International Journal of Research and Innovation in Social Science (IJRISS) | Volume IV, Issue VIII, August 2020 | ISSN 2454–6186

Auditor’s Independence (AUDINDP) and the Quality of Financial Reporting (FRQ) in Listed Deposit Money Banks (DMB’s) in Nigeria

Professor Owolabi, S.A.¹, Afolayan, Oluwatobi²

¹Professor, Department of Accounting, Babcock University, Nigeria
²Department of Accounting, Babcock University, Nigeria

Abstract: This research evaluates the impact of the AUDINDP on the quality of FRQ in listed DMB’s in Nigeria. The necessity for auditors’ independence is fundamental for completion of the audit reporting process. Autonomy of the auditor reveals in technical, investigative as well as reporting practices. For an audit report to be openly certified as capturing the true picture of things, the auditors ought to be viewed to be certainly autonomous. The population for this research comprised of 20 listed DMB’s in Nigeria. Purposive non-probability sampling method was employed to select the sample of ten (10) banks. Secondary data was adopted and likewise gathered from certified corporate annual report of the sampled DMB’s. Descriptive tests, correlation analysis as well as panel OLS regression was adopted for analysis purposes. The research discovered that there exists a positive association amid AUDINDP and FRQ in DMB’s. AUDINDP is a major audit quality in financial reporting. Auditors and professional accountants should follow the integrity of autonomy to realize credibility as well as reliability demanded from FR.

Keywords: Financial Reporting Quality, Auditor’s Independence, Firm Size, Non-Audit Services, Audit Report

I. INTRODUCTION

Most recently, it is necessary to produce financial reports which are relevant globally. Hence, disclosing high quality financial statements is vital since it will positively impact providers of funds as well as other investors in taking investment as well as related funding decisions. IASB (2008) specified revealing the IASB’s conceptual systemas a key condition for financial reporting quality which is the compliance with its objective as well as the qualitative features of financial statements.

Tasios and Bekiaris (2012) indicated that fundamental qualitative factors entail relevance as well as faithful representation. IASB (2008) explained that enhancing qualitative characteristics (comparability, verifiability, timeliness and understandability) augment the fundamental qualities. In recent times, auditors have been indicted on account of involvement pronounced as detrimental and anti-social behavior strictly for the goal of high fees. The importance of auditor autonomy was hinged upon significant corporate scandals such as the insolvency filing of Enron on the 2nd December, 2001 for twelve months.