Independence is a major concern in the auditing profession. Corporate scandals like Enron failure confirmed the importance of credulity of audits. Audit independence refers to the ability of the external auditor to act with integrity and impartiality during his/her auditing functions [1]. Recent challenges of the audit independence assumption have impelled the accounting profession to consider ways of improving the credibility of audit reports [2]. As a result, the accounting profession has considered new ways to improve the credibility of audits. It is constantly facing pressure from the media, stakeholders and investors to minimize [3]. 

Shockley [2] stated that the value of auditing services depends upon the fundamental assumption that certified public accountants are independent of their clients”. It can be described as having an unbiased viewpoint while performing audit test, analyzing the results, and confirming the audit report. Auditor independence increases “the effectiveness of the audit by ensuring that the auditor plans and carries out the audit objectively” [4]. Researchers argue auditing has three different functions: monitor the actions of managers, enhance the information environment, and provide a source of insurance against corporate failures [5]. Corporate collapses such as Enron and WorldCom contributed to the impairment of auditor independence. It is believed that once auditors fail to report or identify incorrect information on financial statements, it can challenge the value of the audit and possibly damage the reputation of the firm ([6]. 

In the aftermath of a downward economy, the public’s concern for auditor independence became heightened as companies wanted to ensure a company’s adherence to professional accounting standards and principles [7]. Revised rules were published by the Securities Exchange and Commission to address the circumstances for non-audit services. Audit firms must now create separate categories that disclose all the fees that were paid to the firm so that investors are aware about the types of fees [8]. Research evidence shows that higher quality earnings are associated with longer audit tenure than shorter audit tenure. Further, research suggests that auditors and client firms have a stronger economic bound once auditors have been employed for a long period of time which leads to personal connections and familiarity. Gul et al, [8] conclude that non-audit fees are likely to affect auditor independence for firms with shorter auditor tenure, but not for firms with longer audit tenure.

Audit quality depends on auditor’s independence as proposed by Aren et al. [9] that the value of auditing depends heavily on the public’s perception of the independence    of auditors. The same thing was also expressed by Enofe et al. [10] based on the results of research that an auditor’s independence increases; the quality of the audit also increases. The American Securities and Exchange Commission [10] defined auditor Independence as “a mental state of objectivity and lack of bias”. Auditor independence which is the fulcrum of audit quality in recent times seems compromised as most corporations whose financial statements were audited and issued unqualified reports collapsed shortly after auditing with the news that the financial statements are grossly misstated [12]. Auditor independence which determines audit quality was one of the fundamental causes of corporate failures that led to the collapse of hitherto strong firms whose fallout caused the global economic meltdown of the middle of 2000. This led to user’s apathy and confusion about the role auditors ought to play to safeguard not only their profession but also build and restore investors’ confidence to reducing the audit expectancy gap that existed after the collapse of these firms. 

There is the belief that auditing report issued by an auditor should be of reputable quality. However, the quality of an audit depends on the relationship between an auditor and the clients. Seen from this perspective, audit quality in this case refers to credibility of the audit opinion which is a measurement of the degree of confidence users place upon the information provided by the auditor. Audit quality in recent times has become a source of worry locally, nationally and globally as most auditors seem not to be discharging their duties independently [13]. 

Many studies have also been carried out on auditor independence and audit quality: many of the researchers found a significant positive effect between auditor independence and audit quality [13-16]. Despite the positive effect, some researchers found a negative view [17-19]. Besides, most of the studies were carried out mainly in foreign countries. The lack of consensus on the theories and the empirical literature calls for more empirical studies on the kind of relationship that exist between auditor independence and audit quality. This research work is embarked on to fill this gap. Therefore, the researcher deems it plausible in this area to verify the effect auditor independence has on the audit quality of deposit money banks in Nigeria using, audit fees, audit tenure as a measure of audit quality.

This study determined whether audit independence affect audit quality in deposit money bank in Nigeria. Specifically, the study sought to achieve the followings:

• To ascertain the effect of audit fees independence on audit quality of quoted deposit money banks in Nigeria

• To determine the extent to which audit tenure affects audit quality of quoted deposit money banks in Nigeria

Review of Related Literature

Conceptual Framework

Audit independence: The major challenges to auditor independence are the fees perceived by the auditor for audit services and the length of relationship between the auditor and client. Erode independence of an auditor leads to poor audit quality and the consequence include greater earnings management and lower earnings quality [20]. Auditor independence may be impaired by auditor tenure. As the relationship between the auditor and client lengthens, the auditor may develop close relationship with the client and may likely act in favour of the management such like, impair objectivity and audit quality [15].

