ABSTRACT This study dealt on Auditors role in safeguarding the going concern concept in Nigeria. The burden of preparing the financial statement lies with the director, the auditor is required to report on these financial statements. A lot of people have failed to understand that the role of an auditor is not to detect fraud or error but the key role of an auditor is to “examine the financial statement prepared by the director of the company and report on it to shareholders. This study sought to investigate the relationship between the role of an auditor and the going concern of the company, to assess the effect of Auditors beneficial shareholdings on the credibility of audit report, to ascertain the effect of auditors non audit engagement services on the credibility of external audits, to examine the impact of non-compliance with audit rotation policy on audit performances. In achieving this objective, a number of research tools were employed both the primary data and the secondary data. The research did not limit herself to a particular audit firm in a state, indefinite statistical formula was used and the five hypotheses was tested using the chi-square. The result drawn from the tested hypothesis reviewed that there is a relationship between the role of an auditor and the going concern concept, auditors’ beneficial holding affect the credibility of audit report, there is significant relationship between auditors engagement in non audit services and the credibility of external audit, here is a strong correlation between non-compliance with audit rotation policy and audit performance. It was therefore recommended that the big four audit firms in Nigeria should be used for further study.

TABLE OF CONTENTS

University of Nigeria Logo------------------------------------------------------------------------i

Title page--------------------------------------------------------------------------------------------ii

Declaration -----------------------------------------------------------------------------------------iii

Approval -------------------------------------------------------------------------------------------iv

Dedication ------------------------------------------------------------------------------------------v

Acknowledgements-------------------------------------------------------------------------------vi

Abstract---------------------------------------------------------------------------------------------vii

Table of Content---------------------------------------------------------------------------------viii

List of Table---------------------------------------------------------------------------------------xii

CHAPTER ONE: INTRODUCTION

1.1 Background of the study-----------------------------------------------------------------1

1.2 Statement of research problem----------------------------------------------------------4

1.3 Objectives of the study-------------------------------------------------------------------6

1.4 Research Questions -----------------------------------------------------------------------6

1.5 Research Hypotheses----------------------------------------------------------------------7

1.6 Scope of the Study-------------------------------------------------------------------------8

1.7 Significance of the Study-----------------------------------------------------------------8

1.8 Limitations of the Study-------------------------------------------------------------------9

1.9 Operational Definition of Terms--------------------------------------------------------9

 References---------------------------------------------------------------------------------10

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1 Brief history of Auditing ----------------------------------------------------------------12

2.2 Meaning of Audit-------------------------------------------------------------------------13

2.3 What is financial system-----------------------------------------------------------------14

2.4 Who is responsible for preparing financial statement--------------------------------15

2.5 Who is an Auditor-------------------------------------------------------------------------16

2.6 Qualities required of an Auditor--------------------------------------------------------17

 2.6.1 Independence--------------------------------------------------------------------17

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 2.6.2 Competence---------------------------------------------------------------------19

 2.6.3 Integrity -------------------------------------------------------------------------19

2.7 Rights, Duties and Powers of an Auditor---------------------------------------------19

 2.7.1 Duties----------------------------------------------------------------------------20

2.8 Objectives of an Audit--------------------------------------------------------------------21

 2.8.1 Primary Objectives-------------------------------------------------------------21

 2.8.2 Secondary Objectives----------------------------------------------------------21

2.9 Advantages of an Audit -----------------------------------------------------------------22

2.10 Features of an Audit -------------------------------------------------------------------22

2.11 Types of Audit----------------------------------------------------------------------------23

 2.11.1 Audit by Nature of Work-----------------------------------------------------23

 2.11.2 Audit by Approach or Method of Work -----------------------------------24

2.12 Regulatory framework of Auditing----------------------------------------------------26

 2.12.1 Statutory Regulations---------------------------------------------------------27

 2.12.2 Professional Regulation------------------------------------------------------28

2.13 Auditing Standards and Guideline-----------------------------------------------------29

 2.13.1 Auditing Standards------------------------------------------------------------29

 2.13.2 Auditing Guidelines ---------------------------------------------------------31

2.14 Professional Ethics ---------------------------------------------------------------------32

2.15 Audit Report -----------------------------------------------------------------------------32

2.16 Types of Audit Report-------------------------------------------------------------------33

 2.16.1 Unqualified Audit Report----------------------------------------------------33

 2.16.2 Qualified Audit Report -----------------------------------------------------34

2.17 Forms of Qualified Audit Report-------------------------------------------------------35

 2.17.1 Disclaimer of Opinion--------------------------------------------------------36

 2.17.2 Adverse Opinion--------------------------------------------------------------36

 2.17.3 Except for Opinion------------------------------------------------------------36

 2.17.4 Subject to Opinion ----------------------------------------------------------36

2.18 Responsibilities of the Auditor after the Audit report has been issued ---------38

2.19 Subsequent discovery of facts existing at the date of the Audit Report --------38

2.20 The Audit process ----------------------------------------------------------------------39

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2.21 Going Concern Concept ---------------------------------------------------------------41

2.22 Going Concern as an Accounting Concept ------------------------------------------44

2.23 Accounting Implication of not applying the Going Concern Assumption-------45

2.24 Audit Evidence --------------------------------------------------------------------------46

2.25 Preliminary Assessment ----------------------------------------------------------------47

2.26 The Auditors Examination of Borrowing Facilities ---------------------------------49

2.27 Symptoms of Going Concern Problems ----------------------------------------------49

2.28.1 Financial Symptoms ------------------------------------------------------------50

2.28.2 Operational Symptoms ---------------------------------------------------------50

2.28 Auditors Responsibility and the Duties as regards the Going Concern concept-51

2.29 Procedures adopted by Auditors in a Going Concern Audit ------------------------52

2.30 Auditors Role in Ensuring the Going Concern Concept ---------------------------53

References ------------------------------------------------------------------------------------------55

CHAPTER THREE: RESEARCH METHODOLOGY

3.0 Introduction -------------------------------------------------------------------------------57

3.1 Research design --------------------------------------------------------------------------57

3.2 Sources of Data collection --------------------------------------------------------------57

3.2.1 Primary Data-------------------------------------------------------------------------58

3.2.2 Secordary Data ------------------------------------------------------------------58

3.3 Sample Size -------------------------------------------------------------------------------58

3.4 Method of Data analysis and Statistical tool ---------------------------------------59

References -------------------------------------------------------------------------------- 62

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.1 Introduction--------------------------------------------------------------------------------63

4.2 Data presentation -------------------------------------------------------------------------63

4.3 Analysis of Data---------------------------------------------------------------------------64

4.4 Test of Hypothesis ----------------------------------------------------------------------66

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CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND

RECOMMENDATION

5.1 Summary of Findings ----------------------------------------------------------------72

5.2 Conclusions--------------------------------------------------------------------------------72

5.3 Recommendation for further Studies ----------------------------------------------73

Bibliography-------------------------------------------------------------------------------74

Appendix-----------------------------------------------------------------------------------78

Questionnaire------------------------------------------------------------------------------79