Effect Of Auditors Culpability On Creative Accounting In Nigeria

The study examines the effects of auditors' culpability on creative accounting in Nigeria. Auditors by virtual of their training, experience, the various Statutory Provisions and Acts relating to companies and professional bodies are expected to be able to uncover unethical accounting practices and brings same to the attention of the management and the regulators for remedial action. Unfortunately, cases of creative accounting practice still abound even with presence of auditors as examiners of books and financial statements of organizations. This study therefore was to examine the various ways in which creative accounting can be carried out in financial reporting; highlight the rationales for statutory auditors that allow creative accounting practices: identify the stance of professional bodies on auditor's misconduct in Nigeria, highlight instances of professional misconducts in Nigeria. The reliability of the instrument (questionnaire) was tasted using test-re-test technique in which Spearman Rank Order correlation coefficient was employed for the determination of the relationship. Analysis of Variance (ANOVA) Statically Technique was used to test the null hypothesis at 0.05 level of significance. The study revealed that the major reason for auditors' involvement in creative accounting practices in Nigeria is self-interest: diversities of professional judgment, hence users of accounting are adversely affected. This study recommends that adoption of International Financial Reporting Standards (IFRS) by all entities will reduce diversities of professional judgment in financial reporting by accountants and auditors.