Meanwhile, the Independent Standards Board (ISB) established a framework for Auditor Independence due to the lack of inconsistent rules and regulations. The framework contains various policies to help the board with writing the standards. This framework defines auditor independence as a freedom from the factors that compromise the auditor’s ability to make unbiased audit decisions” [21]. The overall goal with independence is to ensure financial reports are reliable and improve capital market efficiency. 

Independence is an essential attribute for audits because it determines how credible and reliable financial statements will be to investors. Independence has been the focus of almost constant controversy, debate and analysis [22]. According to Fearnley et al. [6] “the restatement of the Enron accounts and the collapse of Anderson shows the devastating effect of loss of confidence in the integrity of an audit firm.” The media remains critical of the auditing profession. Actual and perceived independence are the two types of auditor independence. The perceptions of auditor’s independence will determine the future of the auditing profession [6]. 

Audit Quality

According to previous literature, the size of the auditor can be considered as a subrogate of the audit quality [23]. DeZoort et al. assert that larger audit firms are better than smaller audit firms at detecting errors because they have greater resources at their disposal and can attract employees with superior skills and experience. Audit quality is defined as auditors use some technics to recognize misstatements in a client’s accounting systems and report the misstatements. Audit quality is the controversial issues for decades and most previous evidence suggests that lack of audit quality is among the most important reason for financial and corporate scandals [24].

The most well-known definition of audit quality, which has been broadly accepted by scholars is the one by DeAngelo [25] which states that the quality of audit services is defined to be the market-assessed joint probability that a given auditor will both discover a breach in the client’s accounting system and report the breach. This definition broadly means that audit quality depends on the probability that the auditor discovers a misstatement in a financial statement and actually reports the misstatement. If auditors are not independent, they will be less likely to report misstatements, which negatively influences audit quality. As a result, it can be argued that the lower the degree of independence of the auditor, the lower the quality of audit services will be.

In a situation of a litigation of an auditor, auditors therefore often try to settle the matter out of court in order to avoid damage to their reputation. She argues that audit quality is inversely related to, although seldom seen, litigation against an auditor. Thus, when using the litigation rate as a measure for audit quality, auditors with relatively low litigation rates provide a higher quality of audit services [26]. Francis [27] describes audit quality as a theoretical continuum ranging from very low to very high audit quality. In addition to the definition, he argues that audit failures occur on the lower end of the quality continuum. According to Francis [27], audit failures can occur as a result of two different reasons, either when the General Accepted Accounting Principles were not applied by the auditor, or when the auditor fails to issue a qualified audit report in circumstances that require such a report. Regardless of the reason for the audit failure, in both situations, the audited financial statements will potentially mislead the users of the statements.

Size of Audit Fee and Non-Audit Services 

Many concerns are centered on auditors providing Non-Audit Services (NAS) because they are likely to risk their independence in return for more NAS earnings. It is assumed that auditors may try to sacrifice their independence in exchange for retaining the audit clients from which they might accrue large NASs revenues [22,28]. Examples of non-auditing services include appraisal services, actuarial services, bookkeeping, internal audit services, and various modes of management consulting, financial information design services, taxation services, and legal advice [7]. Studies have shown that NASs has impacted auditor independence negatively. Rules have been established by the Sarbanes-Oxley Act to limit the services auditors can provide for client. Besides, the SEC required firms that were traded publicly to reveal the number of fees paid to auditors in their annual proxy statements as they were investigating the relationship between non-audit services and auditor independence [29]. On the contrary, a few researchers discussed how utilizing NASs can help increase knowledge about the client. 

Audit Fees can be defined as the amount charged to a client to conduct specific services by the accountant. The fees may vary by size or based on the type of service provided but there have been many questions from researchers whether it affects audit quality. “The amount of audit fee can vary depending on the assignment risk, the service complexity, the level of expertise required, the cost structure of Public Accountant Firm and other professional considerations” [30]. Studies have shown that larger firms tend to charge higher fees because of the idea that they may provide better quality for audits. Audit quality is challenging to measure and explain due to the lack of concept detail. According to Rahmina and Agoes [30], there are nine elements firms should implement to meet quality control expectations. They include independence, assignment of personnel, consultation, supervision, employment, professional development, promotion, acceptance,    and     sustainable    clients,    and inspection.

