ABSTRACT
The study examines the relationship between audit independence and the credibility of financial reporting in Nigerian banks, with specific focus on audit tenure, audit fees, and non-audit services. Utilizing an ex-post facto research design, the study analyzes secondary data from the annual reports of eleven publicly traded banks listed on the Nigerian Exchange Group over a five-year period (2018-2022). The sample was selected using judgmental sampling, ensuring the availability and up-to-date nature of financial statements. Data analysis involved both descriptive statistics and inferential analysis. That is, to summarize the collected data, and panel regression analysis to assess the causal relationships between the variables.
The findings indicate that audit fees have a statistically significant positive relationship with financial reporting credibility, while non-audit services show a significant negative relationship, suggesting that higher audit fees enhance credibility and greater engagement in non-audit services diminishes it. Audit tenure did not have a significant impact on financial reporting credibility.
The study recommends that regulatory bodies establish guidelines for audit fees, enforce policies to strengthen auditor independence, enhance oversight mechanisms for non-audit services, and invest in continuous professional development for auditors. These measures are intended to improve the reliability and transparency of financial reporting in Nigerian banks, thereby increasing investor confidence and contributing to the stability and growth of the banking sector.
