ABSTRACT

This study examined the determinants of auditors’ choice in Nigeria, vis-à-vis auditors’ quality, cost of auditing, and audit firm size. The study adopted descriptive research design. The population of this study was made up of employees in five banks operating in Oshogbo, Osun State Nigeria. These banks include: First Bank Nigeria Plc, Wema Bank Nig Plc, GTBank Nig Plc, Union Bank for Africa, and Zenith Bank Nig Plc. The study adopted Stratified Sampling Technique. A total of 88 copies of questionnaire were administered to the respondents during the study; while a total of 83 copies were properly filled and returned for the analysis. Multiple regression analysis with the aid of the Statistical Package for the Social Sciences (SPSS 23.0) was employed to test the hypotheses in order to ascertain the extend of the relationship between the dependent and independent variables in each hypothesis.  Among other things the result of the study showed that auditors’ quality has a significant impact on corporate choice of auditors in Nigeria; the cost of auditing fees is a significant determinant of auditors’ choice in the banking industry in Nigeria; and that audit firm size has a significant impact on the preference for auditors in Nigeria. The study recommends that auditors should strive at ensuring that the quality of audited financial statement is improved upon as banking organizations often consider this while selecting a given auditing firm.

1.2       Statement of the Problem

Many companies have been characterized by scandals. Directors have acted illegally or in bad faith towards their shareholders. Corporate governance which is hitherto seen as the foundation for good corporate performance has received lack-luster attention from corporate bodies globally for a considerable length of time. This attitude which bordered on neglect of corporate strategies may have eventually led to the recent global high profile corporate failures. Notable among such failed corporate bodies are HIH Insurance and One-Tel both in Australia, Maxwell Communications Corporation, and Bank of Credit and Commerce International (BCCI) both in the United Kingdom; Enron and Worldcom both in the United States and Parmalat in Italy. All these failures have been attributed to poor corporate governance and financial reporting (Tennyson, 2010; Ndubuisi and Ezechukwu, 2017).

Nigeria has had its own share of financial reporting failures with the problems in Cadbury Nigeria Plc, Afribank Nigeria Plc, Lead Bank Plc, Continental Merchant Bank Plc, Pinnacle Commercial Bank Ltd, City Express Bank Plc, Lobi Bank of Nigeria Ltd, Alpha Merchant Bank Plc, ABC Merchant Bank Plc, the list goes on.

Finally, majority of the studies on the determinants of auditors’ choice often focus on the advanced economies. Researches on the determinants of auditors’ choice in third world countries like Nigeria are very few. This study will therefore fill in the gap in the literature by critically examining the determinants of auditors’ choice in Nigeria with particular reference to the banking industry in Nigeria.

1.3       Research Questions

This research was guided by the following research questions:

        i.            What is the perceived influence of auditors’ quality on corporate choice of auditors in Nigeria?

     ii.            To what extent does the cost of auditing fees influence auditors’ choice in the banking industry in Nigeria?

   iii.            What is the effect of audit firm size on preference for auditors in Nigeria?

1.4       Objectives of the Study

The major objective of this study is to explore the determinants of auditors’ choice in Nigeria. Other objectives include:

1.   To examine the perceived influence of auditors’ quality on corporate choice of auditors in Nigeria.

2.   To investigate the extent to which the cost of auditing fees influence auditors’ choice in the banking industry in Nigeria.

3.   To evaluate the effect of audit firm size on preference for auditors in Nigeria.

1.5       Hypotheses of the Study

The researcher intends to test the following hypotheses;

H_o1:     There is no significant influence of auditors’ quality on corporate choice of           auditors in Nigeria.

H_o2:    The cost of auditing fees is not a significant determinant of auditors’ choice in the           banking industry in Nigeria.

H_o3:    There is no significant relationship between audit firm size and preference for      auditors in Nigeria.

1.6       Significance of the Study