Audit Tenure 

An audit firm’s tenure can be defined as the length of time an auditor performs services for a client. Risk associated with the loss of independence is increased once client relationships are maintained for a long period of time. On the other hand, other individuals believe having a lasting and faithful relationship will augment independence. For example, “long tenure is beneficial as auditors gain expertise in the field that they audit and may reduce the auditor’s ability to detect irregularities or material misstatements” (UK Essays). Shockley [2] explained how “complacency, lack of innovation, less rigorous audit procedures and a learned confidence in the client may arise after long association with the client.” A recommendation to rotate auditors was advised by the Metclaf subcommittee to avoid this issue. Academic research has proven that there are more unsuccessful audits in the beginning of auditor-client relationships in addition to lower earnings with audits that have shorter time frames. Apparently, investors reward long auditor-client relationships with a lower cost of debt. 

Review of Related Studies

Quite a number of researches have been carried out locally and outside Nigerian borders on audit independence and audit quality for or against the established theories. Adeyemi and Fagbemi [31] Audit quality, corporate governance and firm characteristics in Nigeria using the size of the audit firm and business leverage. The logistic regression revealed that ownership by the non-executive director has the possibility of increasing the quality of auditing. Yuniarti [32] investigated the relationship between factors that affect the audit quality of 24 Bandung firms in 2009. Using regression analysis, the study found that audit fees are significantly and positively affect audit quality.  Adeyemi and Okpala [33] examined the impact of the audit independence on financial reporting in Nigeria. In conducting this research both primary and secondary data were used. The study captured the opinions of respondents including auditors, shareholders, brokers, analysts, regulators, management, academics and others users of financial information. The primary data were got from three hundred and fifty returned and usable copies of questionnaire, while the secondary data were generated from the financial statements of forty annual reports of companies quoted on the Nigerian Stock Exchange. The data gathered were used to test the research hypotheses and answer some of the research questions. The study found a significant and positive relationship between audit quality and the quality of financial reporting. Kabiru and Abdullahi ascertained the quality of audited financial statements of deposit money banks in Nigeria, using both primary and secondary data and from the population of 21 banks, they selected a sample of 5 banks comprised First Bank, Zenith Bank, Union Bank, United Bank for Africa and Access Bank, all publicly quoted companies in Nigeria. They found that the independence of an auditor does significantly improve the quality of audited financial statements of money deposit banks in Nigeria. They also found that audited financial statements of Nigerian money deposit banks, if re-audited by other independent auditors, will give the same result and conclusion. Adeyemi, Okpala, and Dabor [33] assessed the factors affecting audit quality in Nigeria. Primary data, Questionnaire was used and the study found that the provision of non-audit services would likely have a significant effect on the audit quality in Nigeria.  Sylvia et al. determined the relationship between auditor’s tenure, audit firm size and auditor’s independence. A cross-sectional survey research design and statistical technique used for this paper was the binary logistic regression. From our findings, auditor’s tenure (TEN) does not compromise the independence of the auditors and audit firm size (AUD) does not also compromise the independence of the auditor. Enofe et al. [10] examined the relationship between audit quality and auditors’ independence in Nigeria. A cross-sectional study analysis of companies listed on the Nigerian Stock Exchange was carried out. A sample of twenty (20) audited financial reports of these companies for the period ending 2011 was selected using the simple random sampling technique. The data collected for the variables were subjected to the ordinary least square (OLS) regression analysis. Findings indicated that as auditors‟ independence increases, the quality of audit also improves, and like the independence of the board and ownership structure increases, the quality of audit reduces. Monroe and Hossain examined whether audit partner tenure and audit quality associations remain significant after the implementation of mandatory audit partner rotation in Australia. Ex-post facto study design was employed and financial statements and audit opinions for firms with a balance sheet from 1 July 2006 to 30 June 2010 were collected. A sample data of 4,711 was restricted to financially distressed banks. Logistic regression model was used to analyze the data. Findings revealed that auditors are more likely to issue qualified going –concerns opinion for financially distressed companies when there is mandatory audit partner rotation after a fixed time. Findings suggested that the implementation of mandatory audit partner rotation had improved audit quality. Nam and Ronen [34] examined the relationship between audit fees as a proxy for auditor independence and audit quality of firms in New Zealand. Employing three multiple regression models for a sample of New Zealand companies. The study found that auditor’s independence; abnormal audit fee change rate is negatively associated with audit quality and auditor’s independence of the previous year impacts on the audit fee that is negotiated in the current year. Abdul et al. [14] investigated the effect of competence and auditor independence on audit quality with audit time budget and professional commitment as a moderation variable in Indonesia. Primary data in form of a public accountant’s perception of auditor’s competence, independence, audit time budget, professional commitment and audit quality were collected through questionnaires. The sample size of 278 public accountants was randomly selected. Partial least square (PLS) was used to analyze the data. Findings from this work revealed that; First: auditor’s competence has positive effect on audit quality. Ilaboya and Ohiokha [17] examined the impact of audit firms’ characteristics on audit quality. They proxy the dependent variable (audit quality) using the usual dichotomous variable of 1 if big 4 audit firm and 0 if otherwise. Data for the study were sourced from the financial statements of 18 food and beverage companies listed on the Nigerian Stock Exchange market within the period studied (2007-2012). They adopted a multivariate regression technique with an emphasis on Logit and Probit method in analyzing their data for the study. Their study revealed there is a positive relationship between firm size, board independence, and audit quality whereas there is a negative relationship between auditor’s independence, audit firm size, audit tenure, and audit quality. Ahmed [35] investigated the professional auditors’ perception of the impact of audit firm rotation on audit quality in Egypt. Primary data were collected via questionnaires