Evaluation of Factors Determining Audit Fee of Quoted Nigerian Deposit Money Banks

Uniport Journal of Accounting and Business, vol. 6 No. 1, March 2018, ISSN 979-52334, p106-122. A publication of the Department of Accounting, University of Porthacourt, Nigeria,

16 Pages Posted: 12 Jun 2019

See all articles by Muideen Adeseye Awodiran

Muideen Adeseye Awodiran

Afe Babalola University

Ramat Titilayo Salman

University of Ilorin

Jimba Isiaka Kareem

Afe Babalola University, Ado-Ekiti

Date Written: 2017

Abstract

With auditors mostly found wanting in corporate scandals, there is growing emphasis on the need for auditors of companies in highly regulated sectors like banks to consider factors that are important to regulators. This study evaluates the determinants of audit fee based on variables that are peculiar to banking industry and considered salient to regulators of banking services. It also examines the effect of IFRS adoption on audit fee of banks. Data were sourced from annual reports and accounts of all the fifteen (15) quoted deposit money banks for the period covering 2006-2015 and were analysed using descriptive statistics and inferential statistics. The result of Hausman specification test favours random-effect over the fixed-effect models of panel least square regression. Findings of the study revealed that capital risk has negative influence on audit fees at 10% level of significance while credit risk shows positive influence at 1% level of significance. Also, complexity, IFRS adoption and size had significant positive relationship with audit fees at 1%, 10% and 5% levels of significance respectively. However, management efficiency and profitability showed no significant relationship with audit fees. As regards variables considered important to regulators of banks, the study concludes that auditors do not seem to consider management efficiency in determination of audit fees. The study recommended amongst others that auditors of banks should further align the determination of their fees with factors that are considered important to regulatory body; to reduce costly litigation associated with audit failure.

Keywords: Auditors, Audit Fee Pricing, Audit Quality, Deposit Money Banks

JEL Classification: M41

Suggested Citation

Awodiran, Muideen Adeseye and Titilayo Salman, Ramat and Jimba, Kareem Isiaka, Evaluation of Factors Determining Audit Fee of Quoted Nigerian Deposit Money Banks (2017). Uniport Journal of Accounting and Business, vol. 6 No. 1, March 2018, ISSN 979-52334, p106-122. A publication of the Department of Accounting, University of Porthacourt, Nigeria, . Available at SSRN: https://ssrn.com/abstract=3395778

Muideen Adeseye Awodiran (Contact Author)

Afe Babalola University ( email )

KM 8.5, Afe Babalola Way,
P.M.B 5454
Ado-Ekiti, Ekiti State, Western 234432
Nigeria

Ramat Titilayo Salman

University of Ilorin

Ilorin, Kwara State 0834
Nigeria

Kareem Isiaka Jimba

Afe Babalola University, Ado-Ekiti ( email )

Nigeria

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