DETERMINANTS OF AUDIT QUALITY OF LISTED CONSUMER SERVICE FIRMS IN NIGERIA

Abstract

The main focus of this study is on the determinants of audit quality for listed consumer services firms in Nigeria. The study used some basic determinant factors, such as audit committee size, audit committee independence, financial literacy of audit committee members, auditors’ independence, audit committee meetings, and audit firm staff strength, while audit quality was used as a proxy. The study used a mix of correlational and ex-post facto designs. This is due to the author's collection of existing data from the financial statements of the chosen consumer services firms in order to assess the impact of the factors mentioned on audit quality. The study’s sample includes the 25 consumer services firms that were listed in the Nigerian Exchange Group (NEG) as of December 31, 2022.

The Multiple regression technique was used in analyzing the data obtained from the audited annual reports of the firms. The findings of the study show that audit committee size is seen as having an effect on the audit quality of consumer services firms in Nigeria. It is therefore necessary for firms to have an appreciable number of audit committee members. It was also revealed that the frequency of audit committee meetings does not have any significant effect on the audit quality of consumer services firms in Nigeria.

The study concludes that audit quality largely depends on the financial literacy of audit committee members. The study recommends that to increase the independence of the audit committee, consumer services firms should nominate a sizable percentage of non-executive directors.