USERS’ PERCEPTION OF AUDIT REPORT IN PUBLISHED FINANCIAL STATEMENT
ABSTRACT
This study was carried out with the aim of examining users’ perception of audit report in published financial statement. In order to actualize the objectives of the study, various literature and theoretical issues were discussed. The instrument used for the purpose of this research was gathered through primary source. The primary source is through questionnaire. The information generated from the questionnaires was summarized in form of table and analyzed using simple percentage and chi-square statistical tool. The findings from the analysis revealed among other things that, audit reports are relevant to financial statement in Nigeria, and that external auditor’s independence is enhanced by the presence of audit committee as well as audit report do not create conflict and encroach on management responsibilities.   
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
1.1     Background of the Study        
1.2    Statement of the Research Problem            
1.3    Research Question                    
1.4    Research Objectives                    
1.5    Scope of the Study                
1.6    Research Hypotheses                
1.7    Relevance and Significance of the Study        
1.8    Limitations of the Study                
1.9    Research Methodology                
1.10    Definition of Terms             
    Reference                         
CHAPTER TWO: LITERATURE REVIEW
2.1    Conceptual Framework                 
2.1.1    Auditors Report on Financial Statement            
2.2    Financial Statements                    
2.2.1    Sources of Authority Guiding the preparation    
and presentation of financial statements         
2.2.2    The Component of Financial Statements             
2.2.3    Qualitative Characteristics of Financial Statement
2.3    Users of Accounting Information and their         
Information Needs                 
2.4    Audit of Financial Statements        
2.4.1    Purpose of Audit                    
2.4.2    Objectives of Auditing                     
2.4.3    Classification of Audit                
2.5    Comparison between Audited and Unaudited
Accounts                             
    References                         
CHAPTER THREE: RESEARCH METHODOLOGY
3.1     Introduction                        
3.2    Research Design                        
3.3    Population of the Study                
3.4     Sample Size                        
3.5    Sampling Method                 
3.6    Sources of Data                     
3.7    Instruments of Data Collection            
3.7.1    The Questionnaire                 
3.8    Method of Data Collection                
3.9    Methods of Data Presentation            
3.10    Data Analysis Technique                
    References                             
CHAPTER FOUR: DATA PRESENTATION, ANALYSIS
               AND INTERPRETATION
4.1     Introduction                        
4.2    Data Presentation                    
4.3    Data Analysis and Interpretation            
4.4    Test of Hypothesis                
CHAPTER FIVE: SUMMARY OF FINDINGS, RECOMMENDATIONS AND CONCLUSION
5.0    Introduction                     
5.1    Summary of Findings                    
5.2    Recommendations                    
5.3     Conclusion                        
Bibliography                        
Appendix                             
CHAPTER ONE
1.1    BACKGROUND TO THE STUDY
    Adeniji (2004:1) describes the word audit report as the independent examination and expression of opinion on the financial statements of an enterprise by an appointed auditor in pursuance of that appointment and in compliance with any relevant statutory obligation.
    The audit function is a mechanism to attest to the accountability and stewardship of company’s management (Chandler, Edwards, & Anderson, 1993) and reinforce trust and confidence in financial reporting. As a result of the increase in the complexity of business structure, globalization activities, and remoteness of fund providers from management, greater assurance about the financial information provided by companies is expected from auditors.
    In essence, auditing is an independent functions by means of an ordered and structured series of steps critically examining the assertions made by management or organization about economic activities in which they have engaged and communicate the result in the form of a report (Chow, 1982). The primary product of an audit by an independent certified accountant (CPA) is audit report, which serve as a major vehicle of communication between the auditors, which indicates the scope of his examination and the conclusions draw about the appropriateness of the financial statement presentation (the audit opinion).
    According to Oladipupo (2005), Audit consist of two main element viz, analytical review and substantial testing. Analytical review is a structural temporal and cross sectional comparative evaluation of the financial report to access its overall soundness. He auditor has invested the effort to model the firm and its environment, analytical review became essentially an armchair exercise. Substantive testing is the direct verification of the resources and obligations of the firm in the field and requires costly checking of physical plain, investors, creditors, and debtors of the firm. Although the auditors developed sophisticated statistical techniques to design efficient sampling method to cut this cost, but during the latter part of the twentieth century, substantive testing consumed the bulk of the auditing budgets.
    Greater portion of the audit are now being carried out without leaving the office which leads to less labour and cost (Arens and Leobbecke, 2000). The fact is that the corporate managers never see the auditors while carrying out their audit functions. Even if they do, they are not aware whether the auditors have done their job diligently.
Managers who see the auditor hardly have no proof to determine whether the auditor properly check the representations made by the managers to the investors and others. Only on rare occasion when a corporation ran into serious financial trouble that questions are raised about the fairness of its financial reports and the quality of the audit work. In this environment, there is hardly any opportunity for the auditor to build their reputation based on the quality of their work.
