CHAPTER ONE INTRODUCTION 1.1 BACKGROUND OF THE STUDY
Every professional body has some code of conduct governing their relationship .with their members and other bodies. Before an auditor accepts an engagement he has to consider certain things, for example, an accountancy firm whose senior partner has been a director of a proposed client for some years could not accept the audit even if the partner resigned as a director. Again, it is an established professional custom for the proposed auditor to seek the permission of the company to communicate with the previous auditor to see if there is any professional or other reason why the change was necessary and this would help him decide whether or not to accept the offer. If the company refuses to grant him the permission, he should reject the offer. If the permission is granted, the previous auditor would still seek the permission of the client to disclose information; if the permission is refused the appointment will be rejected. (Howard, 2008)
Today most businesses are operated by limited companies which are owned by shareholders and managed by directors appointed by the shareholders. Owners who appoint managers to look after the owner’s property will be concerned to show what has happened to their property.
Like we were told in Matthew chapter 25 about the rich man who went on a journey and delivered his servants to look after his business while he was away. On his return he asked each of his servants to account for the goods with which he had been entrusted. He was not pleased with the servant who had not profitably managed the goods in his master’s absence. Today, the process of managers reporting to the owners of business is call stewardship accounting. This reporting and accounting is done by means of financial statements. Financial statement usually takes the form of profit and loss accounts and balance sheet. (Millichamp, 1996)
In summary, for the government owned corporation to achieve the above objectives there is the need for administered to safeguard against misappropriation, frauds, mismanagement and other sharp practices by theexecutive and staff of the council. As a result, the executive should be able to render account of their stewardship to the people through proper management and control of resources using internal audit techniques in the council. (Ndorne, 1998)
1.2 STATEMENT OF THE PROBLEM
The unsatisfactory performance of government owned corporation in Nigeria had been blamed on diverse reasons. Makoju (1991) had blamed the poor performance state to the administrative and exhaustion of the civil service which is still intact in the management and operations of such companies. The Federal Ministry of FinanceIncorporated (2006) had identified high incidence of fraud, government’s employment of staff based on political connections rather than on ability to perform, parliamentary control and financial indiscipline as causes of poor performance. Dogo (1990) has alleged that the accounting systems of Government owned corporation in Nigeria do not seem to guarantee proper and up to-date financial records thus making auditing difficult, if not impossible.
1.3 AIM AND OBJECTIVE OF STUDY
The purpose of this study is to investigate the impact legislation on the audit of Government Corporation. Specifically the objectives is to;
1.4 RESEARCH QUESTIONS
For the research work to be carried out, the following research questions will be carried out, they are;
1.5 RESEARCH HYPOTHESIS
For this study to be carried out, the following hypothesis will be formulated;
Ho: There is no significant difference between legislation and the auditing of Government Corporation.
1.6 SIGNIFICANCE OF THE STUDY
This work is intended to be of benefit to business corporations in general.
Following the completion of work and the result made available to them, it will be in a position to re-examine the legislation on the audit of Government Corporation and update them so as to enjoy these benefits available to firms with good auditing techniques and also avoid plugging their business into financial and operating difficulties.
Also the outcome of the research work will be significant to management of the selected government owned corporation. Also it will benefit companies and enterprises. It will equally be important to other researchers and scholars who may wish to carry out further research on the subject matter or on related topic.
1.7 SCOPE OF THE STUDY
The scope of this study focuses on the legislation on the audit of Government Corporation. To ensure their compliance with the law of the land and to also plan for their future growth and expansion.Its utilization government owned firms should have intended to cover all the government owned firms.
1.8 LIMITATIONS OF THE STUDY
Limitation of study are constraints that restricts the writer from elaborating more on the project. In other words, they are restrictions encountered by the writer in course of writing his project, which are beyond his control.
The major obstacle is the co-operation of respondents.Quite a number of responses were made but not to the extent of warranting a thorough knowledge of the organization’s activities as a result, the study was unable to meet the writer’s objective. The writer was faced with financial constraints and as a result could not go round getting more information for writing the project. This to some extent hampered the study.
Furthermore, availability of time for the research work was also a constraint to the study. This is due to the fact that the most writer’s time was spent in attending lectures writing semester tests and assignment.
Time: This was greatly associated/include to the problem encountered during the execution of this research study. Because, as a student the time to do some other things such as reading doing of home works/assignment was limited in the course of executing this study
1.9 DEFINITION OF TERMS
Government Corporation: A government corporation is a state-owned entity that is created in order to pursue commercial or industrial activities on behalf of a national government. These can be completely owned or partially owned by a government. Also it is a corporation set up by a national government to carry out business transactions on its behalf.
Audit: An audit is an objective examination and evaluation of the financial statements of an organization to make sure that the records are a fair and accurate representation of the transactions they claim to represent. It can be done internally by employees of the organization.
Also, an audit is a systematic and independent examination of books, accounts, statutory records, documents and vouchers of an organization to ascertain how far the financial statements as well as non-financial disclosures present a true and fair view of the concern.
Legislation: The process through which statutes are enacted by a legislative body that is established and empowered to do so. A particular bill or other piece of legislation.