Auditor Independence and Audit Quality: A Survey of the Nigerian Banking Sector

Abstract

The objective of this study is to examine the effect of auditor’s independence on audit quality of listed deposit money banks in Nigeria. The population of this study comprised of fifteen (15) listed deposit money banks in Nigeria. The research design adopted in this study is the descriptive survey. Primary data was used for this study. The data was sourced from a five point likert’s scale questionnaire administered to the respondents. The data analysis techniques adopted are the descriptive statistics and ordinary least square (OLS) regression. The findings indicate that client importance has a negative but insignificant relationship with audit quality with a correlation co-efficient of (0.456) which implies that a 1% increase in client importance will result to 45.6% decrease in audit quality. Also, the relationship between audit firm rotation and audit quality was positive and significant at 1%, 5%, and 10% significance level with audit quality. Again, the relationship between non-audit services and audit quality is negative and statistically significant while the relationship between client affiliation with audit firm and audit quality is negative and significant. Hence we recommend that auditors’ independence should be strengthened by taking different measures to address the issues which could create threats for auditors. The measures include; but not limited to regular rotation of auditors, limit of non-audit services rendered to audit client which dampens audit quality.