A Causality Analysis between Tax Audit and Tax Compliance in Nigeria

Tax audit is the independent examination of the returns submitted by taxpayers to the relevant tax authorities to ascertain the level of tax compliance by taxpayers. The objective of this paper is to examine the impact of tax audit on tax compliance in Nigeria. To achieve this objective, data was collected from primary and secondary sources. The secondary sources was from scholarly published and unpublished studies and the primary source from a well structured questionnaire of three sections administered to two hundred and four (204) respondents with an average reliability of 0.77 using diagnostic tests, augmented dickey-fuller, ordinary least square and granger causality. The empirical analysis provided a significant relationship between random tax audit, cut-off tax audit and conditional tax audit on tax compliance in Nigeria. On the basis of the empirical result, the paper concludes that tax audit is one of the compliance strategies that can be used to achieve tax compliance in Nigeria because the average Nigerian is known for tax evasion and avoidance using all the available means of not paying the relevant tax to the government. Therefore, the paper recommends amongst others that government should show some degree of accountability and transparency on the revenue collected to make citizens understand the connection between tax revenue and expenditure; the government should implement the relevant tax laws faithfully, equitably and fairly irrespective of the persons status and organization concerned; the relevant tax authorities at all levels should improve on the standard of tax audit employed for effectiveness and efficiency in tax administration to reduce the high level of tax evasion on those that are self-employed. Keywords: Tax audit, Tax compliance, Taxation, audit, Nigeria

Audit Risk Assessment and Detection of Misstatements in Annual Reports: Empirical Evidence from Nigeria

Audit risk examines the relevant assertions related to balances, classes of transactions, or disclosures contain misstatements that could be material to the financial statements when aggregated with misstatements in other balances, classes, or disclosures and the risk that the auditor will not detect such misstatements.  This paper examines audit risk assessment and detection of misstatements in annual reports. To achieve this objective, data was collected from primary and secondary sources. The secondary sources were from scholarly books and journals while the primary source involved a well structured questionnaire with an average reliability of 0.91. The data collected from the questionnaire were analyzed using relevant diagnostics tests, granger causality test and multiple regression models. The result revealed that the application of audit risk models statistically and significantly affects the detection of misstatement in financial statements. Hence, the paper concludes that audit risk models reduce the level of fraudulent financial reporting through the detection of misstatements in audit practice and relevant recommendations were provided that would enhance the application of audit risk assessments in the audit of financial statements. Keywords: inherent risk, control risk, detection risk, engagement risk, detection misstatement, Nigeria

Financial Reforms and the Nigerian Capital Market: 1986– 2010

This paper examines the impact of financial reforms on the Nigerian Capital Market for the period 1986 – 2010.  This is against the backdrop of the important role the capital market plays in the economic growth and development of a nation.  The paper reviewed empirical secondary data from CBN and Stock Market publications. The impact of the financial reforms introduced since 1986 on capital market development was assessed using multiple regression, the Johansen co-integration technique and Error Correction Model (OCM) as well as the pair-wise Granger causality tests to ascertain the long-term relationship between financial reforms and capital market development. The result revealed that the financial reforms from 1986 upwards had an overall significant impact on the capital market development in Nigeria. Keywords: Capital Market, Economic Growth, Financial Institutions, Financial Reforms, Stock Exchange

Social and Environmental Accounting: The Challenges of Implementation in Oil Prospecting Companies in the Niger Delta States of Nigeria

Social and environmental accounting is the ability to provide accurate information in the financial statements regarding the estimated social cost occasioned by the production externalities on the environment and how much deliberate intervention cost had been incurred to bridge the gap between the marginal social cost and the marginal private cost by a firm. This study examines the factors affecting the practice of social accounting disclosure in Nigerian oil prospecting companies. Three (3) companies operating in the Niger Delta States of Nigeria where randomly sampled with thirty (30) host communities drawn from Delta, Bayelsa, Rivers and Akwa-Ibom states. Secondary data were collected from each company’s annual reports from 2002 to 2011 and one hundred and seventy two questionnaires were administered to staff and host community members for direct inter personal information. The researchers used least square regression analysis with the help of Econometric view (E-view) model to analyse the effect of the identified variables on the practice of social and environmental accounting. The study revealed that the sampled companies did not in detail, report a close to reality estimate of the externalities generated by their production activities but reports the little intervention cost incurred under the directors or the chairman’s report. Again, that factors such as cost of implementation, the effect on profitability, the existence of a legal frame work, the peaceful environment and top management support affects 79% of the level of implementation of social and environmental accounting practice among the companies studied. The paper recommended that a strong legal frame-work should be provided to ensure that more than 80% value of actual economic value of externalities generated in a year is to be reported in the director’s report and the actual intervention cost is to be reported in the profit and loss account under social cost. Key words: Social, Environmental, Accounting, Implementation, Challenges, Niger Delta States, and Nigeria.

Credit Risk Management and the Performance of Deposit Money Banks in Nigeria: An Error Correction Analysis

This paper set out to investigate the impact of credit risk management on the performance of deposit money banks in Nigeria using the ECM and Granger causality techniques in addition to the IRF and VDC methodology. Data for the study were sourced from the CBN Statistical Bulletin and the Annual Reports and Accounts of the NDIC for the period 1989 to 2013. Our findings demonstrate succinctly that the selected credit risk management indicators under study significantly impact on the performance of deposit money banks measured as return on equity, return on total assets, and return on shareholders’ fund respectively. However, the findings report no evidence of significant granger causality relationship between the various credit risk management indicators and the various measures of performance except for a uni-directional granger causality relationship from ROE to RNPD and from ROTA to RNPS respectively. Based on the foregoing, it is recommended that given the observed significant relation between credit risk management and performance, deposit money banks in Nigeria should always pay particular attention to their credit risk management policies in order to significantly improve on the performance of these banks

Exchange Rate Volatility and Monetary Policy Shocks

The study investigated the influence of innovations in monetary policy on the rate of exchange volatility in Nigeria. The research adopted vector error correction model as well as impulse response function and forecast error variance decomposition function in the estimation using two models derived in the study. Monthly data between the periods 2009 and 2019 were adopted for the research. Our findings show that in the long run; all the monetary policy variables have a significant long run correlation with volatility in the exchange rate; but that money supply and the rate of exchange seem to have significant short run impact on volatility in the exchange rate, the other variables such as liquidity ratio or monetary policy rate did not show a significant short run relationship with the volatility in the exchange rate. Further findings on the volatility impulse response and the forecast error variance decomposition suggest a significant link between volatility in the exchange rate and money supply though the link was much more pronounced. The use of monthly data shows that the managed exchange rate regime by the CBN seems to have the desired effect in exchange rate volatility and thus having a critical impact on inflationary spikes