AUDIT ATTRIBUTES AND QUALITY

0
848

OF FINANCIAL REPORTING

(A CASE STUDY OF WEMA BANK PLC, 2009-2018)

ABSTRACT

External auditors conducted an independent examination of firms financial statements, records and supporting documents and give opinion about the true and fair view of the reports , and that the reports is free from material misstatement and errors. While this can be  considered as a good control mechanism for ensuring the quality of corporate financial reporting, there is a great concern by the regulatory authorities and other stakeholders in view of the corporate scandals and failures of the external auditors that adversely affect corporate entities in recent times in Nigeria. Hence, this study examined the influence of audit attributes on quality of financial reporting on Wema Bank plc of Nigeria. Descriptive cross sectional survey designed was adopted for the study. The population of the study consisted of 25 staff of the Wema Bank Plc. Taro Yamane’s statistical formula was used to select sample size of 20. Judgment sampling techniques was considered in the study. The questionnaire was the instrument of study. Also, secondary source was adopted. The hypothesis was tested using the simple regression analysis and table was adopted in analyzing the research questions. Findings reveal that Audit Attributes (joint audit, audit firm size, audit fees, auditor’s reputation, audit committee independent, auditor’s qualification, auditor’s independence and auditor’s tenure) significantly influence the Quality of Financial Reporting in Wema Bank Plc as showed in the weighted mean score of 1.860 and tcal of 17.129. It was concluded that, the probability of a firm to engage in quality financial reporting is the function of its audit attributes. Stringent application of audit attributes would enhance the financial reporting quality in Wema Bank Plc. It was recommended that managers of Wema Banks Plc should subscribe to acceptable ethical standards in discharging their duties and responsibilities.

TABLE OF CONTENTS

Title Page

Declaration –       –       –       –       –       –       –       –       –       ii

Certification        –       –       –       –       –       –       –       –       iii

Dedication –       –       –       –       –       –       –       –       –       iv

Acknowledgments       –       –       –       –       –       –       –       v

Abstract     –       –       –       –       –       –       –       –       –       vii

Table of Contents       –       –       –       –       –       –       –       viii

List of Tables      –       –       –       –       –       –       –       –       x

CHAPTER ONE

INTRODUCTION

1.1    Background of the Study     –       –       –       –       –       1

1.2    Statement of Problem- –       –       –       –       –       –       4

1.3    Objectives of the Study-      –       –       –       –       –       5

1.4    Statement of Hypothesis-    –       –       –       –       –       6

1.5    Research Question-     –       –       –       –       –       –       7

1.6    Significance of the Study-    –       –       –       –       –       7

1.7    Scope and Limitation of the Study                 –       –       –       8

1.8    Organization of the Study-   –       –       –       –       –       9

1.9    Definition of Terms-    –       –       –       –       –       –       10

        CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1    Conceptual Review      –       –       –       –       –       –       11

2.1.1 Concept of Financial Reporting Quality   –       –       –       11

2.1.2 Proxies of Financial Reporting Quality    –       –       –       13

2.1.3 Determinate of Financial Reporting Quality     –       –       14

2.1.4 Audit Firm Characteristic      –       –       –       –       –       15

2.2    Theoretical Framework        –       –       –       –       –       –       19

2.2.1 Agency Theory   –       –       –       –       –       –       –       19

2.2.2 Stakeholder Theory     –       –       –       –       –       –       21

2.2.3 Accountability Theory  –       –       –       –       –       –       22

2.3    Empirical Review –       –       –       –       –       –       –       23

2.3.1 Audit Compensation and Financial Reporting Quality       –       24

2.3.2 Audit Rotation and Financial Reporting Quality        –       –       25

2.3.3 Audit Types and Financial Reporting Quality   –       –       28

2.3.4 Audit Remuneration and Financial Reporting Quality       –       29

2.3.5 Audit committee and Financial Reporting Quality     –       36

2.3.6 Auditor ‘s  Qualification and Financial Reporting Quality   37

2.3.7         Auditor’s Specialization and Financial Reporting Quality   39

2.3.8 Auditor’s Reputation and Financial Reporting Quality       –       40

CHAPTER THREE

 RESEARCH METHODOLOGY

3.1    Design of the Study    –       –       –       –       –       –       43

3.2    Area of the Study       –       –       –       –       –       –       43

3.3    Population of the Study-      –       –       –       –       –       43    

3.4    Sample Size and Sampling Techniques  –       –       –       43    

3.5    Instrument and Method for Data Collection    –       –       44    

 3.6   Data Analysis Techniques    –       –       –       –       –       45    

3.7    Model Specification     –       –       –       –       –       –       45

CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.1    Data Presentation       –       –       –       –       –       –       46

4.2    Data Analysis and Interpretation   –       –       –       –       48

4.3    Test of Hypothesis      –       –       –       –       –       –       54

4.4    Discussion of Findings –       –       –       –       –       –       58

CHAPTER FIVE

 FINDINGS, CONCLUSION AND RECOMMENDATION

5.1    Findings    –       –       –       –       –       –       –       –       60

5.2    Conclusion         –       –       –       –       –       –       –       61

5.3    Recommendations              –       –       –       –       –       62

References

Appendix(ces)