Auditor independence regulations : a case of Nigeria

Abstract

Purpose: The perceived ineffectiveness of applicable regulations at its best promotes susceptibility of statutory auditors to compromise independence. Unlike most of the existing studies, this study investigated auditor independence regulations in Nigeria with a view to appraising their effectiveness in promoting independence of audit practitioners. -- Design/methodology/approach: Survey research design was employed to enable collection of relevant data from relevant practitioners using structured questionnaire. Descriptive method, Relative Importance/Significance Index (RII) and Mean Index Score (MIS) were employed for ranking and assessment of auditor independence regulations according to their effectiveness using a five-point Likert. -- Findings: Results revealed that the most effective auditor independence regulation as perceived by the experts was restriction on advertising with Relative Importance Index (RII) and Mean Index Score (MIS) of 0.82 and 4.08 respectively. Independent review by peers (RII = 0.68, MIS = 3.40) and rotation of audit partners (RII = 0.67, MIS = 3.37) were considered to be ineffective among others. -- Originality/value: Being the first known study on audit regulation effectiveness in the country, the study provided valuable insights for urgent intervention by relevant regulators to enforce compliance with applicable audit regulations in the interest of investors.