN Members selected from the Central Business District of Lagos metropolis, including few stockbrokers selected through list of brokerage companies that trade on the Nigeria Stock Exchange.

In a research work of this nature difficulties are bound to be encountered. The researcher in the course of carrying out the research was faced with the following problems and constraints.

There was paucity of local literature as the researcher was threading on an area that has not been over flogged. Finance constituted another problem limiting the ability of the researcher to travel more extensively in search of relevant data and opinion. Some of the professional auditors and stockbrokers filled the questionnaires in a hurry, because of their busy schedules, thus affecting the quality of their answers. Time was of the essence in this research and this also affected the researcher.

On the whole, however, the researcher was still able to use his wealth of experience to navigate successfully through the difficulties and produce a work that will stand the test of time.

1.8 DEFINITION OF TERMS

1. Audit Expectation Gap: The “expectations gap” is the difference between what the public and users of financial statements perceive the role of an audit to be and what the audit profession claim is expected of them during the conduct of an audit (Ojo, 2006).

3. External Audit: This is an audit carried out by an independent person who is not an employee of the enterprise.

5. Quality audit is the process of systematic examination of a quality system carried out by an internal or external quality auditor or an audit team.

6. ICAN MEMBERS: These are members of the Institute of Chartered Accountants of Nigeria.

7. Expectation: This word refers to the purpose of audit as perceived by the users of financial statements.

8. Gap: This is the inability of auditors to meet the expectation of the users. In this study, the gap is a result of misunderstanding of the auditor’s role and responsibilities, inadequate understanding of the message passed by the audit report and expectations about auditor’s independence.

9. Reliability factor: it elicits the extent to which Auditors’ work or audited statements can be relied on.

10. Independence factor: this shows the extent to which independence of auditors affect the Audit Expectation Gap.

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Account Name: AMUTAH DANIEL CHUKWUDI

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HOW TO IDENTIFY SCAM/FRAUD

As a result of fraud in Nigeria, people don’t believe there are good online businesses in Nigeria.

But on this site, we have provided “table of content and chapter one” of all our project topics and materials in order to convince you that we have the complete materials.

Secondly, we have provided our Bank Account on this site. Our Bank Account contains all information about the owner of this website. For your own security, all payment should be made in the bank.

No Fraudulent company uses Bank Account as a means of payment, because Bank Account contains the overall information of the owner

CAUTION/WARNING

That you ordered this material shows you have agreed not to copy word-to-word.

FOR MORE INFORMATION, CALL:

08068231953 or 08168759420

Tags: ASSESSMENT OF AUDIT EXPECTATION GAP IN NIGERIA, AUDITOR’S CONNECTION.

7 years ago 0 Comments Short URL

ASSESSMENT OF E-TAX PAYMENT ON REVENUE GENERATION EFFICIENCY IN NIGERIA CASE STUDY OF LAGOS STATE BOARD OF INTERNAL REVENUE AND NIGERIAN TAXPAYERS.

ATTENTION:

BEFORE YOU READ THE CHAPTER ONE OF THE PROJECT TOPIC BELOW, PLEASE READ THE INFORMATION BELOW.THANK YOU!

INFORMATION:

ASSESSMENT OF E-TAX PAYMENT ON REVENUE GENERATION EFFICIENCY IN NIGERIA CASE STUDY OF LAGOS STATE BOARD OF INTERNAL REVENUE AND NIGERIAN TAXPAYERS.

CHAPTER ONE

INTRODUCTION

1.1. BACKGROUND TO THE STUDY

Tax is any form charge levied on a person or an institution by a governing body or its equivalent such that defaulted payment is punishable by law. The imposition of taxes and the institution of taxing is as old as civilization itself cutting across religion, race and continental borders. Prompt tax payment and reduced tax evasion is always a primary objective of the government in most civilizations that exist today. The issue of tax evasion has proven to be a difficult practice to curb even in nations with a proper database of its citizenry and the current mode of tax payment is redundant and hectic as ascertained through a survey of our case study. Some of the challenges governmental bodies have to overcome in order to encourage the prompt payment of taxes and effectively reduce evasion includes, developing convenient payment methods and having proper records keeping systems.

