External Audit Quality and Users Confidence in Financial Reports: Evidence from Nigeria Deposit Money Banks

Abstract

This study appraised the determinants of external audit quality and the relationship with the users’ confidence in the financial report of selected Deposit Money Banks (DMBs) in Nigeria. Secondary data were used as obtained from the financial information of seven banks purposively selected out the fifteen quoted deposit DMBs in Nigeria as at 31st of December 2017. Data collected were analyzed using descriptive statistics such as Pearson Product Moment Correlation Coefficient (PPMCC), used to test the formulated hypothesis at 95% confidence level. The overall results showed that technical training and proficiency (TTP), auditor size (AUDS), engagement performance (EP), and auditor independence (AUDIN) were significant determinants of external audit quality. It was further revealed that there is a significant relationship between Audit Quality Attributes and users' confidence in the financial report of selected DMBs in Nigeria (r = 0.4201; 0.0789; 0.3952; 0.7822, P<.0.05). The study suggests that auditors should be adequately remunerated to allow for sufficient resources to conduct thorough audits capable of uncovering material misstatements and errors in the financial statements; it will enhance higher quality reports.