ABSTRACT
The primary aim of this study was to examine the impact of audit independence on the financial statement quality of commercial banks listed in Nigeria.
The study was conducted using a five-year scope (2018 to 2022). Four independent variables—audit firm size, audit rotation, audit tenure and audit market competition —as proxies for measuring audit independence were employed while ten (10) industrial goods firm that consistently submitted their annual financial reports throughout the entire period of investigation were used as the sample size. This study conducted pre-regression analyses, including descriptive statistics, correlation analysis, and data normality analysis.
The findings of the study showed that there is no positive significant relationship between audit firm size, audit rotation and audit tenure with financial statement fraud while there is no negative significant relationship between audit market competition and financial statement fraud. This means that an increase in the size of the audit firm, audit rotation and duration of audit tenure will lead to a decrease in the financial statement fraud. While an increase in the audit market competition will lead to an increase in the rate of financial statement fraud. This is because audit firm will be willing to overlook any financial statement manipulation by any firm as long as they retain them.
Based on the findings recommendation were made, such as the encouragement of appointment of independent auditors by regulatory authorities, encouragement of audit rotation, encouragement of fixed, but long audit tenure and discouraging the current practice of concentrating audit engagement in the sector to the big 4 audit firms.
