Audit Evidence and Financial Statement Quality in Government Owned Companies in Rivers State, Nigeria

Abstract

The spate of Accounting scandals and Financial crisis in firms have undermined investors trust concerning financial statements, and as such has raised concerns and criticisms about the quality of financial statements. In order to regain investors’ confidence on financial statements, the audit function lends credibility to the financial statements, particularly through obtaining audit evidence. Therefore, this study empirically investigated the extent of relationship between audit evidence and financial statement quality of Government owned companies in Rivers State. The survey research design was adopted. Questionnaires were administered to selected audit firms in Rivers State. Spearman’s Rank Correlation analysis and ordinary least squares regression analysis were used to analyze the data. The study reveals significant relationship between audit evidence and financial statement quality of Government owned companies in Rivers State. Based on the findings, it was concluded that Audit evidence greatly improves financial statement quality of Government – owned companies in Rivers State. It was recommended that external auditor should always insist on the submission of a letter of representation from management before the end of an audit for purposes of improved reliability and relevance of financial statements.