IMPACT OF AUDITOR’S INDEPENDENCE ON FINANCIAL REPORTING QUALITY OF LISTED COMMERCIAL BANKS IN NIGERIA

This study examined the impact of auditor independence on financial reporting quality of listed commercial banks in Nigeria. Specifically, the study investigated how audit tenure, audit firm size and audit fees determine the financial reporting quality. Methodologically, the study adopts a quantitative methodology on an ex-post facto design. The study population comprise the entire 13 listed commercial banks on the Nigerian Exchange as at 31 December 2024. However, the study selected five (5) listed commercial banks using stratified random sampling technique by drawing the 5 (3:2) banks from the existing strata of license authorization (international and national). Panel data (from 2015-2024) were sourced from the audited financial reports of the selected banks. Data were sourced on audit tenure, audit firm size, audit fees, and financial reporting quality. The panel dataset was analyzed using descriptives and inferential statistical techniques, through the aid of the E-Views 12 software. Based on the random effect model regression results, audit tenure (AUDT) (β=-0.0167, t-Statistic=-0.3475, Prob.=0.7297), audit firm size (AUDFS) (β=0.0562, t-Statistic=2.7654, Prob.=0.0082), and audit fees (AUDF) (β=- 1.2573, t-Statistic=-8.5562, Prob.=0.0000) depicts mixed results on the audit independence. While AUDT and AUDF have negative effects, AUDFS has positive effect on the audit independence. However, while AUDFS and AUDF have significant effect, AUDT has insignificant effect. Thus, the study concludes that auditor independence impact financial reporting quality of listed commercial banks in Nigeria. Therefore, it was recommended that banks should adhere strictly to audit tenure as stipulated by corporate governance, engage the service of one of the “Big Four”, and offer competitive fees to improve audit independence