MODERATING EFFECT OF AUDIT COMMITTEE INDEPENDENC ON AUDIT FIRM ATTRIBUTES AND AUDIT QUALITY OF QOUTED INSURANCE COMPANIES IN NIGERIA
,Adebiyi, Shola Tajudeen, M.M Naburgi, PhD, M.A .Mohammed, PhD and Umar, Ibrahim Ohinoyi
Volume 11 Issue 1
Abstract
This study investigates the moderating effect of audit committee independence on the relationship between audit firm attributes (specifically audit tenure and audit fees) and audit quality of listed insurance companies in Nigeria. Using a longitudinal research design and secondary data extracted from annual reports and accounts of sixteen insurance companies over a ten-year period (2014-2023), logistic regression and longitudinal balanced panel models were employed for analysis.The findings reveal a significant negative effect of audit tenure and audit fees on audit quality. However, audit committee independence was found to strengthen the effect of both audit tenure and audit fees on audit quality.Based on the findings, the study recommends that regulatory authorities such as the Financial Reporting Council of Nigeria and the Securities and Exchange Commission in Nigeria should consider periodic rotation of audit firms or engagement partners to mitigate the risks associated with prolonged auditorclient relationships. Additionally, regulators should promote greater transparency and fairness in fee negotiations and audit engagement terms to mitigate fee-driven incentives that may compromise audit quality. Furthermore, audit committees should be tasked with closely monitoring and evaluating audit tenure to ensure that auditors maintain independence, objectivity, and quality throughout the engagement period. Moreover, regulators and audit committees should monitor the fee-to-service ratio, ensuring that audit fees are commensurate with the level of audit services provided. These recommendations aim to enhance corporate governance practices, regulatory oversight, and audit quality in the Nigerian insurance sector, ultimately boosting investor confidence and audit quality. Keywords: Audit committee independence, Audit firm attributes, Audit quality, Audit tenure Audit fees
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