Taxation is essential for sustainable economic development, and tax administration is a basic function of a successful state. Taxation also helps make a government accountable to its citizens. When governments spend taxpayers’ money, they are more accountable to make budget decisions transparent and accessible.

Online tax system has received a great attention globally through the development of information technology, which affects the tax administration system. With the emergence of information technologies (IT), it is possible for the tax administrators to improve tax administration system by creating awareness about their tax structure that most of the taxpayers have limited knowledge about (Adeyemi, 2013). Electronic revenue collection in developing countries has gained increasing prominence in the policy debate recently. For instance Nisar (2013) argued that recent trends in public taxation stress the need of developing a system of tax assessment and collection that involves internet services. Several factors explain this, including the potential benefits of taxation for state building; independence from foreign aid; the fiscal effect of trade liberalization; the financial and debt crisis in the “West”; and the acute financial needs of developing countries. Governments in developing countries face great challenges in collecting tax revenues, which result in a gap between what they could collect and what they actually collect.

Wasao (2014), describes electronic tax system is an online platform whereby the taxpayer is able to access through internet all the services offered by a financial authority such as the registration for a personal identification number, filing of returns and application for compliance certificate, electronic tax system forms part of the revenue collection reforms by Nigeria federal Inland Revenue Authority whose main motive is enhancing tax collections and tax efficiency and thus, tax revenues have been increasing rapidly due to the country’s rapid economic development accelerated by the new systems.

Electronic tax filing or e-filing is a process where tax documents or tax returns are submitted through the internet, usually without the need to submit any paper return. The e-filing system encompasses the use of internet technology, the Worldwide Web and Software for a wide range of tax administration and compliance purposes. Electronic taxation differs among countries hence the name of the system differs from country to country.

Several suggested benefit of e-tax filing system have been mentioned in recent times, among them are that it allows taxpayers to conduct transactions within a few mouse clicks. This convenience can serve as a key driver of e-filing adoption. E-filing provides many aspects of ‘convenience’ to taxpayers (that is time to file, place to conduct the filing, ease-of use, information searching and online transactions) at a degree that is not available through traditional channels. E-filing also offers flexibility of time and reduces calculation error on the tax return form to the taxpayers.

Finally, tax systems in developing economies, like those in more developed ones, face both new challenges and new possibilities as a result of technological change. Malaysia’s ongoing reform of its electronic tax ﬁling and payment system shows how and under what conditions technology can beneﬁt both tax authorities and taxpayers, though The goal of any tax authority is to establish a system of tax administration that allows for the collection of required taxes at minimum cost. A tax authority engages in many activities, such as processing returns and related information from taxpayers, entering tax return data into a database, matching returns against ﬁling requirements, processing tax payments and matching them against assessments, and issuing assessments and refunds. One way to boost a tax authority’s efficiency is by expanding its use of information and communication technology and through this medium it will facilitate a broad range of services, including registering taxpayers, ﬁling returns, and processing payments, issuing assessments and checking against third-party information, an example of this e-tax payment system in Nigeria is Integrated Tax Administration System (ITAS) introduced in 2013 by the Federal Inland Revenue Service to improve tax administration in Nigeria and transform the tax compliance process away from the current manual system which is tedious and bureaucratic.

As a result of this, the research study tends to evaluate the effect of E-tax payment system on revenue generation efficiency in Nigeria.

1.2. STATEMENT OF PROBLEM

Worldwide, taxpayers’ resistance, underutilization and reluctance to use electronic filing system remain a great concern and still plague various tax agencies which are embracing electronic tax administration systems (EATAAC, 2002). The importance of understanding and influencing taxpayer’s acceptance of electronic filing system is critical, given the investment in technology and the potential for cost saving. Despite the increasing need to increase revenue collection and enforcement so as to provide public services, developing countries still face the challenges of low tax compliance and tax administration.

