Background of the Study
The informal sector plays a critical role in Nigeria’s economy, contributing significantly to employment and GDP. However, the lack of formal structures and regulatory oversight creates challenges in implementing effective auditing practices (ILO, 2023). In markets such as Balogun, one of the largest open-air trading hubs in Nigeria, traders operate primarily on cash-based systems with limited financial documentation.
Auditing in this context is crucial for fostering transparency, enabling access to credit, and integrating the informal sector into the formal economy. However, barriers such as distrust of external parties, inconsistent record-keeping, and limited financial literacy hinder effective auditing. This study examines these challenges and provides insights into how audits can be conducted more efficiently in Nigeria’s informal sector.
Statement of the Problem
The informal sector in Nigeria is characterized by a lack of structured financial records, making it difficult to conduct audits that ensure accountability and accurate reporting. Traders in Balogun Market face significant challenges, including limited awareness of the benefits of auditing and resistance to external scrutiny. Without addressing these issues, efforts to formalize the sector and enhance its contribution to economic growth may remain unattainable.
This study investigates the key challenges of conducting audits in Nigeria’s informal sector, using traders in Balogun Market as a case study, and explores solutions for improving audit practices in this context.
Objectives of the Study
To identify the key challenges of conducting audits in Nigeria’s informal sector.
To assess the role of financial literacy in improving audit acceptance among traders in Balogun Market.
To recommend strategies for enhancing auditing practices in Nigeria’s informal sector.
Research Questions
What are the key challenges of conducting audits in Nigeria’s informal sector?
How does financial literacy impact audit acceptance among traders in Balogun Market?
What strategies can enhance auditing practices in Nigeria’s informal sector?
Research Hypotheses
H₁: A lack of financial literacy significantly impedes audit acceptance among traders in Balogun Market.
H₂: The absence of structured financial records hinders effective audits in Nigeria’s informal sector.
H₃: Improved financial literacy and awareness can enhance the adoption of auditing practices in Nigeria’s informal sector.
Scope and Limitations of the Study
The study focuses on traders in Balogun Market, analyzing challenges and opportunities for conducting audits in the informal sector between 2023 and 2025. Limitations include reliance on self-reported data and the diversity of informal sector activities that may not be fully represented.
Definitions of Terms
Informal Sector: Economic activities that are not regulated by government authorities and often lack formal financial structures.
Auditing: The systematic examination of financial records to ensure accuracy and compliance.
Balogun Market: A prominent market in Lagos State, Nigeria, known for its diverse trading activities.
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Chapter One: Introduction
1.1 Background of the Study
Relig...