LEGAL FRAMEWORK OF AUDITING (BASES)

LEGAL FRAMEWORK OF AUDITING (BASES)

1.     The Companies Act of 1888: the act legislated that the account prepared by the directors annually must be audited by independent third parties with integrity.

2.     The Companies act of 1948: this deal with the objectives of auditing and protection of shareholders and other users in terms of quality of information in financial statement.

3.     The Nigerian Companies Act of 1968: This was almost a replica of the UK Companies Act 1948, except that it restricted the license to practice as auditor in Nigeria to a member of Institute of Chartered Accountant of Nigeria (ICAN).

4.     The Nigeria Companies Act 1990: this deals the

a.   Protection of the auditor's independency

b. Right of access to all accounting and non accounting books records information and explanation lie considers necessary for his audit and

c. Auditor to report on the true and fairness of the companies' financial affairs.

5.     The companies and Allied Matter Act 1991: This is based on the Companies Act of 1985 published in UK. It's substantially updated and upgraded the Nigeria Company’s act 1968. From the auditor’s point of view, the following are the two important differences between the company’s act of 1968 and the CAMA "91".

a. CAMA 1991 prescribed the format in which published account wants to be presented.

b. The CAMA 1991 has extended the duties of an auditor to include a report to a committee as statutory sets up by the limited company.