and used. A sample size of 83 auditors was drawn using a non-probabilistic sampling technique. A t-test was used to analyze the data. Findings revealed that the auditors‟ perception indicates that there is a negative relation between long audit tenure and audit quality. There is a negative relation between client-specific knowledge and mandatory auditor rotation. There is a positive relation between auditors’ independence and mandatory auditor rotation. Farouk and Hassan [36] examine the impact of audit quality on the financial performance of quoted firms in Nigeria. The study is descriptive in nature and the correlational and ex-post-facto designs were adopted in carrying out this research. The data collected were quantified and presented in tables. Multiple regression analysis using the SPSS Version 15.0 was employed in analyzing the data and testing the stated. The results show that auditor size and auditor independence have significant impacts on the financial performance of quoted cement firms in Nigeria. Mahmoud [37] determined the effect of joint audit on audit quality: Empirical evidence from companies listed on the Egyptian stock exchange. A sample of 32 companies listed on the Egyptian stock exchange in the period 2009 through 2013 representing 160 firm-year observations was determined. A multiple regression model was used to analyze the data. The study design did not disclose the entire population where a sample of thirty two was taken. Findings showed that companies audited by joint auditors are more conservative than companies audited by single auditors. Causholli et al. [38] investigated the effect of selling non-audit services on auditor independence in America. The study did not disclose the study design employed as well as the studied population and sample size. Findings obtained from statistical regressions of abnormal accruals found strong evidence that the anticipated future provision of non-audit services does represent a source of impaired independence in the current year. Shivaram et al. [19] conducted a study on the determinants of audit quality; the study used a variation of Big N auditor, discretionary accruals, audit fees, accrual quality, going-concern opinions, or meet or beat the quarterly earnings target as a proxy for audit quality. The study provide evidence on the construct validity of these measures by evaluating whether they are able to successfully predict alleged audit deficiencies in engagements that are the subject of non-dismissed lawsuits and SEC’s AAERs filed against auditors over the violation years 1978-2011. The presence of a Big N auditor signing off on the statements of the company during the violation periods is negatively associated with the total number of audit quality allegations and this result is driven by a lower incidence of allegations that a Big N auditor did not exercise due care in the audit. Abnormal audit fees during the violation period are positively associated with the number of alleged audit quality violations.  Bishnu, and Ranjan [39] examined the determining factors of the audit committee independence in the financial sector of Bangladesh by employing a cross-sectional regression analysis on 72 financial firms. The study revealed that firms with large boards and more non-executive directors tend to provide more independence to the auditors. The study, however, reveals a negative relationship between the size of the audit committee and its work independence. Dunakhir [40] in his work factors associated with audit quality: evidence from an emerging market. The study investigated the attributes of audit quality in Indonesia by considering input from groups of auditors, audit clients and external statement users. Beside the facts of the important to consider the issue from different groups of stakeholders such as audit committee chairpersons and loan officers, there have been very few published empirical studies of perceived audit quality in Indonesia from those groups’ perspectives. The result shows that there are significant difference perceptions between the groups. Babatolu et al. [15] examined the effect of auditor independence on audit quality of selected deposit money banks in Nigeria. Purposive sampling technique was used to select sample size of seven (7) listed deposit money banks from a population of twenty (20). Secondary data were sourced from the audited annual report of the sampled banks. Descriptive statistics, correlation and ordinary least square (OLS) regression were used to analyze the data. Findings revealed that there is a positive relationship between audit fee, audit firm rotation and audit quality. There exists a negative relationship between audit firm tenure, and audit quality. Zayol, and Kukeng [13] reviewed literature related to auditor independence and audit quality to determine the effect of the former on the latter. The ex-post-facto research design is employed. Information for this study was obtained from secondary sources to include journals, textbooks, and other internet materials. Based on the review, findings show that there is a strong relationship between auditor independence and audit quality. The review also revealed four threats to auditor independence, which are client importance, non-audit services (NAS), audit tenure, and client’s affiliation with CPA firms. Ezejiofor and Erhirhie [16] investigated the effect of audit quality on the financial performance of deposit money banks in Nigeria. The study adopted ex post facto research design, data for the study were collected from annual reports and accounts of quoted Nigerian deposit money banks. Regression analysis and coefficient correlation were employed to test the formulated hypotheses. Findings revealed that there is a significant effect between audit quality and financial performance of Nigerian deposit money banks. Siriyama [3] reviewed literature related to auditor independence. More specifically, this review will examine whether the size of the audit firm, the size audit fees, the auditor’s duration with the client, competition among other firms and the availability of non-audit services will compromise auditor independence. Design/methodology: This paper reviews empirical studies to assess what researchers have done about auditor independence related issues and identify gaps in the literature where further research is needed. Findings show that the top determinant of auditor independence was not clear; however, other researches ranked them based on importance because of their hypothesis that they chose to test. It show that independence remains a going concern when discovering how reliable and credible financial statements are to investors. May and Rasha examined the effect of audit quality on firm performance. It uses financial statements of non-financial firms listed as EGX 100. The population studied consists of thirty non-financial firms. The study covers five years 2010-2014. It applies panel data analysis. Independent Variables are Auditor Experience (measured by Big-4) and Auditor Independence (measured by auditor Rotation ROT). Dependent Variables are Return on Assets ROA and Return on Equity ROE. In accordance with the Random Effect Model results, BIG 4 and ROT have an insignificant impact on the ROA and ROE of the firm. External and internal financial statement users may benefit from the study only when dealing with high-profit firms.

