Audit Independence, Enhancing Accountability And Transparency In Corporate Organization

INTRODUCTION
1.1 Background of the study
In recent years, the independence of an auditor has come under criticism. This is because the essence of auditing was to authenticate the true and fairness of the financial statement, and to give a true picture of the financial statement of the reporting entity, and to give credibility to it. This however has not been achieved, as the public has been misled by “window dressed” financial statement which the auditor has audited and gives an unqualified opinion; and thus mislead the users of this financial statement who relied on it credibility. Many critics have observed that the public accounting profession has done little to police its own members. Due to the fact that most companies which had been wound up had it financial statement audited within the year and a high margin of profit reported , and yet nothing is done to the auditors who authenticate and attest to it credibility. This and so many other cases put forward by Taylor and Glezen (1994) has brought to light some dismal performance of some auditing firms. Among the prominent case of criminal action against auditors is certified professional midwives (CPMs) in United States Vs Natali (1975) where two auditors where convicted of criminal liability under the 1934 act for certifying financial statement of national student marketing corporation that contain inadequate disclosures pertaining to account receivable. The fraud was so extensive and the audit work so poor that the court concluded that the auditors must have been aware of the fraud and where guilty of complacency.However, Azubuike (2005) state that auditing is derived from the Latin word AUDIRS which means to hear. Auditing profession emanate as a result of the development in the business organization over the years from sole proprietorship to partnership and then to corporate entities, ownership continue to be separated from the control (management) of the business.
Ikechukwu and Bridget (2004) Opine that today providers of capital that is business owners or shareholders engage managers (steward) to run the business organization on their behalf. They managers are accountable to the owners then the question arises: How true or correct is the presentation of the managers to the owners of the business on the day-to-day running of the business.An intermediary (Auditor) comes into play to mediate between to owners and the management.Ikechukwu and Bridget (2004) define audit as the independence examination if an expression of opinion on the financial statement of an enterprise by appointed auditor in pursuance of that appointment and in compliance by any relevant statutory obligation. Okezie (1995) see An audit in a process carried out by a suitable, qualified accountants or auditors whereby the accounts of business entities including charities, trust and professional firms are subjected to scrutiny in such a details as to enable the auditor to form an opinion as to the accuracy, truth and fairness. This opinion is then embodies in an “audit report” (attestation) address to interested parties who commission the audit or to whom the auditors are responsible. For this audit report to be of high quality there is need for professional independence.The subject of transparency and accountability in modern day corporate organizations has continued to receive attention as never before. It has become a subject of discuss and empirical research both in developed and developing countries of the world simply because of some recent financial crises and corporate scandals. Greater transparency and accountability are argued to improve the performance of corporate organizations through better resource allocation, enhanced efficiency and increased growth prospects (Chipwa, 2005).
Enhancing transparency and accountability are central to the improvement of corporate governance mechanisms. Basically, transparency is a vital means of enhancing the performance and accountability of firms (Katra, 2003). Transparency is seen as critical for the culture of accountability especially where market competition thrives (Katera, 2003). This implies that those with stake in the corporate organization must have all relevant and material information regarding its affairs in order to make proper judgment and if very necessary take remedies. This becomes possible only if those charged with the day to day management of the corporate organization are transparent and accountable enough. This is premised on the fact that the task of managing the corporate organizations’ affairs is fast moving in the ever-changing market or business environment. The essence of transparency and accountability especially in Nigeria as a developing country cannot be over emphasized. In this regard, Katera (2003), submits that the key to business survival, creating and maintaining wealth for the corporate organizations lies primarily on systems of transparency and accountability built into governance structures of such corporations. There is therefore the need or quest to enhance transparency and accountability so as to ensure shareholders’ wealth maximization and overall performance of the corporate organization. Against this backdrop, this study focuses on enhancing accountability and transparency in corporate organizations in Nigeria.

