Abstract
This study examines the effect of independence factors on audit expectation gap in listed deposit money banks in Nigeria. The population of the study comprises of the investors/shareholders, lenders and other creditors and a sample of 385 respondents was selected using Cohran sample size formula. The period under study is from January, 2012 to December, 2019. The study used a questionnaire drawn on a five point likert scale to collect data. The questionnaire has been pilot tested for reliability and validity, using the Cronbach alpha and Kendall’s coefficient of concordance. The data was analyzed using descriptive statistics and multiple-regression analysis. The study concludes that auditor depends on client economically. Competing for audit market, carrying out non-audit market service, receiving gifts from management and prospects for reappointment are strong determinants of audit expectation gap in deposit money banks in Nigeria. The study opines that the independence factors have significant positive impact on audit expectation gap in listed deposit money banks in Nigeria. This finding is in line with that of Salehi et al., Amaechi and Chinedu as well as Kamau et al. but is not consistent with findings of Ogweno and Kamau. The study recommends that regulatory authority and professional accounting associations should ensure that auditors avoid economic dependence on the client, carrying out services which are not audit related, and collecting gifts from management and that the regulatory authority has to emphasize on auditors tenures and appointment of auditor shall be through a centrally organized body and not allow audit firms to be competing among themselves. Key words: Audit, expectation gap, independence factors, Banks, Nigeria.
Highlights
The need and demand for auditing arose from the desire for an independent person to monitor the contractual arrangements between principal and agent
The results showed among others that uncertainty in the auditor‟s independence has less impact on increasing the expectation gap in the audit process in Jordan
Auditors are responsible for expressing an independent opinion on financial statements based on their audit
Summary
The need and demand for auditing arose from the desire for an independent person to monitor the contractual arrangements between principal and agent. If an auditor lacks independence, the parties to the contract place little or no value on the service provided, especially statutory audit. External auditors play a critical role in validating company‟s finances. Creditors and investor rely heavily on auditor‟s report since credibility has been added to such reports (Madison, 2018). The statutory audit and assurance play an important role of ensuring confidence by the users / stakeholders (Chandler et al, 1993), and the society expects auditors to exercise professional judgment as well as maintain professional skepticism in their function.
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