Summary of the Literature

Dopuch et al. indicated that auditor tenure may have significant effect on the audit quality. Hoitash et al., Yuniarti [32] showed that found that there is a significant positive relationship between audit fees and audit quality. Nam [34] shows that the auditor’s independence; abnormal audit fee change rate is negatively associated with audit quality. Enofe et al. [10] indicate that as auditors independence increases, the quality of audit. Abdul et al. [14] revealed auditor’s independence has a positive effect on audit quality. It means that the higher the auditor independence, the higher the audit quality. ICAS [30] auditor independence, audit tenure and audit fee have a positive influence on audit quality. Babatolu et al. [15] revealed that there is a positive relationship between audit fee, audit firm rotation and audit quality. Also, Zayol and Kukeng [13] showed that there is a strong relationship between auditor independence and audit quality.

Chijoke et al. [41] revealed that there is a negative relationship between auditor tenure and audit quality through the variable was not significant. Auditor tenure was found to be inversely related to audit quality. Ilaboya, and Ohiokha [17] revealed that there is a negative relationship between auditor’s independence, audit firm size, audit tenure and audit quality. Kabiru and Abdullahi found that that independence of an auditor does not significantly improve the quality of audited financial statements of money deposit banks in Nigeria.

However, some studies indicated a positive relationship while others showed contrary due to the type of study design employed, sample size, data collection instruments and analysis techniques used. In addition, most of the studies on auditor independence and audit quality were centered on one or two of the threats and mainly conducted in foreign countries, this however for the significant of this study.

Research Design

Ex-post facto research design was adopted for the study. This is appropriate because the study aims at measuring the relationship between one variable and another, in which the variables involved are not manipulated by the researcher.

Population and Sample Size of the Study

This study makes use of the 15 deposit money banks quoted on the Nigerian Stock Exchange. The study covered eight years of annual reports and accounts of these banks from 2009 to 2018.

