Statutory Auditing and Performance of Small and Medium Scale Enterprises in Lagos State, South West Nigeria
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Date
2016
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Publisher
International Journal of Academic Research in Business and Social Sciences
Abstract
Small and medium Scale Enterprises are gaining increasing prominence in the developing
economics as a driver of economic growth. However, studies has shown that several of these
enterprises prematurely die, before they can achieve their goals due to poor management
arising from inadequate, weak, undependable accounting and financial information as well as
absence of regular auditing and risk assessment.
The purpose of this research is to access the impact of statutory Auditing of Small and Medium
Scale Enterprises on their performance. The sample for the study comprises of 100 SMEs
operators and 25 practicing public accountants purposively selected across the three Senatorial
districts in Lagos State South West, Nigeria, using stratified sampling techniques to ensure that
only those who are knowledgeable about issues under consideration were selected. The
primary data for the study was gathered from a combination of Survey questionnaire and semistructured interviews of key Informants. Data captured from the study were analyzed through
descriptive statistical methods, while the two hypotheses formulated for testing in the study
were tested using the Pearson Product Moment Correlation Coefficient and Student’s t-test. Finding from the study reveals that absence of standard accounting system and detailed
financial records has been a major impediment to Statutory Auditing of many SMEs, and by
extension negatively affect their performance as they find it difficult to convince stakeholders
(creditors, supplier, tax authorities etc.), that there has been regular oversight by an
independent expert into the affairs of the firms. The finding further revealed that this can be
eliminated through adoption of sound accounting System that conforms to International
Auditing Standards. It was therefore recommended that SMEs should be encouraged to adopt
and embrace sound accounting system. More so, the cost of Installing and operating such
system should be minimized so as to encourage the SMEs to keep extensive documentations
requirement of auditing Standard
Description
Keywords
Statutory auditing, Accounting system, Performance, Small and Medium Enterprises