Creative Accounting, Audit Risk and Audit Failure in Nigeria: What is the Auditor’s Perspective?

Nwaorgu, I. A.; Abiahu, M. C.; Iormbagah, J. A. & Egbunike, P. A. (2019). Creative Accounting, Audit Risk and Audit Failure in Nigeria: What is the Auditor’s Perspective?. International Journal of Economics, Business and Management Studies, 6(2): 261-271.

11 Pages Posted: 23 Oct 2019

See all articles by Innocent Augustine Nwaorgu

Innocent Augustine Nwaorgu

Michael Okpara University of Agriculture - Department of Accounting

Mary-Fidelis Chidoziem Abiahu

Nnamdi Azikiwe University - Department of Accountancy

Jacob Aondohemba Iormbagah

Department of Accounting, College of Management Sciences, Michael Okpara University of Agriculture Umudike, Umuahia, Abia State, Nigeria

Amaechi Egbunike

Nnamdi Azikiwe University - Department of Accountancy

Date Written: October 1, 2019

Abstract

Creative accounting has taken a centre stage in the discussions around audit failures on the global stage. Several researches have sought to proffer solutions that aid organizations to avoid the potholes. This study, however, examined the Auditors’ perspective on the effect of creative accounting practices on audit risk and audit failure in Nigeria. The study employed a survey research design using the Chi-square to analyze data gathered from questionnaires distributed to 115 practising auditors from different geopolitical zones in Nigeria. The findings of the study revealed that creative accounting has a significant effect on audit risk with a non-significant effect on audit failure. Based on the results obtained from this study it is recommended that Auditors should ensure that detailed attention is given to the detection of creative accounting practice by managers during the course of audit practice. Also, auditors must make sure that they adhere strictly to the dictates of the International Standards on Auditing in order to avoid failure of audit.

Keywords: Audit failure, Audit risk, Auditors’ perspective, Creative accounting, Earnings management, International standards on auditing

JEL Classification: M40, M48

Suggested Citation

Nwaorgu, Innocent Augustine and Abiahu, Mary-Fidelis Chidoziem and Iormbagah, Jacob Aondohemba and Egbunike, Amaechi, Creative Accounting, Audit Risk and Audit Failure in Nigeria: What is the Auditor’s Perspective? (October 1, 2019). Nwaorgu, I. A.; Abiahu, M. C.; Iormbagah, J. A. & Egbunike, P. A. (2019). Creative Accounting, Audit Risk and Audit Failure in Nigeria: What is the Auditor’s Perspective?. International Journal of Economics, Business and Management Studies, 6(2): 261-271., Available at SSRN: https://ssrn.com/abstract=3469107

Innocent Augustine Nwaorgu

Michael Okpara University of Agriculture - Department of Accounting ( email )

Umuahia-Ikot Ekpene Road
PMB 7267
Umudike, Abia State 440001
Nigeria

Mary-Fidelis Chidoziem Abiahu (Contact Author)

Nnamdi Azikiwe University - Department of Accountancy ( email )

Awka, Anambra 23400
Nigeria

Jacob Aondohemba Iormbagah

Department of Accounting, College of Management Sciences, Michael Okpara University of Agriculture Umudike, Umuahia, Abia State, Nigeria ( email )

Umudike
Umuahia, Abia State
Nigeria

Amaechi Egbunike

Nnamdi Azikiwe University - Department of Accountancy ( email )

Awka, Anambra 23400
Nigeria

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