    This study, therefore, set out to survey user’s perception of audit report in published financial statement.
1.2    STATEMENT OF THE RESEARCH PROBLEM
    Financial statements users must trust financial statement which provides reliable basis for their decision making. The importance of user’s confidence is reflected in the words and actions of financial regulation and auditing profession.     A business entity prepares financial statement to present its financial performance and position, and then brings in outside party to testify to their accuracy and reliability statement of financial accounting concepts (SFAC, 1978) No 1 specifies financial reporting should provide information that is useful to present and potential investors and creditor and other users in making rational investment credit, and similar decisions which is directed to audit quality.
    The impetus for this study stems from the equably questionable nature of the audit process and the value of the audit report has been under discussion and criticism, and it has been an important part of the audit profession within the context of business and audit failure, the value of the audit report continues to be scrutinized and criticized. For example (G. William 1987) argued that a number of studies have suggested that the average investor pays little attention to audit report. So the aim of this study is toe examine user’s perception of audit report in published financial statement.
1.3    RESEARCH QUESTION
    The following research questions are pertinent to ask;
-   How relevant are audit reports to published financial
statement in Nigeria?
Do audit reports create conflicts and encroach on management responsibility?
What are the regulatory requirements of audit report in published financial statement?
1.4    RESEARCH OBJECTIVES
    The rational behind this study is to evaluate user’s view on audit report in report in regard to published financial statement. Thus, the objectives of the study are to;
To examine whether audit reports are relevant to published financial statement in Nigeria.
To investigate whether audit reports create conflicts and encroach on management responsibilities
To verify whether there are regulatory requirement of audit report in published financial statement in Nigeria.
1.5    SCOPE OF THE STUDY
    This research work is an empirical study of users perception of audit report in published financial statement in Nigeria. The scope of this research is limited to quoted companies in the Nigerian stock exchange (NSE), with specific emphasis on selected companies in Benin City.
1.6    RESEARCH HYPOTHESES
Hypothesis I
Ho:    Audit reports are not relevant to corporate financial statement in Nigeria.
Hi:    Audit reports are relevant to published financial statement in Nigeria.
Hypothesis II
Ho:    Audit reports create conflicts and encroach on management responsibilities.
Hi:    Audit reports do not create conflicts and encroach on management responsibilities.
Hypothesis III
Ho:    There is no regulatory requirement of audit report in published financial statement in Nigeria.  
Ho:    There is regulatory requirement of audit report in published financial statement in Nigeria.  
1.7    RELEVANCE AND SIGNIFICANCE OF THE STUDY
    The significance of the study is to reveal user perception of audit report bearing in mind that the rationale for the introduction of the audit report, is to express an opinion with regards to the true and fair view of the financial statement.
    This research work on its conclusion, together with what useful to some particular group of persons or otherwise for various reasons in accordance with their varying needs.
Stakeholder: This study will be important and beneficial to stakeholders of an organization to know the essence of audit report in published financial statement.
Government: It will acquaint the government of the relevance of audit report in published financial statement.
The public: This study will help to restore the lost of confidence of the public as regard the corporate reporting.
Academic/future research: Both academic and other future researchers in this similar subject will find it a useful of learning and research.
1.8    LIMITATIONS OF THE STUDY
    The problem encountered in the course of this research includes:
Inadequate study materials: Research materials were of limited supply due to the practicality of the study. Where they were available, the cost involved in sourcing for them was very expensive.
Lack of Assess to current data: Most management and staff of the establishment would not want to disclose important or relevant information about their organizations on this subject matter, except were such is permitted by law to be disclosed.
Finance cost: The cost involved in sourcing for the available materials and other necessary information was very high within the reach of the student researcher.
1.9    RESEARCH METHODOLOGY
    Data for the purpose of this study would be collected from both primary and secondary sources. According, the relevant data would be obtained from questionnaire, the companies and Allied Matters Act (2004), statement of Accounting Standards (SAS), books of related literature, journal magazine, newspapers, bulletins and others.
    Also, the chi-square analysis would be used to test the hypothesis. However, personal interview will be conducted with relevant personalities where necessary.
1.10    DEFINITION OF TERMS
    For the purpose of appreciating the framework of this study, it became pertinent to attempt to define some key concepts as used on this work.
Financial statement: A written report which quantitatively describes the financial health of a company.
Audit report: A section of an annual report of a firm containing an auditors opinion about the accuracy of the firms financial statement.    
REFERENCES
Adeniji A.A. (2004) “Auditing and Investigation, Lagos: Value  analyst Consult Publishers.
Aren, A.A. and J.K Leobbecke (2000) Auditing: An Integrated Approach, 8th Edition Upper Saddle River, N.J.
Chow, L. (1982) The Demand for external Auditing: Size debt and ownership – Jstop.
Flint, A.L (1971). Development in Auditing and Assurance  Sage     Publication.   
William, D. (1987) Evaluating Effectiveness of External auditors report jespk.net.