The Nexus Between Auditors’ Independence And Financial Reporting Quality Of Listed Companies In Nigeria: A Literature Review Approach.

Abstract

The aim of audit is to ensure that all stakeholders have access to reliable and credible financial information because the report forms the basis for economic and non-economic decisions made by shareholders and other stakeholders. Principally, this paper examined how auditors’ independence affects financial reporting quality listed companies in Nigeria. The inductive approach used in this paper entails the surveying, studying, comparing, and summarizing of all papers published in prominent Journals from year 1999 to 2021 and this is because the nature of extant papers during the pre-Enron era was compared with papers during the post Enron era till date. Thus, the first aim of this paper is to discuss the importance of auditing and review theories that supports and necessitates the auditing profession. Secondly, the paper examined the determinants of auditors’ independence (audit fees, audit firm size, non-audit fees, auditors’ tenure, cultural factors and psychological factors). Thirdly, the study also considered the effect of auditors’ independence on financial reporting quality. The review and analysis of literature reveal that there is a significant relationship between auditors’ independence and financial reporting quality. Also, suggestions for further studies and recommendations were enumerated in the study.