Abstract:
The effect of auditor’s level of independence on financial reporting quality of deposit money banks was investigated in this study. The alarming rate of bank failure in Nigeria is a concern for researchers to investigate the role of auditors in ensuring financial reporting quality in the industry.
Copies of questionnaire were administered on accounts and audit staff of selected deposit money banks in Nigeria. Correlation and regression analyses were employed to test the hypotheses of the study. This study reveals that auditor’s independence has positive significant effect on the quality of financial reporting in deposit money banks in Nigeria. Further result from this study indicates that non-audit services have significant negative effect on the quality of financial reporting in deposit money banks in Nigeria. Another outcome of this study is that audit rotation has significant positive effect on the quality of financial reporting in deposit money banks in Nigeria. Hence, the study concluded that auditor’s independence, non-audit services and audit rotation have significant effects on financial reporting quality of deposit money banks sampled for this study. The study recommended that regulatory bodies and professional bodies should regulate and monitor the type and scope of non-audit services an auditor may engage in from time to time. The study recommends further that mandatory rotation of auditor of deposit money banks in Nigeria should be enforced by enabling regulatory organs like the central bank of Nigeria (CBN), Nigeria Security Exchange (NSE).
