IIARD International Institute of Academic Research and Development

Journal of Accounting and Financial Management (JAFM )

E-ISSN 2504-8856
P-ISSN 2695-2211
VOL. 8 NO. 3 2022

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Auditors Independence and Audit Quality of Industrial Goods Firms in Nigeria

Ofor, Nkechi Theresa (Ph.D) and Orjinta, Hope Ifeoma (Ph.D) Onuigwe Gladys C.

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Abstract

This investigation looks at the impact of Auditor Independence (AI) on Audit Quality (AQ) at twenty Nigerian industrial goods companies over ten-year (2011 - 2020). Adopting an ex-post factor design, the secondary data collected were subjected to some preliminary data tests such as descriptive analysis, Pearson moment correlation matrix and multi-collinearity analysis using Variance Inflation Factor (VIF). Using logistic regression and a firm-random effect model, the study analyzed a sample of 200 firm listed in the Nigeria Exchange Group for ten years (2011 – 2020), measuring auditor independence based on audit fee, auditor education level, auditor busyness and joint provision of audit and non-audit services (JPANS). As a result, this study found that audit fee and auditor education level positively and significantly affect audit quality of industrial goods corporations in Nigeria at 1% 1nd 5% levels of significance respectively while auditor busyness and JPANS negatively affect audit quality and this simply implies compromise of auditor independence. The study concludes that auditor independence in the industrial goods companies in Nigeria is compromised via auditor busyness and provision non audit services during the period covered by the study. Grounded on the outcomes above, it is recommended that Regulatory agencies in Nigeria should increase surveillance on audit practices with regards to fees charged while JPANS by the same audit firm should be discouraged.

keywords:

Audit quality, auditor busyness, audit fees, auditor education level, joint provision of audit and non audit services

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