AUDITING IN A CORRUPT ENVIRONMENT

CHALLENGES AND DIFFICULTIES FACED BY AUDITORS.

Auditing in a corrupt environment is an additional difficulty that auditors have to face in the source of their duty. Some of the traditional difficulties / challenges faced by auditors are as follows:

Auditors’ independence: auditors’ independence is one problem that has been facing the auditing profession from time immemorial. How do you expect an auditor that is connected to the auditee to carryout his or her duty(s) objectively? Leaders of a country appoint the Auditor general of the federation while the directors of a company appoint the auditors of a company. Auditors’ independence is one challenge/ difficulty that will remain problem area in the nearest future.

Difficulties in identifying the scope of audit: a lot of auditors find it difficult to identify the right scope of the audit work to be done.

Time scope of auditing: the large size of the entities audited in this modern and corrupt society makes it almost impossible for auditors to meet up with the time scope given by the regulatory bodies of both business and auditing.

Expectation gap: people place an undue pressure on auditors as a result of the fact that they don’t know the main objective of auditors. For the benefit of doubt, the traditional role of auditors is to lend credibility to a piece of information. This is usually financial statements of a company.

Legal requirements: auditors will have to struggle with legal requirement of both the country and professional bodies. Keeping with these legal requirements is not always easy as many people think.

Negative smartness of people: the activities of negatively smart stewards of both a nation and a country pose a serious threat to the smooth working environment of auditors.

The above are the regular or what some people will call the traditional difficulties or challenges faced by auditors, but these difficulties faced by auditors are further compounded by the presence of high level corruption. High level corruptions are those corruptions that involve influential people in a society. Auditing in a society where those at the helms of affairs are themselves corrupt to a fault is a new face of challenge that auditors have to face squarely. It is generally agreed that the best way to combat fraud (prevention and detection) is to have a strong internal control in place. So what will now be the faith of auditing, auditors and their work when those that make policies are themselves crafty? Laws are meant to be clear and not clever. But these bundles of thieves at the top have resorted to making laws clever rather than clear. It is now common practice that those in power control the business world.

Take Nigeria for example. Those that appoint auditor General of the federation are those that dictate the tune of the game and the so appointed auditor general are always people of questionable character. Corruption magnifies the auditor’s independence challenge.

I know you may at this point be asking, Chinweike, what then do you think is the way out? Well, my standard answer is; auditors and auditing professional bodies should form a formidable alliance with other professional bodies like the Fraud examiners to marshal out way forward. The appointment of the auditor general of the federation should be vested in the hands of the relevant professional bodies.

I strongly believe that financial crisis will be reasonably controlled if auditing is done in a relatively corruption free society. I still appreciate the fact that it is not the duty of the auditors to scout for corporate and national corruption, but, drastic action needs to be taken to reduce the incidence of corporate and national financial crisis that ultimately culminate into global financial crisis.

On the part of consumers of audited information, accepting the information as being credible is always difficult. People are generally aware of the happenings in both the corporate world and the government. They know that auditing in a corrupt environment is not as easy as it sounds in papers.