Distress in the Nigerian banking sectors is a problem that bank has in this recent time. This seems as if the regulatory authorities appeared to be fighting a losing battle to sanitise the system.
Ebtiodaghe (1996) observed that banking distress occurs when customers were unable the loss of their deposits and consequent breakdown of their contractual obligation. The central bank fails to meet its capitalization requirements, has a weak deposit base and is afflicated by mismanagement. Aderiu (1997) said that distress in banks I based on the banks examination rating system with the word “CAMEL” that is C=capital adequaate, A = Asset quality, Management competence, E = earning strenght, L = Liquidity sufficiency. The above mentioned is the aggregate areas that really qualifies a bank to be branded “ healthy or sick”.
A bank is considered healthy by the CBN if it maintians six criteria for instance capital paid up capital, sound management i.e bank meeting up with CBN rules, satisfy customers and shareholders interest, minimum liquidity of 30% not less than 10% of its liquid assets to be in treasury bill and certificates. In a situation where a bank defaults in one or few of the above criteria and fails to rectify its default position within a month, it is indeed qualified to be classifeid as distressed.
Where banks is unable toservice its fixed costs, meet it debts obligations to its stakeholders has a net cash greater than its capital and can no longer operate profitably, the bank is deemed to have failed. Thus a failed banks is a bank which is unable to meet its obligations to its stakehodlers as at when due arising from weakness in its financail, operational and managerial conditions.
The failed bank decree also defined “failed bank” as a bank whose license has been taken over by the CBN. Due to the inability of the regulatory authorities to bring back some of these distressed bank which failed eventually, the only way left in order to sustain public confidence and stability of the system is to revoke their licenseadn put them on liquidation.
Regrettably this has been the fate of some distressed banks in the country. Almost 36 banks are on distress.
This study will also highlight in chapter 2, the main internal causes of distress and its implication on the Nigeria economy.
TABLE OF CONTENTS
Table of contents
1.0Background to the study
1.2Statement of problem
1.3Objectives of the study
1.4Significance of the study
1.5Scope of the study
1.6Limitation of the study
1.7Definition of term
1.8Statement of hypothesis
2.2Distress in the Nigerian banking sector
2.3Emergence of distress banks in Nigeria
2.4Implication of distress for the economy
2.5Causes of bank distress in Nigeria
2.6Who is an auditor
2.7What is auditing
2.8The role of auditor in distress and failed banks
2.9The role of auditing/function of the external auditor
2.10The duties of the accounting/auditor
2.11Auditor liability in relation to distressed and failed bank
2.12Letter to the management
3.1Area of study
1.3Source of data and information
1.4Mode of data collection analysis
1.5Analysis of data
4.0Presentation, analysis and interpretation of data
4.2Questionnaires administration and analysis of responses
4.3Test of hypothesis
5.0Summary, conclusion and recommendation
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