The Role of Auditors in the Recent Nigerian Banking Crisis

Abstract

In market societies people routinely have to transact with faceless corporations about whom they have little personal knowledge. In such societies external auditing and auditors are promoted as a trust engendering technology and watchdog with the capacity to promote a particular kind of social order. Investors and depositors in a number of banks in Nigeria have lost several billions of Naira due to the lack of implementing qualified audit report theory and practices of accountants and auditors, which has resulted in the distress of a number of banks. This research work has examined the contemporary auditing and the role of accountants and auditing firms in causing the collapse of banks. The paper locates the role of auditors within the broader dynamics of professionalism and the pursuit of profits to argue that major accountancy firms are becoming more and more willing to increase their profits by indulging in anti-social practices that show scant regard for social norms and even legal rules and regulations. Contrary to their claims to be protecting the public interest, accountants and auditors may be partly responsible for cases of distress and the collapse of banks in Nigeria, as they failed to qualify their reports when there were indications of financial difficulties in the banks. There is also evidence to show that auditors have collected large sums in audit and non-audit fees. Such events raise questions about the value of company audits, auditor independence and the quality of audit work. This paper argues that the basic auditing model is flawed since it makes auditors financially dependent on companies. The conventional approach to 'audit quality' is also inadequate as it pays little attention to the organizational pursuit of profits and the social

The Impact of the Opinions of the Independent Auditors on the Investor Decisions in Banking Sector: An Empirical Study on the Banks Operating in Turkey

“…In the audit, the authors express that the audit quality that increases together with the independency of the auditor shall provide the protection of the deposit needed by the deposit owners and shall increase the interest of other authorities in the sector. Jibrin, Blessing, & Danjuma (2014) examined the role of the accountants and independent auditors in the banking crisis experienced in Nigeria by means of the case study together with the theory and application of the qualified audit reports that have become a questionable issue in the banking sector of Nigeria. The inclusion of the accountants and auditors in the unethical activities of the operation especially in the crisis period has drawn the attention of the public to the deficiencies in the applications.…”