Method of Data Analysis

The data for the study was collected from annual reports and accounts of deposit money banks quoted on the Nigerian Stock Exchange (NSE). The independent variable is audit independence (AUDIND) proxied using audit fees and, audit tenure. This variable is dichotomous in nature while the dependent variable is Audit Quality (AUDQUA) proxy using audit reputation:

• Audit fees comprise the natural log of the Audit fees paid by the company

• Audit tenure involved the length of the auditor-client relationship, ‘1’ if 3 years + and ‘0’ if otherwise                                 

• Audit Committee Independence (ACIND) = proxy using the proportion of non-directors on the board

• Audit Firm Reputation (AUDREP) = proxy using the Big Four (1)/ Non Big Four (0) dichotomy. Audit quality was set equal to one (1) if the information obtained from banks audited reports show that it is audited by one of the “big 4” audit firms (Price-water house coopers; Akintola Williams Deloitte; KPMG Professional service and Ernst and Young, otherwise zero (0)

This operationalization follows the approach used in Kane and Velury (2011) where big audit firms are assumed to have quality audit services than other smaller audit firms. 

Model Specification

The hypotheses formulated for this study were tested with the use of logistic regression. This was used to examine the relationship between dependent and independent variables.

The logistic regression for this study takes the form:

AUDQTY = β0 + β1AUDFEE + β2AUDTNE + β3AUDCIND + ε

(i)

AUDQTY = β0 + β1AUDFEE ε

(ii)

AUDQTY = β0 + β2AUDTNE ε

(iii)

Where:

• AUDFEE  : Audit fees

• AUDTNE : Audit tenure

• AUDQTY  : Audit quality, proxied by audit firm reputation             

Presentation and Analysis of Data

Table 1 shows the mean (average) for each of the variables, their maximum values, minimum values, and standard deviation. The results in table 1 provide insight like the Nigerian quoted deposit money banks that were used in this study. It was observed that on the average over the Ten (10) years (2008-2017), the sampled quoted Nigerian quoted deposit money banks were characterized by improved financial performance; return on asset (ROA) =.0244, return on equity (ROE) = .0781 and profit margin = 0.1825. The gap between the maximum and minimum value of the financial performance and  audit quality (audit committee size, audit committee independence, and firm size) shows that audit quality determines the level of thefinancial performance of the banks.

Test of Hypotheses

Hypothesis One

Ho₂: Audit fees have not affected audit quality of quoted Nigerian deposit money banks.

In Table 2, it reveals that the F-stat (9.266) and p-value (0.003) indicates that the hypothesis is statistically significant; hence f-sat is greater than the p-value.

In Table 3, the regressed coefficient correlation result shows that an evaluation of the audit firm reputation of the explanatory variable (Beta Column) shows that audit fees are not significant (Sig.= 0.000). Therefore, we reject null hypotheses and uphold 

the alternative hypothesis which state that audit fees affect the audit quality of quoted Nigerian deposit money banks.

Hypothesis Two

Ho₃: Audit tenure has no effect on audit quality of quoted Nigerian deposit money banks.

In T able 4, it reveals that the F-stat (0.038) and p-value (0.845) indicates that the hypothesis is statistically significant, hence f-sat is less than the p-value.

In Table 5, the regressed coefficient correlation result shows that an evaluation of the audit firm reputation of the explanatory variable (Beta Column) shows that audit tenure independence is not significant (Sig.= 0.000). Therefore, we reject null   hypotheses and uphold the alternative hypothesis

Table 1: Descriptive Statistics

Table 2: ANOVA^a

Note: Dependent Variable: AUDFMREP, Predictors: (Constant), AUDFEE

Table 3: Coefficients^a

Note: Dependent Variable: AUDFMREP

Table 4: ANOVA^a

Note: Dependent Variable: AUDFMREP, Predictors: (Constant), AUDTNE

Table 5: Coefficients^a

Note: Dependent Variable: AUDFMREP

which state that audit committee independence affects the audit quality of quoted Nigerian deposit money banks.

The results obtained from the analysis revealed that audit fees have affected the audit quality of quoted Nigerian deposit money banks. Another observation is that audit tenure affects audit quality of quoted Nigerian deposit money banks.

