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This research work examines the value for money audit and financial performance of telecommunication firms in Nigeria. The population of the study was made to be one hundred (100) junior staff from selected firms in Rivers State. A self-designed questionnaire was used and administered for the collection of data from the respondents in MTN Nigeria and Globacom Nigeria, Rivers State. The Yaro Yemen’s formula was used to determine the sample size of 80. The simple percentage was used to analyze the research question and Pearson moment product correlation was used to test hypothesis. Findings amongst others reveal that Auditors independence has no significant impact on the financial performance of quoted telecommunication firms in Nigeria. Based on the findings, possible recommendations were made that telecommunication companies in Nigeria should always conduct value for money audit to prevent fraud, there should be a formal accounting system and the associated controls to ensure completeness, accuracy and validity of the data to aid in the reduction and prevention of fraud in telecommunication, the objectives on which the concept is demanded must be quantifiable in terms of money or other units as may be applied. The objectives should be communicated to concerned individuals who will also be informed of the relevant performance indicators. This should be carried out by professionals with the requisite experiences and there should be well-articulated organizational structure with a unified chain of command and well-delegated authorities to achieve value for money giving room for adequate internal control system.
CHAPTER ONE 1
1.1 BACKGROUND OF THE STUDY 1
1.3 OBJECTIVES OF THE STUDY 3
1.4RESEARCH QUESTIONS 4
1.5 RESEARCH HYPOTHESIS 4
1.6 SIGNIFICANCE OF THE STUDY 4
1.7 SCOPE OF THE STUDY 5
1.8 LIMITATION OF THE STUDY 5
1.8 DEFINITIONOF TERMS 6
CHAPTER TWO 7
LITERATURE REVIEW 7
CHAPTER THREE 27
RESEARCH METHODOLOGY 27
3.1 RESEARCH DESIGN 27
3.2 POPULATION OF THE STUDY 27
3.3 SAMPLE/SAMPLING TECHNIQUES 28
3.4 INSTRUMENT OF DATA COLLECTION 28
3.5 RESEARCH INSTRUMENT 29
3.6 STATISTICAL TECHNIQUES FOR DATA ANALYSIS 30
CHAPTER FOUR 32
DATA PRESENTATION, ANALYSIS,AND INTERPRETATION 32
4.1 INTRODUCTION 32
4.2 DATA PRESENTATION AND ANALYSIS 32
TABLE 4.1 ADMINISTERED AND RETRIEVED QUESTIONNAIRE 32
4.3 DATA ANALYSIS 33
4.4 TEST OF HYPOTHESIS 38
4.5 TEST OF HYPOTHESIS 39
Table 4.9: COMPUTATION OF PEARSON PRODUCTS ANALYSIS 39
4.6 DISCUSSION OF FINDINGS 41
CHAPTER FIVE 44
SUMMARY OF FINDINGS, CONCLUSION AND RECCOMMENDATIONS 44
5.1 SUMMARY OF FINDINGS 44
5.3 CONCLUSION 44
5.4 RECOMMENDATIONS 45
1.1 BACKGROUND OF THE STUDY
The turbulent effects of the global financial crisis have highlighted the critical importance of credible high quality financial reporting. Achieving quality financial reporting depends on the role that the external audit plays in supporting the quality of financial reporting of quoted companies. It is an important part of the regulatory and supervisory infrastructure and thus an activity of significant public interest. Audit quality is one of the most important issues in audit practice today. Several individuals and groups; both internal and external, have an interest in the quality of audited financial information (IAASB, 2011; Heil, 2012).
The financial statement audit is a monitoring mechanism that helps reduce information asymmetry and protect the interests of the various stakeholders by providing reasonable assurance that the management’s financial statements are free from material misstatements. The societal role of auditors should be a key contribution to financial performance, in terms of reducing the risks of significant misstatements and by ensuring that the financial statements are elaborated according to preset rules and regulations. Lower risks on misstatements increase confidence in capital markets, which in turn lowers the cost of capital for firms (Heil, 2012; Watts and Zimmerman, 1986).
External financial statement users, including current and potential investors, creditors and others need reliable financial information on which to base their resource allocation decisions. When the financiers of organizations have confidence and trust in the audited financial report of an organization, they are bound to pour in more funds into the organization, which in turn results in increased financial performance. Regulators and standard setters can increase the effectiveness of quoted companies by promulgating rules and regulations that help ensure that audits improve financial information quality. Internal financial statement users such as management, audit committees and board of directors have an interest in quality audits, for example; to help reduce the cost of capital (ISB, 2000; Miettinen, 2011).
