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Abstract
Most business organizations world-over have computerized their accounting systems. Extant literature finds that the use of Computer Assisted Audit Techniques (CAATs) is positively related to the quality of audit reports. CAATs are widely applied to audit financial statements in developed countries. However, there is a void in literature about the audit of computerized accounts in developing countries. We draw a sample from Nigeria to investigate the following questions, "Do auditors effectively audit computerized accounts and; Is there a positive relationship between the use of CAATs and audit quality?" Using descriptive statistics, correlation analysis and logistic multiple regression, we provide evidence that: (1) CAATs are effectively used, (2) there is a positive relationship between the use of CAATS and audit quality, and (3) in a sample that excludes the big 4 International audit firms, local Nigerian firms are not effective in applying CAATs, and so, do not produce quality audit reports.
Keywords: CAATS; Computerized accounting; Audit quality; Auditor; Nigeria
© Omonuk JB, 2015
INTRODUCTION
Auditing is an attest function that authenticates the credibility of financial statements. Without audit certification, financial statements could be misleading by failing to present a true and fair view of the financial position of an organization. Auditing involves systematically and objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users (Messier, Glover and Prawitt). Financial Statement audit is performed by Certified Public Accountants (CPAs) who are independent of the company being audited. From Agency perspective, an auditor acting on behalf of the principal (shareholders) will check whether or not the agents (managers) have acted in the interest of the principal [1]. An auditor has to ascertain that the financial information submitted by agents reflect the true financial performance of the company in an effort to protect the principal from information risk. Minimizing information asymmetry between the agents and the principal is a crucial role for the auditor [2]. Information risk is reduced if accountants prepare financial statements in accordance with Generally Accepted Accounting Principles (GAAP). The auditors are expected to perform the audit in accordance with the Generally Accepted Auditing Standards (GAAS). To benefit consumers of audit reports, audit...