The Role of External Auditors and Bank Inspectors in the Distress Condition of Banks

ABSTRACT Over the years the Nigerian banks have been ravaged by the phenomenon called bank distress. The role of bank Inspectors and External auditors in this regard cannot be over emphasized. when it became apparent that the distress was leading to total; doom, the federal Government stepped in this intervention led to liquidation of banks of curb and menace of distress on our banks. Banks were liquidated due to poor capital base, insider abuse are mismanagement. More also other problems ravaging banks are forgeries, frauds and financial indiscipline etc. this posed grant challenges to management. Here the work of the auditors set in; The primary duty of the auditor is to report on truth and fairness of the financial statement. The project took a look at the auditor’s and inspectors reviving the true banking culture. Auditors are given the constitutional powers to control frauds and forgeries. But the reverse is the case, in the sense that we have management-aided fraud. One management is supposed to check fraud, financial indiscipline, and corruption in the bank’s management, vis-à-vis, the auditor’s shares the responsibilities of promoting, maintaining financial discipline, deterring frauds and forgeries, thereby curbing the menace in the banking industry.

CHAPTER ONE 1.1 INTRODUCTION Nigerian banking industry is today arguably one of the most sophisticated in Africa. It has embraced Information Technology including computerization, Internet and other forms of electronic banking. It has grown in number and branch network from about 10 banks in 1960 to 120 banks in 1990 courtesy of Babangida deregulation in 1986 and now to above 91. CBN sanitization polices played a vital role since 1998 till date. Since then the Industry has succeeded in its major role of financial intermediation (money from the surplus sector to the needy sector) stimulation of real sector growth and overall enhancement of trade. Obviously the industry has failed in majority e.g. those roles possibly scored high in just a few banks. For one Nigeria has not experienced real in industrialization. Most of the surviving companies in Nigeria are Multinational that survives on imported capital. That no truly industrial firm has grown to a multinational status is a pointer to the old ones that in manufacturing, mining and other real production activities have suffered form perennial inadequate funding due to numerous banking malpractices thereby resulting to distrust to the industry with the multiplier effect led to distress and possibly liquidation. This does not mean that these are the only cause of the stunted growth in the 8 real sector; but they are considered as the major causes. Others, like poor industrial base its adequate statistical data research, non - statutory rate changes and in short general corruption and financial indiscipline are among other factors.