International Journal of Economics and Business Administration
Articles Information
International Journal of Economics and Business Administration, Vol.3, No.3, May 2017, Pub. Date: Aug. 8, 2017
Audit Firm Attributes and Bank Failures in Nigeria
Pages: 20-31 Views: 1620 Downloads: 960
[01] Egbunike Francis Chinedu, Department of Accountancy, Nnamdi Azikiwe University, Awka, Nigeria.
[02] Egbunike Patrick Amaechi, Department of Accountancy, Nnamdi Azikiwe University, Awka, Nigeria.
[03] Okafor Ogochukwu Gloria, Department of Accountancy, Nnamdi Azikiwe University, Awka, Nigeria.
The main objective of this study is to examine the relationship between audit firm attributes and bank failures in Nigeria. Specifically, the study shall examine if auditors independence, audit team competency has any effect on the quality of audit report issued by the audit firm. Thirdly, the study shall ascertain if mandatory rotation of bank auditors’ has significant relationship with audit outcome of banks in Nigeria. The study made use of survey research design. The population of the study was made up of chartered accountants; specifically members of Institute of Chartered Accountants of Nigeria (ICAN) and the Association of National Accountants of Nigeria (ANAN), also, to be included are employees of financial institutions in Nnamdi Azikiwe University. The study finds that auditors’ independence has an effect on the quality of audit report issued by auditors. Secondly, there is a significant relationship between audit team competency and quality of audit report issued by the audit firm. Thirdly, there is a significant relationship between mandatory rotation of bank auditors and audit outcome of banks in Nigeria. Based on this the study recommends, that there should be a re-definition of the auditors’ role from that of a watchdog to a professional expert. Secondly, government should expand the role of auditors. An expansion in the role of auditors will also involve an increase in their remuneration. Thirdly, reputable firms should be hired to audit the accounts of the banks.
Audit, Audit Firm Attributes, Bank Failures
[01] Adeyemi SB, Fagbemi TO. Audit quality, corporate governance and firm characteristics in Nigeria. International Journal of Business and Management. 2010 May 1;5(5):169.
[02] Farouk MA, Hassan SU. Impact of audit quality and financial performance of quoted cement firms in Nigeria. International Journal of Accounting and Taxation. 2014 Jun;2(2):1-22.
[03] Anvarkhatibi S, Safashur M, Mohammadi J. The effect of auditors’ opinions on shares prices and returns in Tehran Stock Exchange. Research Journal of Management Sciences. 2012 Aug 27;1(1):23-7.
[04] Okoli, MN. The Role of Internal Audit in Financial Institutions (A Study of Nigerian Agricultural and Corporative Bank, First Bank of Nigeria and United Bank forAfricaPlc).2012; British Journal of Science, 5(1):72 – 82.
[05] Ojo, M. Regulating non audit services: Towards a principles based approach to regulation. 2009. Available at
[06] Kabajeh, MAM, Al Shanti AM, Dahmash FN, Hardan AS. Informational Content of Auditor’s Report and its Impact on Making Decisions from Lenders and Management’s View in the Jordanian Industrial Public Firms. 2012; International Journal of Humanities and Social Sciences, 2(14): 93 – 103. Retrieved from
[07] Agyei A, Aye BK, Owusu-Yeboah E. An Assessment of Audit Expectation Gap in Ghana. International Journal of Academic Research in Accounting, Finance and Management Sciences, 2013;3(4):112-8.
[08] Al Thuneibat, A. Auditing in the Light of International standards. 2009; Al- Ruz Press Co., Amman – Jordan, Second Edition.
[09] Adeyemi SB, Akinniyi KO. Stakeholders' perception of the independence of statutory auditors in Nigeria. Serbian Journal of Management. 2011;6(2):247-67.
[10] Arnold Sr DF, Bernardi RA, Neidermeyer PE. The effect of independence on decisions concerning additional audit work: A European perspective. Auditing: A Journal of Practice & Theory. 1999 Oct;18(s-1):45-67.
[11] O’Connor MS. Strengthening Auditor Independence by Reducing the Need for it. Reestablishing Audits as Control and Premium Signaling Mechanisms. Washington Law Review. 2006; 81(3):525-594.
[12] Transparency International. Global Corruption Report 2009: Corruption and the Private Sector. Cambridge University Press. 2009.
[13] Njanike K, Dube T, Mashayanye E. The effectiveness of forensic auditing in detecting, investigating, and preventing bank frauds.Journal of Sustainable Development in Africa. 2009; 10(4): 405-425. Available at
[14] Sikka P. Financial crisis and the silence of the auditors. Accounting, Organizations and Society. 2009 Oct 31;34(6):868-73.
[15] Sikka P, Filling S, Liew P. The audit crunch: reforming auditing. Managerial Auditing Journal. 2009 Jan 2;24(2):135-55.
[16] Otusanya JO, LauwoS. The Role of Auditors in Nigerian Banking Crisis. Accountancy, Business and the Public Interest. 2010;9:159-204.
[17] Okolie AO. Audit Firm Size and Market Price Per Share of Quoted Companies in Nigeria. International Journal of Business and Social Research. 2014;4(5):100-117.
[18] Sweeney AP. Debt-covenant violations and managers' accounting responses. Journal of accounting and Economics. 1994 May 31;17(3):281-308.
[19] DeAngelo LE. Auditor size and audit quality. Journal of accounting and economics. 1981 Dec 1;3(3):183-99.