Electronic tax system was introduced in 2013 by Federal Inland Revenue Service to increase financial collection, administration, avail services to the tax payers all the time from anywhere, reduce costs of compliance and improve tax compliance. However, tax compliance levels remain low and tax collections are below the targets set by FIRS .Despite the increasing need to increase revenue collection and enforcement so as to provide public services, and the introduction of electronic tax systems in most countries across the global divide, developing countries like Nigeria, still face the challenges of low tax compliance and tax administration.

The E-filing offers many benefits to service providers, which are the tax authorities. To the service provider, e-filing minimizes their workload and operational cost due to the submission of tax returns in a paperless environment. It also reduces the cost of processing, storing and handling of tax returns. Despite these benefits associated with e-filing, tax authorities face some major challenges towards the implementation of the e-filing system. One such challenge is the public perception of the e-filing system. After using an e-service over the Internet, the public may find the e-service system easy and useful or otherwise. Since the public cannot directly communicate with tax personnel, see or touch the tax forms as the service is provided online, the e-filing service system delivered to them may not perform as expected. In addition, the public may be burdened by the time and effort spent learning the new system and accommodating any services failure. Although time is a non-monetary effort and varies among individuals, researchers have recognized that time is a cost that consumers/users must pay for any use of products/services.

Another major challenge is to ensure that the system runs smoothly and efficiently during the tax filing period each year. This refers to the technical aspects of e-filing, i.e. computer and information systems utilized for the efiling system need to be stable and reliable enough to handle a large amount of information processing, especially during the peak period of e-filing and particularly as the deadline approaches. The service provider has to ensure that the e-filing system can handle the heavy processing of data during the month of tax submission without any glitches.

Another critical issue on e-filing is that the tax authorities have to ensure that the confidentiality and privacy of the information submitted through the Internet is preserved. If tax authorities are not able to provide an e-filing system that could overcome these challenges, taxpayers might be reluctant to adopt the e-filing system. The issues, such as loss of valuable time, information privacy, glitches on the system’s performance, if not strategically overcome, could be translated into risks to current and potential adopters of the e-filing system.

1.3. OBJECTIVES OF THE STUDY

The general objective of this study was to assess the effects of electronic- tax system on the revenue generation efficiency of FIRS, case of Ikeja Metropolis.

This study was guided by the following specific objectives;

To establish the effects of electronic tax payment on revenue collection efficiency by tax authority.

To establish the challenges of using electronic- tax system on revenue collection efficiency.

Examine the effect of online tax system on tax compliance among small taxpayers.

Examine the significant relationship between perceived ease of use and online tax system usage.

Identify factors affecting taxpayers’ acceptance of online tax payment system in Nigeria.

Suggest possible solutions to the challenges faced in the adoption of E-tax payment system by taxpayers.

1.4. STATEMENT OF HYPOTHESIS

Hypotheses are assumptions on which a researcher bases his investigation and on the basis of which a confirmation of the assumed conditions are tested and validated. Based on the literature, the following hypotheses were developed. The null hypothesis (Ho):

Hypothesis One

H0: There is a direct negative relationship between online tax system (E-Payment) and efficiency of revenue generated by Government.

Hypothesis two

Ho: Perceived ease of use of e-filing will have a positive effect on the adoption of e-filing among taxpayer in Nigeria.

1.5. SIGNIFICANCE OF THE STUDY

The Lagos State government relies heavily on taxes to fund its infrastructural and recurrent development expenditure. An increase or decline in tax revenues has a direct bearing on the economy of Nigeria as a country.

The study is likely to reveal the strengths or weaknesses associated with implementation of new technology and its benefits not only to the revenue generated by the government but also to taxpayers thereby, enriching knowledge to other state government institutions planning to embark on similar modernization programs.

