Abstract

This research has been carried out with the main objectives of assessing the Impact of Auditing on the Achievement of Organizational Objectives in State corporations in Cameroon. This study brings out the effect of auditing on the organization’s goal achievements, effective control system, fraud, and auditing’s effect on management’s ability to meet their goals. Data were collected from primary and secondary sources.

Primary data was collected using questionnaires and secondary data was collected from textbooks, journals, and the internet. Both descriptive tools of the analysis such as tables, frequencies, percentages, and influential tools such as the Chi-square were used to analyze the data. The main objective of this research is to assess the impact of auditing in the achievement of organizational objectives in state corporations (C.D.C).

The main hypothesis of this study was that auditing has a significant impact on the achievement of organizational objectives. It was proven that auditing has a positive effect on the organization’s goal achievements. The researcher recommended that state corporations must act with caution so they do not impair their auditor’s independence and the auditor must ensure that the audit is based on his expertise and professional ethics, thereby guiding the audits towards its objectives.

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Auditing is derived from the Latin word “Audire” which means “to Hear” because, in ancient times, the owner of a business heard from the reports made by the auditor about the bookkeeping and financial records of his business. This was because the primitive ways of keeping financial records, which included making marks on a board, keeping figures off-hand without any documentation, and lack of mechanical aids for calculation, had a lot of problems associated with it.

Auditing has been practiced for as long as there has been commerce. Early in the bible (Saint Mathew’s Gospel, chapter 25), it is recorded as the rich man went on a journey entrusting his goods to his servants to cater for them. On his return, he asked them to give account for the goods in their care. This gave rise to today’s stewardship accounting where shareholders and owners of business rely on the managers’ account/report presented.

The checking of records and accounts of financial transactions could be traced back to the 17th century when civilization came to a stage where people began to carry on formal business transactions. But such checking was confined mainly to the public account because private audits in the early stages of civilization were rare.

In 1914, Luca Pacioli, an Italian, first published his comprehensive treaties (Summate Arithmetical Geometric, proportion et proportionalita) where he described the double-entry system, bookkeeping, and the duties and responsibilities of an auditor.

It was later in the 19th century that auditing started taking firm roots, as several texts on accounting and auditing were published.

The scope and complexity of business expanded greatly after the industrial revolution as companies increased in size. Accounting systems expanded and work was easily delegated amongst workers and internal controls came to play. There was used for management to prepare an efficient internal control system and the auditor had the liability to test this system.

Auditing, as it exists today, developed quite late because the development of accounting was slow as compared to economic theory. The eventual development of auditing was based on a strong determination to conquer problems associated with early business transactions and to provide an independent and competent report on the state of affairs of the business to its owners.

With the rapid increase in the number of companies in the last century, the profession has assumed an ever-increasing role in business practices. This was so because the auditor played a vital role in instilling confidence in the public, by revealing facts that would otherwise have been hidden and by imposing a check on management.

England was the first to make it legal and compulsory for every company to appoint an auditor through the Acts of parliament in 1990. The increase widespread of ownership of corporations encouraged the development of modern auditing. The federal Securities and Exchange Commission (SEC) which expanded the reporting requiring that financial statement be attested by independent auditors.

The auditor’s role has shifted over the years from, searching for defalcations and certifying the correctness of the financial statements to today’s role of reviewing the system and testing evidence so that an opinion can be expressed on the fair presentation of all the financial statements. Present-day auditing moves across:

–           Understanding the client’s business

–           Review and evaluation of clients Internal control

–           Test of audit evidence, and

–           Auditor’s report.

The philosophy behind auditing as a practice arose from eth separation of ownership from management and the consequential need to safeguard the interest of owners who in all but the smallest of businesses were not involved in the day-to-day decisions made by management.

Nowadays, businesses are seen to have been in existence, effective run and yet collapse like a case of ENRON and others like TEXACO of the petroleum sector in Cameroon which has failed. This increases the need for auditing and the questions asked.

In Cameroon, the institute of chartered Accountants (ONECCA) issues licenses to practice upon qualification and provides guidelines to the auditors as to their ethics, duties, and rights. The independent auditors play a vital role in the achievement of organizational objectives, through their opinion, assurance is given to the users of accounting information and decisions can be taken based on the type of opinion.

State corporations like the Cameroon Development Corporation (C.D.C) have an obligation for their financial statements to be audited by an external auditor. In the auditor’s opinion, owners of the business rely on it for decisions and there is an impact of the auditor’s opinion (Auditing) on the organization’s objectives which have been set before.

1.2 Problem Statement

Auditing is conducted by an independent professional who must not only be independent in mind but must be seen to be independent judging from the fact that he does not have any prior interest.

Shareholders and owners of businesses rely on external audits for reasonable assurance from their auditor’s opinion. Organizations, at the start of the year, have their objectives laid down, decisions towards the achievement of these objectives may be derailed of the auditor’s opinion is biased or the auditing is not carried out according to the standards/law.

There exists a problem when the auditor’s opinion does not reflect the true state of the affairs of the organization. The problem which has always existed when managers report to owners is – can the owners believe the report? Hence, there is an impact of auditing on the organization.

1.3 Research Questions

With the above mentioned, the following questions will be addressed when trying to resolve the problem

1. What guides the auditor as to the opinion they give?
2. How does the auditor adjust the “expectation Cap”? (What is required by law and what he is expected to do by his employees)
3. How is auditing carried out in state corporations?
4. How is the auditor independent in all aspects?
5. What role does the audit committee play in reviewing the audit?

1.4 Research Objectives

1.4.1 Main objective

The main objective of this research is to assess the impact of auditing in the achievement of organizational objectives in state corporations (C.D.C).

1.4.2 Specific Objectives

The following sub-objectives will be viewed to aid the main objective.

1. To assess how auditing is done and the audit requirements of state corporations (C.D.C).
2. To assess whether the credibility in reports and accounts lies in the appointment of an independent auditor.
3. To identify the relationship and link between auditing and organizational objectives.
4. To provide possible recommendations to the shortcoming of the study.

1.5 Research Hypothesis

To better understand the study on the impact of auditing in the achievement of organizational objectives, the following hypothesis will be analyzed, which help better understand the problem, objectives, and research questions.

Ho: Auditing significantly affects the achievement of organizational objectives

H1: Auditing does no significantly affect the achievement of organizational objectives.