Audit Quality and Financial Reporting Quality in Selected Public Universities in South West Nigeria

Abstract

Financial reporting quality has been a relevant discus in the world business to aid investors in making timely and economical decisions. In public enterprises, it helps the users to determine the effective utilization of relevance. Evidence from literatures indicated that poor financial reporting quality as a result of lack of transparent, or lack of accountability and fraud had waned investors’ confidence and investors decisions. Study has it that many universities have not integrated audit quality in their operations for the enhancement of financial reporting quality. Therefore, this study investigated effect of audit quality on financial reporting quality in selected public universities in south west Nigeria. The study adopted survey research design. The population was 19 public universities in south west Nigeria, purposive sampling techniques was used to select 12 universities. The target population was 250 staff of bursary, audit, and senior management. Taro Yamane formula was used to obtained 201sample size. A validated structure questionnaire was used to administer 201 copies of the questionnaire to the respondents. One hundred and ninety returned representing 94.5%. The Cronbach’s Alpha reliability coefficients ranged from 0.724 – 0.991. Descriptive and inferential (multiple regression) statistics were used to analyzed the data. The study found out that audit quality had significant effect on relevance financial reporting quality of public universities in south west Nigeria (Adj. R2 =0.766; F(6, 183) = 99.565=; p=0.00), had a significant effect on faithful representation of financial reports quality (Adj. R2 =0.598; F(6, 183) = 47.930=; p=0.00), had a significant effect on understandability of financial reports quality (Adj. R2 =0.416; F(6, 183) = 21.735=; p=0.00), had a significant effect on comparability of financial reports quality (Adj. R2 =0.390; F(201) = 21.102=; p=0.00), the result also showed that audit quality had a significant effect on timeliness of financial reports quality (Adj. R2 =0.516; F(201) = 43.597=; p=0.00). The study concluded that audit quality influenced financial reporting quality in public universities in south west Nigeria. The study recommended that public universities should integrate audit quality in their operations in other to increase the financial reporting quality.