This result was in line with that of Hoitash et al., Yuniarti [32] who shows that there is a significant positive relationship between audit fees and audit quality. Ilaboya and Ohiokha [17] whose study revealed there is a positive relationship between firm size, board independence and audit quality whereas there is a negative relationship between auditor’s independence, audit firm size, audit tenure and audit quality. Enofe et al. [10] Findings indicated that as auditors‟ independence increases, the quality of audit. Abdul et al. [14] auditor’s independence has a positive effect on audit quality. It means that the higher the auditor independence, the higher the audit quality. ICAS [30] auditor independence, audit tenure and audit fee have a positive influence on audit quality. Babatolu et al. [15] revealed that there is a positive relationship between audit fee, audit firm rotation and audit quality.

Based on the review, findings show that there is a strong relationship between auditor independence and audit quality. The review revealed that auditor independence proxied audit fees and audit tenure), which are client importance, enhances the client’s firms audit quality. Conclusively, auditor independence remains an important element when individuals are conducting an audit. Auditor independence ensures an unbiased perspective and allows financial statements to be more reliable. Firms face the risk of damaging their reputation once auditors fail to report mistakes in their audits. Based on the findings, the study recommended the followings:

• The auditor should be remunerated based on work experience, qualification, duration of the audit assignment, and background profile. The payment of the adequate audit fee will encourage the auditor to do the assurance engagement assignment according to the high degree of standardization expected 

• The professional bodies should always watch governmental actions and raise alarm on policies that could hinder the smooth discharge of Auditors’ responsibility, especially in the audit of deposit money banks in Nigeria

1. Akpom, U.N. and Dimkpah, Y.O. "Determinants of auditor independence: A comparison of the perceptions of auditors and non-auditors in Lagos, Nigeria." Journal of Finance and Accountancy. Retrieved from http://www. aabri.com/manuscripts/131506.pdf

2. Shockley, A.R. "Perceptions of auditor independence: An empirical analysis." The Accounting Review, vol. 56, no. 4, 1981, pp. 785–800.

3. Siriyama, K.H. and Tori, P. "A literature review on auditor independence." The Business and Management Review, vol. 9, no. 3, 2018.

4. Chepkorir, C. "Factors influencing auditor’s independence and accountability." Academia, September 2013.

5. Fernando, G.A. and Randal, E. "Audit quality attributes, client size and cost of equity capital." Review of Accounting and Finance, vol. 9, no. 4, 2010, pp. 362–381.

6. Fearnley, S. et al. "Auditor independence and audit risk: A reconceptualization." Journal of International Accounting Research, vol. 4, no. 1, 2005, pp. 39–71.

7. Austin, E. and Herath, S.K. "Auditor independence: A review of literature." International Journal of Economics and Accounting, vol. 5, no. 1, 2014, pp. 62–74.

8. Gul, F.A. et al. "Auditor independence: Evidence on the joint effects of auditor tenure and non-audit fees." Auditing: A Journal of Practice and Theory, vol. 26, no. 2, 2007, pp. 117–142.

9. Arens, A.A., Randal, E.J. and Beasley, M.S. Auditing and assurance services: An integrated approach. 14th ed., Pearson Education, Inc., 2014.

10. Enofe, A.O. et al. "Audit quality and auditors’ independence in Nigeria: An empirical evaluation." Research Journal of Finance and Accounting, vol. 4, no. 11, 2013, pp. 131–138.

11. SEC. American Securities and Exchange Commission. Rule 57. 2003.

12. Deirdre, C. "Audit firm rotation- Its impact on auditor independence: An Irish perspective." Unpublished dissertation, Letterkenny Institute of Technology, 2010.

13. Zayol, P.I. et al. "Effect of auditor independence on audit quality: A review of literature." International Journal of Business and Management Invention, vol. 6, no. 3, 2017, pp. 51–59.

14. Abdul, H. et al. "Effect of competence and auditor independence on audit quality with audit time budget and professional commitment as moderation variable." International Journal of Business and Management Invention, vol. 3, no. 6, 2014, pp. 64–74.

15. Babatolu, A.T. et al. "Auditor’s independence and audit quality: A study of selected deposit money banks in Nigeria." International Journal of Finance and Accounting, vol. 5, no. 1, 2016, pp. 13–21.

16. Ezejiofor, R.A. and Erhirhie, F.E. "Effect of audit quality on financial performance: Evidence from deposit money banks in Nigeria." International Journal of Trend in Scientific Research and Development (IJTSRD), vol. 2, no. 6, 2018.

17. Ilaboya, O.J. and Ohiokha, F.I. "Audit firm characteristics and audit quality in Nigeria." International Journal of Business and Economics Research, vol. 3, no. 5, 2014, pp. 187–195.