Audit quality plays an important role in maintaining an efficient market environment; an independent quality audit underpins confidence in the credibility and integrity of financial statements which is essential for well functioning markets and enhanced financial performance. External audits performed in accordance with high quality auditing standards can promote the implementation of accounting standards by reporting entities and help ensure that their financial statements are reliable, transparent and useful. Sound audits can help reinforce strong corporate governance, risk management and internal control at firms, thus contributing to financial performance (Internal Audits Board, 2011).
The statutory audit can reinforce confidence because auditors are expected to provide an external, objective opinion on the preparation and presentation of financial statements. Auditors need to be independent in the opinions they express, while the work they have to do to form their opinions is highly dependent on and rooted in the real world and may become challenging in some business environments such as the cement industry.
1.2 STATEMENT OF PROBLEMS
There have been concerns about audit quality in the present environment, where severe failures have come to light, for example; Enron scandal of 2001; Parmalat in 2003; Cadbury Nigeria Plc in 2006 and Afribank Nigeria Plc in 2009 (Ajani, 2012; Miettinen, 2011).
It has been found that the perceived reliability of audited financial information has declined. In contrast, the perceived relevance of audited financial information has increased. The effect of audit quality on financial performance has recently received attention from researchers in the western world. Studies have shown that audit quality has an impact on the financial performance of an organization (Beasley, 1996; Heil, 2012; Miettinen, 2011).
While these studies provide evidence from vibrant capital markets, very little research on the relationship between audit quality and the financial performance of organizations has been conducted in countries where capital markets are less developed. Thus, it is evident that there is a need for research on audit quality and the financial performance of organizations in Nigeria.
It is against this background that this research work is carried out.
1.3 OBJECTIVES OF THE STUDY
The main of this study is to assess the influence of value for money audit and financial performance of telecommunication firms in Nigeria. The specific objectives are as follows:
- To determine the impact of auditor’s independence on the financial performance of Quoted telecommunication firms in Nigeria.
- To ascertain the influence of auditor size on the financial performance of quoted telecommunication firms in Nigeria.
iii. To examine auditor’s quality on the financial performance of quoted telecommunication firms in Nigeria.
- To ascertain the causes and preventive measures of fraud in telecommunication firms in Nigeria.
- What is the impact of auditor’s independence on the financial performance of Quoted telecommunication firms in Nigeria?
- What is the influence of auditor size on the financial performance of quoted telecommunication firms in Nigeria?
iii. To what extent does auditor’s quality influence the financial performance of quoted telecommunication firms in Nigeria?
- What are the causes and preventive measures of fraud in telecommunication firms in Nigeria?
1.5 RESEARCH HYPOTHESIS
Ho1: Auditors independence has no significant impact on the financial performance of quoted telecommunication firms in Nigeria.
Ho2: Auditors size has no significant influence on the financial performance of quoted telecommunication firms in Nigeria.
1.6 SIGNIFICANCE OF THE STUDY
The need for studies on the relationship between Value for money audit and financial performance is important in a country like Nigeria where organizations are striving to gain credibility among local and global investors. While previous researches have focused on the relationship between audit quality and financial performance in developed countries, there has been relatively little empirical work on this relationship in developing countries. The aim of this study is to empirically test the impact of value for money audit on the financial performance of quoted telecommunication firms in Nigeria. The study will also help auditors to improve their reporting standard in other to improves confidence of the users.
1.7 SCOPE OF THE STUDY
This work overviewed value for money audit and financial performance of telecommunication firms in Nigeria. The scope of the study is united to some selected telecommunication firms in Port Harcourt metropolis which include MTN Nigeria and Globacom Nigeria.
1.8 LIMITATION OF THE STUDY
In carrying out an investigation of this native the researcher must of necessity be faced the following constraint.
Firstly, the time constraint’s the time frame provision for this study was short.
Secondly, financial constraints. Usually, a study of this nature involved some level of expenditure therefore, finance was also a limiting factor.
Thirdly, poor response from the respondent and inability to access the entire population of the study. In the next segment significance of the study will be discussed. Lastly, poor measurement instrument.
1.8 DEFINITION OF TERMS
Auditing: An independent examination of an expression of opinion on the fundamental statement of an entity by an appointed auditor (Ihe and Umeake(2008).
Accountability: This simply is a requirement on public servant entrusted with certain financial responsibilities to render and account of or answers for their actions to their superior officers.
Audit Report: An auditor’s report provides an opinion on the validity and reliability of a company’s financial statements.
Auditors: Conduct an official financial inspection of (a company or its accounts).
Financial Control: It is the process assures that financial resources are obtained economically and utilized efficiently and effectively in the attainment of the desired goals.
Financial Performance: It is a subjective measure of how well a firm can use assets from its primary mode of business and generate revenues.
Value For Money Audit:- Audit is systematic purposeful, organized and objective examination of government activities.