Professional Documents
Culture Documents
BY
JUNE 2015.
DECLARATION
I hereby declare that I am the author of this research project titled "AN EVALUATION OF
THE STATUTORY AUDITORS PERCEPTION OF MANIPULATION THROUGH
CREATIVE ACCOUNTING", submitted to the Department of Accounting, Faculty of
Business Administration, University of Lagos, as a record of the original work done by me under
the supervision of DR. (MRS.) J.O. OGUNLEYE. I am responsible for all errors that may be
found in this work.
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DATE
CERTIFICATION
This is to certify that this research work titled "AN EVALUATION OF STATUTORY
AUDITORS PERCEPTION OF MANIPULATIONS THROUGH CREATIVE
ACCOUNTING", was carried out by OMOZUYI, ESOSOA OSASUMWEN, with Matric. No.
110201225, under my supervision.
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DATE
Project Supervisor,
Department of Accounting,
University of Lagos.
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DATE
Head,
Department of Accounting,
University of Lagos.
DEDICATION
This project is dedicated to God Almighty, the sustainer of life.
ACKNOWLEDGEMENTS
All praises are due to God Almighty for his countless mercies and blessings on me, my family,
my supervisor and all other persons that provided assistance, guidance and encouragement in the
successful completion of this project.
Special gratitude goes to my project supervisor, Dr. (Mrs.) J.O.Ogunleye, for her support and
understanding in the completion of this project, the Head of Accounting Department, Dr. (Mrs.)
Ajibolade, my course adviser Miss. Bunmi Ogunmeru, and all other lecturers, for their efforts in
ensuring that my stay in this school is fruitful.
Finally, I am most grateful to my parents Mr. and Mrs. Omozuyi and other members of my
family for their moral and financial support.
TABLE OF CONTENTS
Pages
Title Page
Declaration
ii
Certification
iii
Dedication
iv
Acknowledgements
Table of Contents
vi
List of Tables
ix
Abstract
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5.2 Conclusions
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5.3 Recommendations
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BIBLIOGRAPHY
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Appendix 1: Questionnaire
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LIST OF TABLES
Table 2.1: Potential gains and losses in/ from Creative accounting manipulation
Table 4.1 Sex of Respondent.
Table 4.2 Marital Status of respondents.
Table 4.3 Age of respondents.
Table 4.4 Length of Service in current employment.
Table 4.5 Position Occupied in the firm
Table 4.6 Professional Accounting Qualification Obtained
Table 4.7: What is the level of creative accounting observed by statutory auditors in practice?
Table 4.8 Frequencies
Table 4.9 Chi-square goodness of fit
Table 4.10 Do Nigerian auditors approve of creative accounting
Table 4.11 Frequencies
Table 4.12 Chi-square goodness of fit
Table 4.13 What factors do statutory auditors believe motivate management to engage in creative
accounting
ABSTRACT
This study aimed to examine the way auditors perceive creative accounting practices and what
auditors consider to be the reasons why management engage in such practices. The objectives of
the study included examining the level of creative accounting practice observed by auditors in
practice, getting the perception of the auditors on the morality or otherwise of creative
accounting practice and finding out what auditors believe are the factors that motivate
management to engage in creative accounting. To achieve these objectives 77 copies of
questionnaire were distributed to auditors. Statutory auditors were chosen due to the fact that
they are one of the categories of people equipped with the exposure and technical knowledge to
detect creative accounting manipulations. Two hypotheses were formulated and tested. Data
obtained were analyzed using descriptive analysis and the hypotheses were tested using ChiSquare goodness of fit. The study shows that auditors are of the opinion that management
engage in creative accounting to make financial ratios appear better, to reduce their tax liability
and to smoothen out profits.
Creative accounting practice was observed to be quite prevalent in Nigeria as many of the
sampled auditors claimed to witness cases of creative accounting when auditing firms and that it
is used frequently in deceiving investors. The study concludes that auditors perception of the
practice of creative accounting is that it is not morally right, creative accounting is totally
unethical and auditors have a duty to detect creative accounting practices. The study
recommends that there should be stricter penalties and sanctions imposed on erring companies
and individuals. This should deter the companies and individuals from engaging in such
practices.
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