Auditors’ Independence and Quality of Financial Reporting of Listed Manufacturing Firms in Lagos State, Nigeria
DOI:
https://doi.org/10.61424/rjbe.v4i3.951Abstract
This study examines the effect of auditor independence on the quality of financial reporting among listed manufacturing firms in Lagos State, Nigeria. The study addresses key threats to auditor independence, specifically self-interest and familiarity, which can compromise the reliability of financial statements. Using a cross-sectional survey design, data were collected from staff in the accounting, auditing, and finance departments of five listed manufacturing firms: Cadbury Plc, Nestle Plc, UAC Plc, PZ Cussons Plc, and Unilever Plc. Out of 115 questionnaires administered, 110 valid responses (96% return rate) were analysed using descriptive statistics and linear regression via SPSS. The findings reveal that auditor incentives, audit report lag, auditor tenure, status of the audit firm, and audit client size each significantly influence the quality of financial reporting. All five null hypotheses were rejected at the 5% level of significance, confirming that auditor independence is a statistically significant determinant of financial reporting quality. The study concludes that maintaining robust auditor independence is essential for ensuring transparency, comparability, and credibility in financial reporting. Practical recommendations are offered for regulatory bodies, audit firms, and corporate management.
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