The effects of Qualified Audit Report on a Company a Study of UACN Plc and PZ Cussons Plc

Abstract

The research topic is the effects of qualified audit report of a company. A study of UACN Plc AND PZ Cussons Plc. It is a known fact that some business organizations are in the habit of corporate deceit where financial statements are made to appear better than the true positions of affairs in these organizations. This had led to a lot of business going under after declaring fantastic results at year –end. In this study, there is the case of disagreement between the board and auditors of UANC Plc regarding the amount of revaluation surplus included in capital reserves to be released to profit following the transfer of the company’s investment properties to the newly incorporated UANC property development company. There is also the case of disagreement between the board and the auditors of PZ Cussons Plc over payment made out of profits arising from the use of this company’s property and fixed asset sold for dividend when the company was unable to pay its debts as they fall due. The objectives of the study is to determine the relationship between the market share price and the earning per share of UACN Plc and PZ Cussons Plc from 1992 to 2003 and also to compare the PE Ratio of UACN Plc from 1991 to 2003. the hypotheses of the study are the market share price and earnings per share of UACN Plc have no significant relationship with the market share price and earnings per share of PZ Cussons Plc from 1992 to 2003 and also there is no significant relationship between the PE Ratio and UACN Plc and PZ Cussons Plc from 1002 to 2003. The methodology adopted includes the research design, sample size, and population of the study, sampling techniques, data collection procedure, and the techniques of data analysis. The research design, which is a guide for data collection, adopted Y for the dependent variable, which is the market share prices and X1 and X2 for the independent variables – earnings per share and price earning ratios respectively. The sample size is 92. it was determined using the yard Yamene’s formular for a definite population. The population of the study is the capital market report from 1992 to 2003 of UACN Plc and PZ Cussons Plc published by the Nigerian stock exchange for all companies listed on the exchanges. This is a 10 years period, which consist of 120 months. The sampling technique adopted was the stratified sampling method. The data collected have been assembled in tabular form with appropriate titles. The multiple regression model technique have been adopted because we have three variables, one dependent and two independent variables; Y, X1 and X2. The major findings from the study showed the with the exception of 1992 to 1997, the EPS and the PE Ratio was unable to significantly influence the market share prices of both UACN Plc and PZ Cussons Plc. This means that a higher EPS did not significantly move upwards the market share price of the two companies and a lower PE Ratio did not significantly move upwards the market share price of the two companies. The conclusion from the study indicated that investors did not react significantly as to influence the market share price of the shares of UACN Plc and PZ Cussons Plc after auditors of both companies issued a qualified audit report. The recommendation proffered indicated that a qualified audit opinion does not necessarily mean that market share price of a company’s stock would be affected either upwards or downwards.