Impact of Auditors Reputation on Compliance with Accounting Standards on Employee Retirement Benefits by Listed Firms in Nigeria
Aliyu Sulaiman Kantudu
Bayero University Kano - Department of Accounting
This paper seeks to determine whether or not auditor's reputation has an impact on compliance with accounting standards on employee retirement benefits (SAS 8) in Nigeria. The population of the study is the 182 firms quoted on the first-tier market of the Nigerian Stock Exchange (NSE). The annual accounts and reports of the sampled firms serve as source of data for this study. The 30 sampled firms were selected randomly using the stratified sampling technique from 19 of the 25 sectors that made up the first-tier market of the NSE. The methods of analyses used were the qualitative grading (using compliance index) and Spearman's rank correlation. The paper finds that the auditor's reputation is not an explanatory variable on firms' compliance with accounting standards on employee retirement benefits (SAS 8) in Nigeria. In other words the correlation between the degree of application of SAS 8 and the reputation of audit firms is weak, as indicated by the 2-tailed test of 15.8% level of significance. Although we note a varied application of SAS 8 among quoted firms, on the average compliance with the standard (SAS 8) as shown by the total compliance index is weak (38.8%). This paper recommends that the accounting regulatory body (NASB) and other regulatory authorities should ensure that quoted firms in Nigeria apply the requirements of SAS 8 and other standards through effective monitoring and enforcement of penalties for non compliance. Similarly, accounting professional bodies especially ICAN, should make sure that their members at all times see to it that accounting standards are complied with by their clients, and any failure on the part of these auditors should be sanctioned or penalized. The paper further recommends annual awards to the best complying firms and their auditors and, penalties and appropriate punishments for non compliers and their auditors, which should be published in the national dailies. This, we believe, will not only enhance compliance with accounting standards but will also serve as caveat emptor for investors and other users.
Number of Pages in PDF File: 16
Keywords: Auditors Reputation, Compliance, Accounting Standards, Employee Retirement Benefitsworking papers series
Date posted: May 26, 2008
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