An Assesment of the Role of the Auditor in Fighting Corruption in an Organization
CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
Reliable accounting and financial reporting issued by auditors help organisations in allocating resources from the society in an efficient manner. Although the primary goal of an organisation is profit making and to allocate limited capital resources to the production of goods and services for which society’s demand is great, a highly complex phenomenon which is corruption poses a threat to those goals and services. However, most organisations spend huge sums of money adopting strategies to fight corruption (Whittington et al., 2004).
2.2 History of Auditing
The word “Audit” originated from the Latin word 'auditus' which means, 'a hearing'. In the earlier days, whenever there was suspected corruption in a business organization, the owner of the business would appoint a person to check the accounts and require hearing the explanations given by the person responsible for keeping the accounts and funds. In those days, the audit was done to find out whether the payments and receipts were properly accounted or not accounted for (http://www.eHow.com).
During the advent of the Industrial Revolution, from 1750 to 1850, auditing evolved into a field of fraud detection and financial accountability. Until then, Auditing existed primarily as a method to maintain governmental accountancy and record-keeping. The incidence of the revolution resulted in businesses expanding thereby resulting in increased job positions between owners to customers. Resultantly, management was hired to operate businesses in the owners' absences, and owners found an increasing need to monitor their financial activities both for accuracy and fraud prevention. (http://www.eHow.com).
In the early 20th century, the reporting practice of auditors, which involved submitting reports of their duties and findings, was standardized as the "Independent Auditor's Report." The increase in demand for auditors led to the development of the testing process
LITERATURE REVIEW
2.1 Introduction
Reliable accounting and financial reporting issued by auditors help organisations in allocating resources from the society in an efficient manner. Although the primary goal of an organisation is profit making and to allocate limited capital resources to the production of goods and services for which society’s demand is great, a highly complex phenomenon which is corruption poses a threat to those goals and services. However, most organisations spend huge sums of money adopting strategies to fight corruption (Whittington et al., 2004).
2.2 History of Auditing
The word “Audit” originated from the Latin word 'auditus' which means, 'a hearing'. In the earlier days, whenever there was suspected corruption in a business organization, the owner of the business would appoint a person to check the accounts and require hearing the explanations given by the person responsible for keeping the accounts and funds. In those days, the audit was done to find out whether the payments and receipts were properly accounted or not accounted for (http://www.eHow.com).
During the advent of the Industrial Revolution, from 1750 to 1850, auditing evolved into a field of fraud detection and financial accountability. Until then, Auditing existed primarily as a method to maintain governmental accountancy and record-keeping. The incidence of the revolution resulted in businesses expanding thereby resulting in increased job positions between owners to customers. Resultantly, management was hired to operate businesses in the owners' absences, and owners found an increasing need to monitor their financial activities both for accuracy and fraud prevention. (http://www.eHow.com).
In the early 20th century, the reporting practice of auditors, which involved submitting reports of their duties and findings, was standardized as the "Independent Auditor's Report." The increase in demand for auditors led to the development of the testing process