CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND
OF THE STUDY
The
concept of misrepresentation of information in the financial statement tends to
examine those items that can alter the financial affairs of on the financial
concern (or an entity), audited by an auditor based on the financial statement
presented by the manager on the basis of true and fair view.
The establishment or introduction of the joint stock company increased the supply of capital for commerce and industry. It was therefore, necessary for the owners of the company obviously known as shareholders to delegate some of their numbers to act as Board of Directors (BOD) to take care of daily activities of the business concern.
The establishment or introduction of the joint stock company increased the supply of capital for commerce and industry. It was therefore, necessary for the owners of the company obviously known as shareholders to delegate some of their numbers to act as Board of Directors (BOD) to take care of daily activities of the business concern.
The
joint stock company act of 1844 in Britain was the first legislation, which
requires that all incorporated companies or business should have the result of
their daily activities known as the financial statement to be examined by an
auditor. Later developments required that the auditor must be independent of
his client, and be professionally qualified to enable him (the auditor) express
a qualified opinion on the financial statement without bias.
Auditing
was meant to serve for many purposes. So, there should not be any form of
fraud, error, or misrepresentation in audited accounts in order not to create conflict
between the interest groups. The critical examinations of its effects are the
basis for this works. The auditor over the years played the role of instilling
confidence in the public at large by revealing facts about companies, which
would otherwise be hidden to avoid misrepresentation and false information.
England in 1900 made it legally compulsory for every company or any
organization to appoint an auditor through acts of parliament.
Nigeria
as a matter of fact, having accessed the effects of misrepresentation of
accounts gave recognition to auditing through the companies and Allied matters
acts 1990 and other earlier promulgations.
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