auditor
Auditor: the independent person or firm that checks a company's financial statements and tells everyone, honestly, whether the numbers can be trusted.
In plain English
Think of the strict aunty who checks the caterer's receipts after a big owambe, and not since she cooked anything, but because everyone wants to know the money was spent the way it was reported. That is what an auditor does for a company, except the owambe is a full year of business and the receipts are the accounts.
In Nigeria, companies registered under CAMA above a certain size must have their financial statements checked by an independent auditor before they are presented to shareholders. A firm like a bank or a listed company on the Nigerian Exchange will hire an audit firm, often one of the big international names or a strong local one, to go through the books line by line and confirm the figures are fair and accurate.
In the United Kingdom, it works the same way. Public companies listed on the London Stock Exchange, and most private companies above a certain turnover, must appoint an auditor registered with a recognised body. The auditor writes a report that either says the accounts give a true and fair view, or raises concerns if something does not add up.
The key word is independent. An auditor should have no stake in the company beyond doing an honest job, which is why conflict of interest rules exist to stop the same firm from auditing a company it also advises heavily on other matters. Trust is the whole product an auditor sells, and once that trust is questioned, as happened in some big corporate scandals abroad, shareholders start asking very hard questions.
For the ordinary person, an auditor's signature at the back of a company's annual report is a calm form of protection. It tells you that someone independent looked at the numbers before you trusted them with your savings or your shares.
A Nigerian manufacturing company reports a profit of ₦850,000,000 for the year. Before shareholders approve the figure at the annual general meeting, an external auditor reviews the accounts, checks the stock records, confirms bank balances, and signs off that the ₦850,000,000 figure fairly represents the company's performance.
Questions people ask
Is an auditor the same as an accountant?
No. An accountant usually prepares or manages the accounts, while an auditor independently checks those same accounts afterwards to confirm they are accurate and fair. In most cases they cannot be the same firm, to protect independence.
Do all Nigerian companies need an auditor?
Small companies below certain thresholds set by CAMA can sometimes be exempt, but most medium and large companies, and all public companies, must appoint a registered external auditor every year.
What happens if an auditor finds a problem?
The auditor can issue a qualified opinion, flagging specific concerns, or in serious cases refuse to sign off the accounts at all, which is a major red flag for investors, regulators and lenders.
Last reviewed