EFFECT OF AUDIT FIRM ATTRIBUTES ON FINANCIAL REPORTING QUALITY OF LISTED DEPORSIT MONEY BANKS IN NIGERIA MODERATED BY AUDIT COMMITTEE FINANCIAL EXPERTISE

Abstract

 The persistent challenge of ensuring high-quality financial reporting in Nigeria banking sector, compounded by information asymmetries and complex fair value measurements, necessitated this investigation into how audit committee financial expertise moderated the relationship between audit firm attributes and financial reporting quality. The study examined the effect of audit firm attributes on financial reporting quality of listed deposit money banks in Nigeria moderated by audit committee financial expertise. The study was anchored on agency theory. An ex-post facto research design was employed, with the population comprising fourteen quoted deposit money banks on the Nigerian Exchange Group as at December 31st, 2024. Thirteen (13) banks were sampled using purposive and judgmental sampling techniques, and secondary data were gathered from audited annual reports spanning eleven years from 2014 to 2024. Panel data regression techniques were applied using EViews 10 statistical software. Findings revealed that audit fees and auditor industry specialization have a negative and significant effects on financial reporting quality. However, audit committee financial expertise significantly moderated the audit fee-reporting quality relationship, while its interaction with auditor industry specialization remained insignificant. The study concluded that audit committee financial expertise served as a crucial governance mechanism conditioning the effectiveness of audit firm attributes, particularly enhancing cost-based audit quality mechanisms. The study recommended among others that regulatory authorities should strengthen audit committee composition requirements by mandating higher proportions of financially qualified members, and that banks should strategically align audit firm selection with audit committee capabilities while prioritizing audit fee investments when committees possessed strong financial expertise.