Abstract
This study was examined factors affecting auditors’ independence with reference to private audit firms in Ethiopia. The researcher employed quantitative research approach with explanatory research design where the effect caused by the independent variable on the dependent variable is observed through regression analysis. Primary data was collected through structured questionnaire from chive executive officers of private audit firm. Accordingly, the result of regression analysis showed that size of audit firm, size of audit fee, professional audit standard, competition, existence of audit committee and information technology have positive and statistically significant effect on auditors’ independence. Whereas, provision was not statistically significant. Based on the findings of the study, the researcher recommended that for audit firms in Ethiopia have to work on statistically significant variables due to fact that they have positive influence in improving auditors’ independence. Keywords: Determinants, Auditors’ Independence, Private Audit Firms, Ethiopia DOI: 10.7176/RJFA/12-11-04 Publication date: June 30 th 2021
Highlights
The reliable information is produced by independent audit firms for investment decisions
2.5 Research Gaps As per literature review of both studies outside and inside Ethiopia, most the above reviewed studies has focused on particular firms or regions of the nation but the current study focused on the factors affecting external auditor’s independence in Ethiopia and selected respondents using probability in opposing to the sample size selection which non- probability for most studies reviewed above
And Discussion This section is deals with analysis and discussion of data collected from 80 respondents out of 122 sample respondents from selected audit firms in Ethiopia
Summary
The reliable information is produced by independent audit firms for investment decisions. Regulators around the world have agreed that public or private firms must disclose independently audited financial statements. The financial markets, businessess firms and government must have confidence in the integrity and objectivity of auditors and without definite independence, audits have little value (John And Tasie, 2012). It has a constructive to study the factors affecting independency of audit firms in conducting the auditing activity in Ethiopia. Prior researches do not touched the factors affecting auditor’s independency of audit firms in Ethiopia and focused on assessment audit practice. Understanding and identifying the factors affecting independence of private audit firm is the corner stone for improving financial reporting quality of business or government entities. Improving the effectiveness of audit firms work quality is possible after identifying and controlling the factors affecting auditor’s independence
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