ABSTRACT
The purpose of this study was to ascertain the effect of audit quality on financial performance of deposit money banks in Nigeria. In order to achieve the objectives of this study, we utilised four explanatory variables as proxies for audit quality (audit committee independence, audit fees, audit firm rotation, and audit firm size) and two variables (return on assets (ROA) and return on equity (ROE)) as proxies of financial performance. The study covered a time period of 2012-2022 (11years) and utilised thirteen (13) deposit money banks quoted on the Nigeria Exchange Group as the sample size. The study used panel least squares to carry out the statistical analysis. Based on the analysis carried out, it was discovered that: utilising ROA, audit committee independence has a significant relationship with the financial performance, however, measuring financial performance with ROE, the regression analysis showed a non-statistical significance relationship between audit committee independence and financial performance; utilising ROA as a proxy of financial performance, audit fees has an insignificant relationship with financial performance, however, measuring financial performance with ROE, the analysis showed a statistical significance relationship between audit fees and financial performance of deposit money banks in Nigeria; for both measures of financial performance (ROA and ROE), audit firm size was found not to have a significant effect the financial performance; and for both measures of financial performance (ROA and ROE), audit rotation was found not to have a significant effect the financial performance of listed deposit money banks in Nigeria. As a result of these findings, it was recommended that: deposit x money banks should prioritize enhancing the independence of their audit committees; deposit money banks should conduct an in-depth review of their audit fees structure; banks need to focus on other qualitative aspects of audit firms, such as their expertise, experience, and methodology, rather than just their size; and regulatory bodies and deposit money banks should reassess the costs and benefits of mandatory audit rotation.
