ABSTRACT

This study examines the effect of mandatory audit rotation on the audit quality of firms in Nigerian Exchange Group. Mandatory audit rotation is a requirement that man date sthata company change its external auditor after a specific period of time. It has been a controversial topic around the world in regards to whether it has any effect, which could be positive or not, on the audit quality among firms. It specifically took an empirical look into the effect of audit fees, audit tenure and audit firm size in Nigerian firms

A longitudinal research design was adopted with extensive reliance on secondary data sourced from the annual reports of 50 companies quoted on the Nigerian Exchange Group for 2018-2022. Both statistical and econometric tools were employed in the analysis using data obtained from the Nigerian Exchange Group for the period of 2018 to 2022. The Binary logistic regression technique was employed to obtain the functional relationship between the variables.

The study found that the result of audit fees (AUDFEE) had a positive and statistically significant relationship with audit quality (AUDQTY) . It also found that firm size (F size) had a positive but statistically insignificant relationship with audit quality (AUDQTY). It was also discovered that auditor tenure (AUDFT) had a negative and statistically insignificant audit quality(AUDQTY) . This study has shown the importance of mandatory audit rotation on audit quality. Hence, the study recommends that policy makers should consider implementing flexible regulatory frameworks that allows a balance between mandatory audit rotation and the potential risks associated with abrupt changesinauditengagementsasthispresentsthepotentialtoenhanceauditquality.