LITERATURE REVIEW   2.1 Introduction  

Over the past decade, increased instigation as well as criticism of auditors has left little room for doubt that auditors are facing a liability and credibility crises in their profession. The reputation of accountancy profession comes under question for the reliability of their services (Adhikari, 2011). Similarly, failure of business in which deficiencies of financial reporting and corporate disclosure have figured prominently are not new phenomena however, high profile cases of recent past such as Enron, Worldcom, Global crossing, Adelphia communication and most recently, Royal Ahold and Health South together with a host of small-scale example worldwide such as Cadbury, Oceanic bank and Intercontinental Bank Plc. in Nigeria, have drawn for greater attention to this area. At the same, there has been evidence of an increased frequency of re-stated financial statements. All these have had a negative cumulative impact on the way informed opinions views the quality of financial reporting. This loss of credibility has been wide spread across capital market. A key factor in the scale of the problems was the unprecedented high level of share price in many markets. Maintaining these price levels was a top management objective and when it became clear that the supposed level and trend of profitability justifying the level has not existed, the fall in share prices was accentuated by a major re-rating of the shares. This impacted share in similar companies (ICAN Study Pack, 2009:252). Be that as it may, the quest over the year has been how confidence and credibility in audit and financial reporting (both in internal and external auditing) can be improved and sustained. Adequate literature review has shown that effectives of the audit process, the auditor’s personal qualities and skills as well as the discipline from the audit profession have significant relationship with the achievement of public confidence and credibility. For instance, independence is fundamental to the credibility of auditors’ reports. Those reports would not be credible, and investors and creditors would have little confidence in them. If auditors were not independent in both fact and appearance. To be credible, an audit opinion must be based on an objective and disintegrated assessment (Olagungu, 2011). It is on the basis of the issue raised above that this research work aims a presenting confidence and credibility in audit report as reliable approaches to maintaining and improving audit competence. Meanwhile, the next literature review will include the overview of the concept of credibility and confidence in audit reports, the factors responsible for loss of credibility and confidence, the drivers and indicators of audit quality as well as suggestion to improve credibility and public confidence in audit reports.

Overview of the Concept of Credibility and Public Confidence in Audit Reports

Credibility in this usage means that the financial statements can be believed, that is, they can be relied upon by outsiders, such as trade creditors, bankers, stockholders, government and other interested third parties (www.crfonline.org/cro/cro-11.html). On the other hand, confidence according to the Oxford Advanced Learner’s Dictionary of English, 5th edition, is defined as “the feeling that you can trust, believe in and be sure about the abilities or good qualities of something or somebody”. Again, the public relates to the stakeholders of the professional accountant who have varying interest uses and expectations from the financial statement prepared by directors of the company. The stakeholder of the professional accountant includes and is not limited to the following.

The general public Shareholders-potential and existing Government at various level Creditors Debtors Employees Management The international community Donor agencies Multilateral institutions The institute Regulatory authorities

(ICAN Study Pack 2009:133) The basic objective for preparing financial statement is to provide information useful for making economic decisions. The functions of auditing is to lend credibility to the financial provide information useful for making economic decisions. The functions of audition are to land credibility to the financial statements. According to Olagunju [2011], for an audit to credible, and reliable, it must be performed by someone who is independent and can be influence by position and power which will affect its own position. In the work of Olagungu [2011], he recommended that for auditors to remain strictly independent and credible, they should not allowed to provide audit clients, with any other advisory or non audit services in order to safe guard the audition from self review threat. To this end, the over view of the concept of credibility and confidence has shown that the concept has relationship with many factors exerting influence on its achievements.      2.3 Factors Responsible for Loss of Confidence and of the Cause of Loss of Public Confidence and Credibility include:

Window dressing or creative accounting: Okolie [2007:187] defined the term as all action taken to hide unpalatable facts about the company from its creditors, bankers, and general public. Some of such action include frequent revaluation of land and building, inflation of stock values, lower depreciation charges, capitalization of revenue expenditures liked repairs and maintenance expense upon the above manipulation, the company obtains an unqualified audit report despite the truth that the trues financial position has been hidden for years from the investing public being and the various stakeholders of the company.

b. Corporate governance failure: ICAN STUDY PACK [2009:240] provide a list of factors responsible for many of the corporate governance failure: i. poorly designed remuneration package ii. Excessive use of share options among top management iii. When trading failed to earn the targets of earnings manipulation of accounts set in. This case was very apparent in the case of companies like Ahold, Enron, WorldCom and zerox.c.     Auditors compromising fundamental principles: Most times because of the closeness or familiarity between the auditors and clients the risk of losing big clients, auditors favour their client and themselves during financial auditing and reporting to the disadvantage of the investors. Such principle usually breached includes independence, objectivity and integrity.


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How To Write Chapter Three Of Your Research Project (Research Methodology)

  • Methodology In Research Paper

    Chapter three of the research project or the research methodology is another significant part of the research project writing. In developing the chapter three of the research project, you state the purpose of research, research method you wish to adopt, the instruments to be used, where you will collect your data, types of data collection, and how you collected it.

    This chapter explains the different methods to be used in the research project. Here you mention the procedures and strategies you will employ in the study such as research design, study design in research, research area (area of the study), the population of the study, etc. You also tell the reader your research design methods, why you chose a particular method, method of analysis, how you planned to analyze your data.

    Your methodology should be written in a simple language such that other researchers can follow the method and arrive at the same conclusion or findings.

    You can choose a survey design when you want to survey a particular location or behavior by administering instruments such as structured questionnaires, interviews, or experimental; if you intend manipulating some variables.

    The purpose of chapter three (research methodology) is to give an experienced investigator enough information to replicate the study. Some supervisors do not understand this and require students to write what is in effect, a textbook.

    A research design is used to structure the research and to show how all of the major parts of the research project, including the sample, measures, and methods of assignment, work together to address the central research questions in the study. The chapter three should begin with a paragraph reiterating the purpose of research. It is very important that before choosing design methods try and ask yourself the following questions: Will I generate enough information that will help me to solve the research problem by adopting this method?

    Method vs Methodology

    I think the most appropriate in methods versus methodology is to think in terms of their inter-connectedness and relationship between both. You should not beging thinking so much about research methods without thinking of developing a research methodology.

    Metodologia or methodology is the consideration of your research objectives and the most effective method and approach to meet those objectives. That is to say that methodology in research paper is the first step in planning a research project work.

    Design Methodology: Methodological Approach

    Example of methodology in research paper, you are attempting to identify the influence of personality on a road accident, you may wish to look at different personality types, you may also look at accident records from the FRSC, you may also wish to look at the personality of drivers that are accident victims, once you adopt this method, you are already doing a survey, and that becomes your metodologia or methodology.

    Your methodology should aim to provide you with the information to allow you to come to some conclusions about the personalities that are susceptible to a road accident or those personality types that are likely to have a road accident.

    The following subjects may or may not be in the order required by a particular institution of higher education, but all of the subjects constitute a defensible in metodologia or methodology chapter.

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