Impact of Auditing on Bank Profitability
CHAPTER ONE INTRODUCTION
1. BACKGROUND OF THE STUDY
Business development in the 19th Century gave birth to the concept of Limited Liability Company, hereby ownership is separate from management. This concept was initially vague, but was quickly made explicit and popular by the celebrated case of Solomon Vs. Solomon and Col. Ltd.
Uzochukwu (2004), said that in an attempt to bridge the information gap between the shareholders on one hand and the directors on the other hand. The companies Act of 1884 (UK), (The First Act) was passed to make it compulsory that annual report and accounts be prepared compulsory by directors and be submitted to the shareholders in their Annual General Meeting (AGM).
Although, the accounts were required to show a true and fair view of the company’s state of affairs. Yet, some unscrupulous directors manipulated the accounts to exploit and victimize the shareholders. In almost all cases, shareholders were presented with accounts showing much less than the true profit that least dividend and paid in shareholders and lesser tax to the government.
The companies Act of 1888, stopped in to save the shareholders and the Government from this dilemma. The Act required external auditors with sound financial training to examine Annual Report and Accounts before they were presented to shareholders.
Since then, the function has grown in importance and had continued to enjoy recognition and fortification by various companies Acts worldwide. In Nigeria, similar recognition was first carried by the companies Act 1968, and currently by the Companies and Allied Matters Decree 1990.
Olusanya (2000), said that auditing, as it exists today, developed quite late because the development of accounting of accounting was slow as compared to economic theory. The eventual development of auditing was based on a strong determination to conquer problems associated with early beginning of business
1. BACKGROUND OF THE STUDY
Business development in the 19th Century gave birth to the concept of Limited Liability Company, hereby ownership is separate from management. This concept was initially vague, but was quickly made explicit and popular by the celebrated case of Solomon Vs. Solomon and Col. Ltd.
Uzochukwu (2004), said that in an attempt to bridge the information gap between the shareholders on one hand and the directors on the other hand. The companies Act of 1884 (UK), (The First Act) was passed to make it compulsory that annual report and accounts be prepared compulsory by directors and be submitted to the shareholders in their Annual General Meeting (AGM).
Although, the accounts were required to show a true and fair view of the company’s state of affairs. Yet, some unscrupulous directors manipulated the accounts to exploit and victimize the shareholders. In almost all cases, shareholders were presented with accounts showing much less than the true profit that least dividend and paid in shareholders and lesser tax to the government.
The companies Act of 1888, stopped in to save the shareholders and the Government from this dilemma. The Act required external auditors with sound financial training to examine Annual Report and Accounts before they were presented to shareholders.
Since then, the function has grown in importance and had continued to enjoy recognition and fortification by various companies Acts worldwide. In Nigeria, similar recognition was first carried by the companies Act 1968, and currently by the Companies and Allied Matters Decree 1990.
Olusanya (2000), said that auditing, as it exists today, developed quite late because the development of accounting of accounting was slow as compared to economic theory. The eventual development of auditing was based on a strong determination to conquer problems associated with early beginning of business
References: Akinyemi, S. T. (2000).Research Writing Made Essay: Lagos, Education Consultants and Publishers Braimoh, D. D. and Olaleye, B. O. (2003).The Constructivists’ Approach to Education: Research Methodology Lagos: JEB Ace Publisher