Audit fee

Audit Independence and Financial Reporting Quality: An Insight from Sub-Saharan African Stock Markets (Published)

This study examines the possible effects of audit independence on financial reporting quality in the Sub-Sahara African Stock Markets. Using quantitative data obtained from the annual financial reports of 106 listed firms in the 6 sub-Saharan African stock markets of ten-year period (2012 to 2021). The Ex-post factor research design was considerably suitable for the study.The result shows that audit tenure has a positive impact and is significant in explaining financial reporting quality. The results further show that audit firm size has a positive impact but is insignificant in explaining financial reporting quality. Audit fees were found to have a positive and significant impact on. It is recommended that listed firms should increase audit tenure and policies on audit tenure should be revised. It is also recommended that firms should carefully assess the audit report of previous auditors when determining whether to appoint a new auditor. Lastly, Firms should increase the amount of fees paid to auditors to enhance their work while adhering to ethical principles with regard to audit fees.  The focus on only firms listed on Stock Market of Sub Saharan African

Keywords: Audit fee, audit independence, financial quality

Determinant of Audit Quality in Post IFRS and 2018 Code of Corporate Governance: Evidence from Nigeria (Published)

Audit quality is an issue of great concern in dealing with the confidence and credibility crisis that has engulfed the investment scene following collapse of many firms around the world as a result of outright fraud or fraudulent financial reporting. The study used panel data approach to investigate determinant of audit quality of firms listed in Nigerian Stock Exchange. Positivist research paradigm and Ex post facto research design was adopted. Thus secondary data was collected from sample of 14 firms purposively selected from non-financial firms from 2012 to 2019 resulting to 112 firm specific observations. Audit quality measured by accrual quality developed by Dechow and Dichev 2002 is the dependent variable.  Audit fee, audit independence, audit switching, audit effectiveness (audit firm size) constitute the independent variables. Result of the study revealed that about eleven percent variation in the audit quality of sampled firms was jointly explained by the independent variables used in the study. The beta coefficient of the variables showed that audit fee, audit independence, audit switching and audit effectiveness (audit firm size) is negative but not significant in influencing accrual level. This indicates that the independent variables by reducing accrual level increases audit quality. The study concluded that audit fee, audit independence, audit switching and audit effectiveness by reducing accrual level has positive but insignificant effect on audit quality of selected firms. The study affirms Agency theory that managers opportunistic behaviour can be reduced by a third party employed by the owners. The study among other things recommended that firms should review their policies particularly as it concerns their external auditors to ensure that there are no familiarity threats, real or perceived conflict of interest that will undermine their independence in carry out their services. there is also need to enforce recent regulations toward audit firm rotation or switching after the ten years’ period specified in the 2018 Code of corporate governance in order to reduce information risk and enhance audit quality.

Keywords: Audit fee, Capital market, Determinant, IFRS, Independence, audit effectiveness, audit switching

Effect of Audit Fees on Audit Quality: Evidence from Cement Manufacturing Companies in Nigeria. (Published)

This paper aims to examine the effect of audit fees on audit quality in Nigeria using a sample of listed cement companies on the floor of the Nigerian Stock Exchange. In specific terms, the study investigates the relationship between audit fee, audit tenure, client size, leverage ratio and audit quality. Ordinary Least Square Model estimation technique was employed to analyze the relationship between the explanatory variables and the dependent variable. Secondary data derived from the published annual reports of the selected companies for a six year period (2010-2015) was used for the study.  Findings from the study show that audit fee, audit tenure, client size and leverage ratio exhibit a joint significant relationship with audit quality given coefficient of determination (R²) being 0.6006 and a combined p-value of 0.001 and F_calc=7.14. This implies that the predictive power of the independent variables as used to explain changes in audit quality is about 60%. Audit fee in particular shows a significant positive impact on audit quality with a t and p-values of (4.04 and 0.001) respectively as well as a high positive correlation coefficient of 0.7513 with audit quality. The study recommends that Government through the various professional bodies should develop robust policies that will help improve audit quality in Nigeria.

 

Keywords: Audit Quality, Audit fee, Audit tenure, Client Size, Leverage Ratio .