1.2. Statement of the Research Problem
Transparency and accountability are increasingly more topical, broadly relevant, but also more under-researched in enterprises (Chipwa, 2005). Inspite of existing company regulation encompassing legislative framework and guidelines which govern corporate activities, the lack of or inadequate transparency and accountability encapsulated into sound corporate governance practices has partly led to organizational failures (Katera, 2003). To the best of our knowledge, literatures extensively dealing on transparency and accountability in corporate organizations in Nigeria are scanty. Similarly, the factors enhancing transparency and accountability in corporate organizations in Nigeria have also received little empirical research to the best of our knowledge. In the light of this existing gap, the following research questions are raised.

1.3. Objectives of the Study
The objectives of this study are broadly classified into two general objective and specific objectives. The general objective is basically on enhancing transparency and accountability in corporate organizations. However, the specific objectives of the study include:
• To find out if audit committee enhances transparency and accountability in corporate organizations.
• To determine if board independence enhances transparency and accountability in corporate organizations.
• To ascertain if ownership concentration enhances transparency and accountability in corporate organizations.

1.4. Scope the study
This study focuses on enhancing transparency and accountability in corporate organizations. The study further examines the variables that enhance the transparency and accountability in the Nigerian banking industry. The quoted banks whose operations are based in Benin metropolis are examined via structured questionnaire with a view to making inferences.

1.5 Research Hypotheses
H0: audit committee does not enhance transparency and accountability in corporate organizations.
H0: Board independence does not enhance transparency and accountability in corporate organizations.
H0: Ownership concentration does not enhance transparency and accountability in corporate organizations.

1.6 Significance of the Study
The subject matter of this becomes relevant drawing from present day financial crises rocking firms in developed countries and in developing countries such as Nigeria.
Firstly, the results of this study will be of interest to corporate regulators such as the federal government and central bank of Nigeria. This is because regulation aimed at making businesses or corporate organizations more transparent and accountable will have benefits to ordinary investors who rely on company management’s corporate governance and financial disclosures and will aid the overall development of the Nigeria economy.
Secondly, the audit profession will be interested in the research results simply because evidence that corporate organizations are not transparent and accountable could suggest that auditors need to me more vigilant.
Thirdly, the findings of this study will be beneficial for company management who seek to attract external investment.
Very little academic research has been done on this subject matter in Nigeria. Thus, this study will enrich the literature on the corporate reporting practices, transparency and accountability of firms, thereby adding to the body of knowledge.
Lastly future, researchers definitely will find the outcome of the study useful in terms of reference materials.

1.7 Limitations of the Study
Difficulty in generating reasonable, adequate and reliable information from respondents- Respondents tend to provide information which they feel the researcher would be pleased to get, which may not be the right information.
Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (questionnaire and interview).
Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8 Definition of terms
Audit: this is an official examination of business and financial records to see that they are true and correct.
Independence: the freedom to organize a business and make decisions for the business.
Constraint: a strict control over the way that you behave or allowed to behave.
Financial statement: Akakpan (2002) defines financial statement as the financial data or reports concerning an organization. Financial statement or report is a formal record of the financial activities of a business, person or other entity. It consist of statement of financial position, statement of comprehensive income, income statement, value added statement, statement of source and application of find.
Working papers: Audit working papers contain information from accounting and statistical records, personal observation, they result interview and enquires and other available sources.
Working papers according to meigs etal (1982) includes all the written records, of the work performed by the auditors, the methods and procedures that followed and the conclusion they developed. The information contained there constitutes the principal evidence of the auditors work and their resulting conclusion.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLE
An accounting term that encompasses the conventions rules and procedures necessary to define accepted accounting practice at a particular time. GAAP as used in reports include accounting principles and practice as well as the methods of applying them.

PROFESSIONAL ETHICS
These are rules of conduct imposed by professional Accounting bodies on their members as a guideline on audit work.
Peer View: Taylor and Glezen (1994) define peer view as review of an audit firms systems and procedures, approaches and audit standards generally conducted by another audit firm of comparable size and reputation

1.9 ORGANIZATION OF STUDY
This research work is organized in five chapters, for easy understanding, as follows Chapter one is concern with the introduction, which consist of the (overview, of the study), statement of problem, objectives of the study, research question, significance or the study, research methodology, definition of terms and historical background of the study. Chapter two highlight the theoretical framework on which the study its based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding. Chapter five gives summary, conclusion, and recommendations made of the study