AUDIT INDEPENDENCE: ENHANCING ACCOUNTABILITY AND TRANSPARENCY IN CORPORATE ORIGINATIONS
The essence of transparency and accountability especially in Nigeria as a developing country cannot be over-emphasized. 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 through an independent audit system.
Chapter one of the study lays an introduction for subsequent chapters. Following the background of the study, the problem statement and the objective of the study which provided the basis for the significance of the study and the hypothesis were stated. The limitations of this study were also highlighted.
In the literature review as contained in chapter two, works of various authors, international and local journals were reviewed to elicit views on enhancing accountability and transparency in corporate organizations in Nigeria.
Chapter three, research methodology, description of the population, and sampling procedure for data collection were discussed. Methods of questionnaire design, determination of sampling size, and questionnaire distribution were also highlighted.
Chapter four was based on an analysis of data collected. This chapter was sub-divided into data analysis, hypothesis testing, and summary. Percentage table, figure, and narration were carefully employed for proper understanding and testing of hypothesis.
Finally, chapter five was divided into a summary of findings, recommendation and conclusion.
TABLE OF CONTENTS
Title Page - - - - - - - - - i
Approval Page - - - - - - - - ii
Declaration - - - - - - - - iii
Dedication - - - - - - - - - iv
Acknowledgement - - - - - - - v
Abstract - - - - - - - - - vi
Table of Contents - - - - - - - vii
CHAPTER ONE – INTRODUCTION
1.1 Background of the Study - - - - - 1
1.2 Statement of General Problem - - - - 5
1.3 Objective of the Study - - - - - - 6
1.4 Research Questions - - - - - - 6
1.5 Significance of the Study - - - - - 7
1.6 Scope of the Study - - - - - - 8
1.7 Definition of Terms - - - - - - 8
CHAPTER TWO – REVIEW OF RELATED LITERATURE
2.1 Introduction - - - - - - - 10
2.2 Transparency Defined - - - - - 11
2.3 Transparency - - - - - - - 14
2.4 Accountability and Business Survival - - - 16
2.5 Impact of Corporate Governance Mechanisms and Transparency and Accountability - - - - - - - 16
CHAPTER THREE – RESEARCH METHODOLOGY
3.1 Introduction - - - - - - - 32
3.2 Research Design - - - - - - 32
3.3 Area of the Study - - - - - - 32
3.4 Population of Study - - - - - - 33
3.5 Sample size and Sampling Techniques - - - 33
3.6 Instrument for Data Collection - - - - 33
3.7 Validity of the Instrument - - - - - 33
3.8 Reliability of the Instrument - - - - 34
3.9 Method of Data Collection - - - - - 34
3.10 Method of Data Analysis - - - - - 34
CHAPTER FOUR – DATA PRESENTATION AND ANALYSIS
4.0 Introduction - - - - - - - 36
4.1 Data Presentation and Analysis - - - - 36
4.2 Characteristics of the Respondents - - - 36
4.3 Data Analysis - - - - - - - 39
4.4 Testing Hypothesis - - - - - - 46
4.5 Summary of Findings - - - - - - 51
4.6 Discussion of Findings - - - - - 52
CHAPTER FIVE – SUMMARY, CONCLUSION AND RECOMMENDATION
5.0 Introduction - - - - - - - 54
5.1 Summary - - - - - - - - 54
5.2 Conclusion - - - - - - - - 57
5.3 Recommendations - - - - - - 58
Appendix - - - - - - - - 62
1.1 Background to the study
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 lightof this existing gap, the following research questions are raised.
1. Do audit committee enhance transparency and accountability in corporate organizations?.
2. Does board independence enhance transparency and accountability in corporate organizations?
3. How does ownership concentration enhance transparency and accountability in corporate organizations?
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:
1. To find out if audit committee enhances transparency and accountability in corporate organizations.
2. To determine if board independence enhances transparency and accountability in corporate organizations.
3. To ascertain if ownership concentration enhances transparency and accountability in corporate organizations.
1.4 Research Hypotheses
In this study, the null hypothesis are used and stated as follows:
1. H0: audit committee does not enhance transparency and accountability in corporate organizations.
2. H0: Board independence does not enhance transparency and accountability in corporate organizations.
3. H0: Ownership concentration does not enhance transparency and accountability in corporate organizations.
1.5 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.
1.6 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 corporategovernance 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
This study is limited by such factors as:
⦁ Respondents’ response: Some of the respondents may resent giving out useful information on the subject matter. There is the problem of generalizing the outcome of the study to non-banking industry in that the factors that may enhance transparency and accountability could differ markedly..