INFLUENCE OF AUDIT COST, AUDIT ENGAGEMENT, AUDIT ROTATION ON AUDIT QUALITY

ABSTRACT

This research project explores the multifaceted relationships between audit cost, audit engagement, audit rotation, and audit quality within the Nigerian banking sector. The study employs a mixed-methods approach, incorporating both quantitative analysis of financial data and qualitative insights from interviews with stakeholders. The research is grounded in the context of Nigerian business environments and builds on existing literature related to auditing and financial reporting practices. The findings reveal several important insights. Audit cost was found to have a negative association with audit quality, underscoring the need for companies to strategically manage costs while maintaining the quality of their audit processes. Audit engagement, on the other hand, exhibited a positive relationship with audit quality, highlighting the significance of well-defined engagement processes and effective communication in enhancing audit quality. Furthermore, the study suggests that audit rotation can positively impact audit quality by enhancing auditor independence and objectivity. Implementing mandatory audit firm rotation policies may introduce fresh perspectives and mitigate threats to independence. The research underscores the importance of considering the unique dynamics of the Nigerian business environment, such as industry characteristics and regulatory nuances, when implementing audit practices Recommendations for companies include adopting strategic cost management approaches, strengthening engagement processes, considering proactive audit rotation policies, and investing in continuous professional development for auditors. Moreover, firms are encouraged to maintain a culture of ethical conduct and professional judgment within the auditing profession, collaborate with regulatory bodies, and tailor audit practices to the Nigerian context.