The research will also contribute to the existing body of literature knowledge and may form the basis for further research in the area of E-tax technology and revenue generation in Nigeria.

This study shall also seeks to contributes to understanding the effective usage of the online tax system through self-employed taxpayers that leads to increase in tax compliance and revenue generation in Nigeria.

Furthermore, the recommendations made will be of great help to LSIRS and the small taxpayers in carrying out a cost-benefit analysis on the use of technology in efficient tax administration. This may aid in future policy formulation on the same.

Finally, it will also be of use to the student, researchers for further research study, the existing and prospective taxpayer as well as any interested party from other field of study who wish to understand the practical aspect of taxation. It will assist students in their knowledge build-up and appreciation of the practical E-tax situation of the government.

1.6. SCOPE AND LIMITATION OF THE STUDY

Online tax system is referred to as the transmission of tax information directly to the tax administration using the Internet (Edwards-dowe, we, 2008). The online tax system makes an effective impact on the economic toward improving the level of income generation and tax compliance by the taxpayers. This is because of its convenience, time saving, cost effectiveness from both the tax administrators and the taxpayers

The scope of this study is on E-tax payment and revenue generation of government in Nigeria, with it focus on the Lagos State board of internal Revenue as the case study, and some few taxpayers in the Lagos Metropolis.

Particular care will be taken to ensure that all tax officials of Tax authority and various taxpayer at all various level of education are covered in the samples. As Lagos has become the melting point of Nigeria’s ethnic groups, the researcher will, among others, sample their opinion on the research topic in order to get the best possible answers.

In a research work of this nature difficulties are bound to be encountered. There was paucity of local literature as the researcher was threading on an area that has not been over flogged, also the researcher could not generate enough secondary data because little research has been done earlier in relation to the research study. Finance constituted another problem limiting the ability of the researcher to travel more extensively in search of relevant data and opinion.

Some tax officials filled the questionnaires in a hurry, because of their busy schedules, thus affecting the quality of their answers. Time was of the essence in this research and this also affected the researcher.

1.7. DEFINITION OF TERMS

Electronic tax filing or e-filing is a process where tax documents or tax returns are submitted through the internet, usually without the need to submit any paper return.

Tax compliance is defined as the full payment of all taxes.

Tax non-compliance is referred to as any difference between the actual amount of taxes paid and the amount of taxes due. Tax Service Quality

Taxation: is defined as the process or machinery by which individuals, groups, or communities are made to contribute in some agreed quantum and method for the purposes of the administration and general development of the society they belong.

Tax service quality (TSQ) can be defined as entire taxpayers’ perceptions or evaluation associated with electronic service connection with the Internet marketplace

Responsiveness is aimed on how fast are the tax administrators in responding to any inquiries made by the taxpayers. Responsiveness are referring to the preparedness of self-employed taxpayers to accomplish a goal in an accurate and timely manner.

Reliability is the process by which the system has the ability to assess it administration function accurately and dependably by evaluating the requisition.

Electronic tax systemis an online platform whereby the taxpayer is able to access through internet all the services offered by a financial authority such as the registration for a personal identification number, filing of returns and application for compliance certificate.

CITA: (Company Income Tax Act) it is a Federal Law operated by the FIRS, which deals with the taxation of all limited liability companies in Nigeria with the exception of those engaged in petroleum operations.

10. Persons/tax payers: It includes all taxable persons be it individual or corporate bodies.

FBIRS: (Federal Board of Inland Revenue Services): It is an operational arm of Federal Board of Inland Revenue which is responsible for the Federal Tax Matters.

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Tags: ASSESSMENT OF E-TAX PAYMENT ON REVENUE GENERATION EFFICIENCY IN NIGERIA CASE STUDY OF LAGOS STATE BOARD OF INTERNAL REVENUE AND NIGERIAN TAXPAYERS.