Relationship between Audit Firm Size, Non-Audit Services and Audit Quality
Abstract
The study investigates the relationship between audit firm size, non-audit services and audit quality in Nigeria against the background of the global financial crisis. The population of the study is the commercial banks listed in the Nigeria Stock Exchange Market from where a sample of 18 banks
was scientifically established. Well structured 200 copies of the instrument (questionnaire) were administered on the respondents who were selected using the purposive random sampling method. We had a response rate of 75%. We estimated the data using ordinary least squares regression
method. Audit firm size and non-audit services were positive and statistically significant. Audit tenure and independence were positive but statistically insignificant while audit fee was negatively related to audit quality. Against the background of the findings, we concluded that the size of the audit firm increases the quality of audit, non-audit services give the auditor a comprehensive knowledge of the organisation thereby helping to increase audit quality.
Keywords: Auditor independence, audit quality, non-audit services, audit fees, spillover reputation hypothesis, deep pocket hypothesis
was scientifically established. Well structured 200 copies of the instrument (questionnaire) were administered on the respondents who were selected using the purposive random sampling method. We had a response rate of 75%. We estimated the data using ordinary least squares regression
method. Audit firm size and non-audit services were positive and statistically significant. Audit tenure and independence were positive but statistically insignificant while audit fee was negatively related to audit quality. Against the background of the findings, we concluded that the size of the audit firm increases the quality of audit, non-audit services give the auditor a comprehensive knowledge of the organisation thereby helping to increase audit quality.
Keywords: Auditor independence, audit quality, non-audit services, audit fees, spillover reputation hypothesis, deep pocket hypothesis
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