18. Kabiru, I.D. and Abdullahi, S.R. "An examination into the quality of audited financial statements of money deposit banks in Nigeria." International Journal of Academic Research in Accounting, Finance and Management, vol. 4, no. 1, 2012, pp. 145–156.

19. Shivaram, R. et al. "Measuring audit quality." Journal of Accounting and Economics, vol. 24, no. 1, 2015, pp. 3–37.

20. Okolie, A.O. "Accrual-based earnings management, corporate policies and managerial decisions of quoted companies in Nigeria." Research Journal of Finance and Accounting, vol. 5, no. 2, 2014, pp. 1–14.

21. McGrath, S. "A framework for auditor independence." Journal of Accountancy. Retrieved from www.journalofaccountancy.com/issues/2001/jan/aframeworkforauditorindependence.html.

22. Law, P. "An empirical comparison of non-Big 4 and Big 4 auditors' perceptions of auditor independence." Managerial Auditing Journal, vol. 23, no. 9, 2008, pp. 917–934.

23. Carcello, J.V. and Nagy, A.L. "Audit firm tenure and fraudulent financial reporting." Auditing: A Journal of Practice and Theory, vol. 23, no. 2, 2004, pp. 55–69.

24. Soltani, B. Auditing: An international approach. Trans-Atlantic Publications, Inc., 2014.

25. DeAngelo, L.E. "Auditor size and audit quality." Journal of Accounting and Economics, vol. 3, no. 3, 1981, pp. 183–199.

26. Palmrose, Z. "The effect of non-audit services on the pricing of audit services: Further evidence." Journal of Accounting Research, vol. 24, no. 2, 2001, pp. 405–411.

27. Francis, J.R. "What do we know about audit quality?" The British Accounting Review, vol. 36, 2004, pp. 345–368.

28. DeFond, M. et al. "Do non-audit service fees impair auditor independence? Evidence from going concern audit opinions." Journal of Accounting Research, vol. 40, no. 4, 2002, pp. 1247–1274.

29. Securities and Exchange Commission. Revision of the commission's auditor independence requirements. Washington, DC, 2000.

30. Rahmina, L.Y. and Agoes, S. "Influence of auditor independence, audit tenure, and audit fee on audit quality of members of capital market accountant forum in Indonesia." International Conference on Accounting Studies (ICAS), 2014.

31. Adeyemi, S.B. and Fagbemi, T.O. "Audit quality, corporate governance and firm characteristics in Nigeria." International Journal of Business and Management, vol. 5, no. 5, 2010, pp. 169–179.

32. Yuniarti, R. "Audit firm size, audit fee and audit quality." Journal of Global Management, vol. 2, no. 1, 2011, pp. 84–97.

33. Adeyemi, S.B. and Okpala, O. "The impact of audit independence on financial reporting: Evidence from Nigeria." Business and Management Review, vol. 1, no. 4, 2012, pp. 9–25.

34. Nam, S. and Ronen, J. "The impact of non-audit services on capital markets." Journal of Accounting, Auditing and Finance, vol. 27, 2014, pp. 32–60.

35. Ahmed, A. "Auditors’ perceptions of audit firm rotation impact on audit quality in Egypt." Journal of Accounting and Taxation, vol. 6, no. 1, 2014, pp. 105–120.

36. Farouk, M.A. and Hassan, S.U. "Impact of audit quality and financial performance of quoted cement firms in Nigeria." International Journal of Accounting and Taxation, vol. 2, no. 2, 2014, pp. 1–22.

37. Mahmoud, G.E. "The effect of joint audit on audit quality: Empirical evidence from companies listed on the Egyptian Stock Exchange." International Journal of Accounting and Financial Reporting, vol. 5, no. 2, 2015, pp. 195–207.

38. Causholli, M. et al. "Does selling non-audit services impair auditor independence? New research says, 'yes'." Current Issues in Accounting, vol. 9, no. 2, 2015, pp. 1–6.

39. Bishnu, K.A. and Ranjan, K.M. "Determinants of audit committee independence in the financial sector of Bangladesh." Applied Finance and Accounting, vol. 2, no. 2, 2016, pp. 46.

40. Dunakhir, S. "Factors associated with audit quality: Evidence from an emerging market." Second Asia Pacific Conference on Advanced Research, 2016, pp. 189–198.

41. Chijoke, O.M. et al. "Audit partner tenure and audit quality: An empirical analysis." European Journal of Business and Management, vol. 4, no. 7, 2012, pp. 154–163.