Auditors Independence and Audit Quality of Health-Care Firms in Nigeria

Abstract

This study examines the effect of auditor independence on audit quality of twenty industrial goods companies in Nigeria for a period of ten years spanning 2012 to 2021. The objectives were centered on assessing possible effect of client importance, auditor reputation, audit opinion and auditor professional qualification on audit quality of health care companies in Nigeria. To achieve this set objectives, this study employed ex-post-facto research design based on data sourced from selected firm’s yearly reports for time period that ranged from 2012 to 2021. Adopting an ex-post factor and longitudinal research design, the secondary data collected were subjected to some preliminary data tests such as descriptive analysis, Pearson moment correlation matrix and multi-collinearity analysis using Variance Inflation Factor (VIF). The research used panel least square procedure based on fixed and random effect framework and houseman test was equally employed in selecting the best model to estimate parameters contained in the model. Emanating from the review of relevant literature and theories on auditor’s independence and audit quality and based on the data collected, analyzed and the hypotheses tested the study found that auditor reputation and auditor professional qualification recorded a positive and significant effect on audit quality which was statistically significant at 5% level of significance. On this basis, therefore, it may be recommended that there is need for the audit firm to protect its independence by working within its statutory duties. The management of health care companies is hereby advised to always source for the services of reputable audit firms with professional qualification and expertise to ensure quality of audit in their firms