CHAPTER ONE
INTRODUCTION
1.1
Background
to the Study
Accountability
in both public and private section has being an issue that is worth discussing
due to its paramount and colossal impact to the overall performance of an
organization. It (Accountability)
has to do with reporting back action, task carried out by an individual to the
authority who apportioned such function.
Accountability
is the process or act of reporting back to a higher authority, body or
individual the actions taken by a steward. It enables the person or persons
reported to determine if the steward has acted or performed the assigned duties
properly and satisfactory. It plays a major role in the success or failure of
any business, particularly when the business is not managed by its owner.
Initially
most business set-ups were managed by their owners. The owners‟ manager was the
sole financial contribution to the enterprise. But with the development in the
scale and scope of business, a huge capital beyond that affordable by the sole
individual or a family was needed. Consequently contributors (hereafter called
shareholders) were required to raise the funds for the business. The emergence
of these shareholders led to the divorce of the owner managers from the
management of the business as all of them cannot be directors at the same time.
This the management of business was entrusted to the hands of people who have
no financial claims to the business and the shareholders were sceptical about
this particularly as the law does not permit them individually to go through
the books of the company in their desire to keep abreast of the performance of
the directors.
This
scepticism aroused the need for surveillance over the activities of the
non-owner managing directors. This bid to fulfil the later led to the
engagement of third-party (an Auditor) to perform an audit of the company’s
accounts.
Audit
has since them received a lot of definitions and/or then received a lot of
definitions and/or interpretations both from accounting bodies and auditors and
their non-the-like. Justifiable is to say that audit has suffered a lot of
misinterpretations. Most of the misgiving interpretations see it as being armed
at fraud and error detection. But audit essentially involves much more than
that. One of the most involved and of course the most acceptable definitions so
far is that issued by the consultative council of accountability bodies (CCAB)
which sees audit as “the independent examination and expression of opinion on
the financial statement of an enterprise by an appointed auditor in pursuance
of statutory obligation (Howard 1982).
Deductively,
an audit is the objective scrutiny of someone’s work or presentation by a third
party (an auditor) who is different from the users and the preparing of the
presentation. The general essence of audit is to ascertain compliance of the
firm’s records and operational policies with usefulness of acceptability of and
the dependability on the firm’s financial statements.
Accountability
as explained above has suffered some misconceptions, surprisingly in the hands
of those who should have understood it better. Most of the laymen conceptual
understanding of accountability relates it to „communicating about monetary matters
(Odon, 1999) but accountability goes beyond that. According to the Webster
encyclopaedia dictionary of English language (1995), accountability is defined
as “the state of being accountable, answerable, liable or responsible” the same
dictionary goes further to define accountable as “liable to pay or make good in
case of loss; responsible to a trust, liable to be called to account, put in
another way an much more related to
the context in the articles Aba times of fourth September 1999 captioned
“accountability in the third republic” it says Accountability connotes answerability and stewardship, by
answerability is meant answering for one’s actions and decisions (Odon1999)
Stewardship
according to the article means service; it means that every leader should be
responsible to the people who reposed trust in him. For accountability to be accorded its rightful place in an
organization the writer believes that there is a high need for proper internal
control measure and in addition, efforts should be made to ensure that company
accounts are subjected to external and independent audits after each financial
period.
The
bible also records in chapter 25 verse 14-30 of saint Matthew gospel, the story
of a rich man who went on a far journey entrusting the affairs to his servants
and who when he returned, required the servants to answer individually, for
their stewardship to the business while he was away. It in the same manner that
it is required of the chief executives and directors of a company who are quite
different from the real owners of the business to answer for their stewardship
of the funds and property entrusted to them by the shareholders. It is desire
for accountability that gave rise to what we know today as audit- a mechanism
through which the shareholders are made abreast of the true and fair picture of
the activities of the directors and chief executive of the company.
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