https://www.finalyearproject.xyz/2020/07/Role%20of%20An%20Auditor%20in%20the%20Prevention%20and%20Detection%20of%20Fraud%20in%20an%20Organization.html

ABSTRACT

The objective of the research project is to highlight the problems caused by fraud and also, state the important roles management and the auditor play in the detection and prevention of fraud an organization.

The population size for the research project were limited to the management level of the organization. Information and data were collected through the use of research questionnaires and the company’s annual financial statement. The research questionnaires distributed were 50 of which 45 were completed and returned by the respondents.

This represented a response rate of 90%. The hypothesis formulated were tested using chi-square statistical tool.

The study reveal that both auditors and management play an important role in the detection and prevention of fraud. This research study is significant because the finding and subsequence recommendations made there on will be useful not only in Nigeria Bottling Company Plc, but also to the Nigeria public at large.

CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND OF THE STUDY

In the earlier days man started his trading activities with his fellow human beings via. Barter trading system”. This form of business activity calls for no record keeping and auditing activities evolved from mere barter trading into a form of trading or business activities which became more complicated and dynamic. This them made it necessary for man to appoint stewards to manage his business activity on his behalf.

At the end of each period of time the steward is therefore expected to give an account on how he has managed the business. This account may o may not be accepted by the owner. As time goes on, the complexity of modern business transaction calls for voluminous account keeping and ultimately the independent examination of such records. This is so important to test the truth and fairness of the statement holders involve in the business of which the correctness of the stated statement will be most importance to them.

1.2       STATEMENT OF THE PROBLEM

The statement is basically meant to highlight the various and problems which may be attributable to the perpetration of fraud and misrepresentation of fact in the financial statements of an organization some of the problems are highlighted below

1. The nature of the various organization which involves human beings of diverse background and interest in a relationship of trust.

2. Wide-network of branches, some remotely not well-equiped and inadequately provided with good communication network, might make an organization susceptible to fraud because the worker may take the advantage to perpetrate fraud.

3. Lack of effective and efficient internal control mechanism in an organization, which may provide for the necessary checks and balances.

4. The social economic environment in which a company operates will perhaps have an overbearing influence on the thinking and attributes of management and staff.

5. Lack of good organization structure and the experience of both the management and staff.

6. The degree of adherence to all the accounting standards and practices.


1.3 PURPOSE OF THE STUDY

The study is actually aimed at educating prospective scholars with the dangers of fraud in an organization with the view to assisting managers, shareholders, customers, government and the general public in reducing the practice and tackling the ugly incidence of fraud in the daily transactions of an organization. Also, to further draw to the notice of people the causes, consequences, trends and problems of fraud in an organization and the way out via the appointment of an auditor for the adoption of good and sound internal control system.

Furthermore, the study is also based on its education of the public on the importance and role of an auditor in fraud prevention and detection in an organization and the method which an auditor uses in reducing the effect of fraud to the bearest minimum.

 

1.4 SIGNIFICANCE OF THE STUDY

The significance of the study is to state some of the benefits which are accruable to the general public, scholars and government.

Moreso, to the company which is being used as the case study.

Therefore, as the research topic implies there are plethoral of benefits which are indeed derivable from the study and also be of immense benefit to the society. Fraud is indeed a cancerous disease which may afflict an organization if stringent and effective internal control system are not adopted in the operation of its business.

Although, many wrongly believe that the primary responsibility of an auditor is to stop the perpetrations of fraud in an organization, it is the primary responsibility of management to adopt measures which will prevent the perpetration of fraud in their organization.

The auditor and management are therefore required to compliment each other in reducing to the bearest minimum the incidence of fraud in an organization. An effective and efficient internal control system, helps to add value to the optimization of an organizations capacity in the minimization of cost and maximization of wealth to the overall benefits of all stakeholders. Internal control system helps to reduce the excesses of management by making them to be financially prudent and responsible and accept responsibility for every action taken by it. Internal control gives a clear picture of the organizational structure of a company for checks and balance purposes by preventing collusion amongst staff and for customers for the perpetration of fraud.

 

1.5 SCOPE OF THE STUDY

The scope of the study will basically be limited to the role played by the auditor in the prevention and detection of fraud in Nigeria Bottling Company Plc, Lagos.

As one of the big soft drink companies in Nigeria, with a strong financial and human resources base, the company has an extensive production process which are grouped into three (3) groups. 

Therefore, based on the extensive and integration strategy of the production process adopted by the company, the auditor must have a firm grip of the working and level of collaboration amongst the divisions that make-up the company and aloes, how the internal control system put in place by the management are:.

1.6 LIMITATIONS OF THE STUDY

There are various and obvious general constraints which have been envisaged to be immense limitation are

• Funds

• Time

• Lackadaisical attitude of respondents to questionnaire

• Data collection

• Epileptic power supply

FUNDS: This is one of the major factors which could limit ones ability in carrying out an extensive research project, because there are competing demands for the limited funds available.

TIME: Time they say is the most delicate and sensitive factors in the life of man, because the time spent can never be regained again.

LACKADAISICAL ATTITUDE OF RESPONDENTS TO QUESTIONNAIRES: The respondents to the questionnaire may not exactly see the expediency and importance of the research project to themselves and the society at large, therefore fail to show much interest.

DATA COLLECTION: The collection of data in our peculiar environment can be very tasking due to non-availability of record keeping in some of our public institutions and perhaps some private organizations.

EPILEPTIC POWER SUPPLY: Energy say is the engine room for this industrialization and growth of the economy. In this light therefore, the effect of an epileptic power supply on the preparation of the research project cannot be over emphasized, for the apparent delays with which will impact on the researchers ability and connivance in doing their work.

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