AUDITOR’S INDEPENDENCE AND FINANCIAL REPORTING QUALITY OF LISTED COMMERCIAL BANKS IN NIGERIA

Abstract

This study investigated the relationship between auditor’s independence and financial reporting quality of selected commercial banks in Port Harcourt, Nigeria. The methodology adopted in this study was survey research design and stakeholder theory were used to underpin the study. The collected primary data used were source from 16 selected banks in Port Harcourt metropolis. The instrument for collection of data was structure questionnaire administered on management cadre of the banks. The data were analysed using Pearson moment correlation coefficient added by SPSS version 22.0. The result of the empirical study revealed a strong positive relationship between auditor’s independence and financial reporting quality of selected commercial banks in Port Harcourt. Also, the dimension of auditor independence used (objectivity and integrity) as well as dimension of financial reporting quality used (faithful representation and understand ability) indicates a significant positive relationship. This means that increase financial reporting quality is attributable to a corresponding increase in auditor independences. Therefore, the researchers concluded that auditor independence increase financial reporting quality of commercial banks in Nigeria. The study recommends among others that corporate organisation should ensure that auditors are allowed to do their work independently for the financial reporting quality of the corporation to be credible