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AN ASSESSMENT OF AUDITING PROCEDURE IN THE BANKING INDUSTRY (A CASE STUDY OF KINGSTONE BANK TAIWO BRANCH, ILORIN.)

CHAPTER ONE

1.1   INTRODUCTION

Audit itself is a Latin word from the word Audire i.e. to “Hear” in those ancient times, the account of an estate domain or manor prepared by managers are to be head to the owner in the presence of an outside know as auditor.

According to the auditing standards, auditing is defined as the expression of opinion on the financial statement and understanding records of an enterprise by an appointed auditor in pursuant of the audit objectives and in compliance with his appointment and any relevant statutory obligation like laws and regulation.

Also in this modern time, an audit is a process carried out by a suitable qualified auditor who has undergone a professional examination by a professional body well known and recognized in the country, and also who has been given license to practice as an auditor where by the accounting record of a business entity are selected to scrutiny in such a way that will enable the auditor to form an opinion, the embodied in an audit report addressed to those interested parties who commission the audit or whom the auditor is  responsible to under the status.

1.2   STATEMENT OF THE PROBLEM

Evidence has shown that the banking industry facing a lot of problems through unqualified or incompetent auditor, a competent auditor should be able or capable to assessing of auditing procedure in the banking industry, well, there should be suitable qualified auditor who has undergone a professional examination by a professional body well known and recognized in the country, in which the financial statement of the bank industry will be audit well.

Also another problem facing in assessment of auditing procedure in banking industry is the management, if the management are not well informed there will problem if they cannot provide a well qualified external auditor not internal auditor.

 

1.3   RESEARCH QUESTION

In order to give his research work some degree of validity the following question were formulated

1. To establish whether the procedure can reduce the degree of errors.
2. To ascertain the practically of standard auditing in banking industry.
3. To investigate the bank’s accountings systems of internal control and the impact of audit on this.
4. To establish whether the introduction of audit had aids to detect all kind of fraud in the banks accounts.
5. And finally, to find out the importance and standard of auditing in banking industry.

 

1.4   OBJECTIVE OF THE STUDY

In the early history, it is popularly believed that the primary purpose of auditing was to detect errors but with development of a new intellect about the primary objectives of auditing, the purpose is report which includes the following.

The question of fraud and implementation of account have been a major problem in the banking sectors today. How far has the respond to curb this?

1. To examine the auditing procedures being practiced or being carried out in the bank.
2. To examine the problem areas such as “ bottle neck” on the part of the bank, in achieving their desired goals examine area such as internal control system of the bank and how strong it is.
3. Computerization of bank transaction common errors in the bank account and many others.
4. Finally, to evaluate the performance of the bank and make contribution to knowledge as regards operation.

 

1.5   RESEARCH HYPOTHESIS

 

The research hypothesis used in this project is as follows:

Ho:   An assessment of auditing procedure in the banking industry is very vital

Hi:    An assessment of auditing procedure in the banking industry is not very vital

 

1.6   SIGNIFICANCE OF THE STUDY

The auditing procedure is very significance in the sense that the need for an independent audit arose principally from the separation of ownership from management and the consequent need to safeguard the interest of the owners of the company making in the management.

It protect the interest of investing public provides that company in incorporated under the decree which is the company and allied company (CAMD) and finally to ensure the shareholder that the directors have fulfilled their statutory for keeping book and account and safeguarding of asset.

1.7   SCOPE OF THE STUDY

The study is intended to carried on keystone bank Nigeria limited the geographical limit is intended to be only at Ilorin branch, so the study will not cover the population of bank keystone.

The study will be confirmed to a particular section which is the financial report for a period of six (6) years which are divided into two, firstly (1985-1988) and secondly (1988-1990) which will give us an insight into how the bank has fared over the years.

 

1.8   DEFINATION OF TERMS

1. INTERNAL CONTROL: This is said to be whole system of controls financial and otherwise established by management in order to carry on the business of the enterprises in an order and efficient manner, ensure adherent to management policies safeguard secure as far as possible the completeness and accuracy of the record.
2. INTERNAL CHECKING: This is defined as the check on the day to day transaction which operates continuously as part of the routine system where the work of one person is proved independently or is seen to be complimentary to that of another the objective is the prevention or early detection of fraud and errors.
3. INTERNAL AUDITS: This is defined as an independent appraisal of activities within the organization for the review of operations as a service management. Internal audit is normally conducted by the company’s own specially assigned staff.
4. AUDITOR REPORT: This is said when an auditors has finished his audit work, there must be a report by him which will be the end product of work done such as a standard report should be expressed in fairly uniform language and depending on circumstance, may be two, three or more paragraph length.

1.9   PLANS OF THE STUDY

This study consist of five chapter one as the introduction of the study, Chapter two contains Literature review, Chapter three is the Historical background and financial report of the case study bank keystone, chapter four consist of the accounting policies and account of the bank while chapter five consist of the summary of the research as well as conclusion and recommendation.