[20] Okolie AO. Audit quality and earnings response coefficients of quoted companies in Nigeria. Journal of Applied Finance and Banking. 2014;4(2):139.
[21] McMullen DA. Audit committee performance: An investigation of the consequences associated with audit committees. Auditing. 1996 Apr 1;15(1):87.
[22] Tepalagul N, Lin L. Auditor independence and audit quality: A literature review. Journal of Accounting, Auditing & Finance. 2015 Jan;30(1):101-21.
[23] Institute of Chartered Accountants of Nigeria (ICAN). Professional code of conduct andguide for members. 2009.
[24] Barac K, Gammie EB, Howieson B, Van Staden M. The capability and competency requirements of auditors in today's complex global business environment. Institute of Chartered Accountants of Scotland (ICAS) and The Financial Reporting Council (FRC). 2016 March. Available at
[25] Odia JO. Auditor Tenure, Auditor Rotation and Audit Quality–A Review. European Journal of Accounting, Auditing and Finance Research, 2015;3(10):76-96.
[26] AICPA. The Commission on Auditor’s Responsibilities: Reports, Conclusions and Recommendations. 1978; New York, AICPA.
[27] AICPA. Statement of Position: regarding mandatory Rotation of Audit Firms of Publicly Held Companies. 1992; New York, AICPA.
[28] Dopuch N, King RR, Schwartz R. An experimental investigation of retention and rotation requirements. Journal of Accounting Research. 2001 Jun 1;39(1):93-117.
[29] Institute of Chartered Accountants in England and Wales [ICAEW]. Mandatory Audit Firm Rotation. 2002.
[30] Seidman JS. Catching up with employee frauds. The Accounting Review. 1939 Dec 1;14(4):415-24.
[31] Bae GS, Kallapur S, Rho JH. Departing and incoming auditor incentives, and auditor-client misalignment under mandatory auditor rotation: Evidence from Korea. 2013. Available at
[32] Ouyang B, Wan H. Does Audit Tenure Impair Auditor Independence? Evidence from Option Backdating Scandals. International Journal of Business and Social Science. 2013 Nov 1;4(14).
[33] Pitt H. Statement of Harvey L. Pitt before the Public Company Accounting Oversight Board concerning auditor independence and audit firm rotation. Washington, DC, March. 2012;21.
[34] Metcalf Committee, US Congress. Senate Subcommittee on Reports, Accounting and Management of the Committee on Governmental Affairs. Improving the Accountability of Publicly Owned Corporations and their Auditors. 1977.
[35] Commission on Auditors' Responsibilities, Cohen MF. Report, Conclusions, and Recommendations. The Commission; 1978.
[36] Public Company Accounting Oversight Board (PCAOB). Concept release on auditor independence and audit firm rotation. PCAOB Release No. 2011-006. 2011.
[37] Bazerman MH, Morgan KP, Loewenstein GF. Opinion: The impossibility of auditor independence. Sloan Management Review. 1997 Jul 1;38(4):89.
[38] Bazerman MH, Loewenstein G, Moore DA. Why good accountants do bad audits. Harvard business review. 2002 Nov 1;80(11):96-103.
[39] Eilifsen A, Messier Jr WF. The incidence and detection of misstatements: A review and integration of archival research. Journal of Accounting Literature. 2000 Jan 1;19:1.
[40] Gerayli MS, Yaanosari AM, Ma’atoofi AR. Impact of Audit Quality on Earnings Management (Evidence From Iran). International Research Journals of Finance and Economics, issue 66:77-84.
[41] Okolie AO. Auditor tenure, auditor independence and accrual-based earnings management of quoted companies in Nigeria. European Journal of Accounting, Auditing and Finance Research. 2014 Apr;2(2):63-90.
[42] Onwuchekwa JC, Erah DO, Izedonmi F. Mandatory audit rotation and audit quality: Survey of southern Nigeria. Research Journal of Finance and Accounting. 2012 Oct 1;3(8):70-7.
[43] Hoai Nam L. Audit Fees, Auditor Independence and Audit Quality: A New Zealand evidence, PhD RESEARCH PROPOSAL, School of Accounting and Commercial Law, Victoria University of Wellington. 2011.
[44] Coulton J, Livne G, Pettinicchio A, Taylor S. Audit Fees and Accounting Quality: Inferences from Single-Period versus Multi-Period Perspectives. Working paper. University of New South Wales; 2012 Sep.
[45] Choi JH, Kim JB, Zang Y. Do abnormally high audit fees impair audit quality?. Auditing: A Journal of Practice & Theory. 2010 Nov;29(2):115-40.
[46] Miettinen J. The role of audit quality on the relationship between auditee’s agency problems and financial information quality. Paper presented at the Department of Accounting and Finance, University of Vaasa, Finland. 2011.
[47] Bouaziz Z., Triki, M. The impact of the presence of audit committees on the financial performance of Tunisian companies. International Journal of Management and Business Studies. 2012 Oct 15;2(4):57-64.
[48] Friedman, M. The social responsibility of business is to increase its profits. The New York Times Magazine, Retrieved from 1970, September 13.
[49] Udeh FN, Abiahu MC, Tambou LE. Impact of corporate governance on firms financial performance: A study of quoted banks In Nigeria. The Nigerian Accountant. 2017, Apr-Jun, 50(2): 54-62.
MA 02210, USA
AIS is an academia-oriented and non-commercial institute aiming at providing users with a way to quickly and easily get the academic and scientific information.
Copyright © 2014 - American Institute of Science except certain content provided by third parties.