AUDIT QUALITY AND FINANCIAL REPORTING QUALITY: EVIDENCE FROM NIGERIA

Abstract

The quality of audit opinion on financial statements has been a concern since the 2001 Enron
accounting scandal and the financial crisis that rocked various organizations despite unqualified
audit opinions given over the years. This study thus investigates the impact of audit quality on the
quality of financial reporting of quoted companies in Nigeria for the period 2011-2020. Ex-post facto
research design using panel data was employed and the 25 companies in the consumer goods sector
quoted on the Nigerian Exchange Group (NGX) constitute the population for this study. Applying the
purposive sampling technique, a sample of 21 companies was selected. Secondary data relating to
the variables were gathered from sampled firms' annual reports for the period and were analyzed
using descriptive statistics and multiple regression techniques. Findings revealed that audit quality
has a significantly positive effect on financial reporting quality (FRQ). It is concluded that audit
quality significantly improves the FRQ of listed companies in Nigeria. It was thus recommended that
policymakers and regulatory authorities should ensure the enforcement of policies towards ensuring
quality financial reporting through quality audits.

Keywords: : Audit Quality, Financial Reporting, Nigerian Exchange Group, Listed Companies