Corporate Failure in the Banking Sector: The Role of External Auditors

Joseph Kwasi Agyemang ,Barjoyai Bardai ,Samuel Ntoah-Boadi

doi:10.7176/rjfa/11-4-03

Abstract

The aim of the study was to establish the role of external auditors in corporate failure in the banking sector. The study discovered that the auditing gaps within banks are tangibility and empathy services. It was also revealed that remuneration, training of external auditors, lot of variety in their job, level of logistics, loyalty rate of external auditors, motivational package and improved salary and opinion counts in the organisation were the factors influencing the effectiveness of external auditors. Lastly, unethical behavior has a positive relationship with corporate failure which was statistically significant at confident interval of 0.05 with a predictive power of 83.7 percent chance of predicting corporate failure which was moderate. It was recommended that the Bank should take steps to train and promote external auditors towards acquiring the necessary skills and experience to commission the corporate failure audit. Additionally, assistance also could be sought from other Supreme Audit Institutions in other countries with a similar government arrangement. Alternatively, assistance from private audit firms that have developed expertise in the public sector audit can be sought to assist them to make the audit function more meaningful and constructive. This will help fill the empathic gap of clients. With the current trend towards the harmonization of auditing standards and guidelines, further research into the usefulness and adequacy of auditing standards and guidelines is worthwhile. Keywords: Corporate failure, auditing, corporate corruption, assurance, effectiveness DOI: 10.7176/RJFA/11-4-03 Publication date: February 29 th 2020

Highlights

Background to the studyCorporate failure has remained a threat to sustained economic growth around the globe
4.7 Conclusion In conclusion the study recognized the difference between the mean perception and expectation of external auditors and that of staff at the Banks
The analysis indicates that, the external auditing gap from the views of external auditors was about tangibility service whiles that of Staff was about empathy of service delivered by external auditors at the Bank

Summary

Introduction

Corporate failure has remained a threat to sustained economic growth around the globe. This is made worse considering the contemporary global business networks. Despite the evolution of corporate governance practices and other strategic managerial and stakeholders’ actions, failure of firms to meet desired stakeholders’ objectives has shown a prominent phenomenon (Olabiyi, 2014). Laiya, (2013) mentioned that the imposing challenge of managing organizations to meet it stated objectives in developing nations like Ghana has prescribed a reflection of the cultural circumstance as central to failure of organization. Considering the grievous economic consequences of these failures which often times are of permanent nature, different strategic efforts have been put in place to ensure survival and growth. Attempts at understanding the dynamics of business failure have attracted a multi-disciplinary approach. There are strategic initiatives offered across all functional aspects of business (Tosin, 2014)

Objectives

Methods

Findings

Conclusion