THE IMPACT OF AUDIT QUALITY ON FINANCIAL PERFORMANCE OF SELECTED DEPOSIT MONEY BANKS IN NIGERIA

Abstract The study investigated the impact of Audit quality on financial performance of selected deposit money banks in Nigeria. The study was guided by three objectives. The population of this consisted of First Bank of Nigeria and Union bank as first generational bank and Fidelity bank and Zenith Bank of Nigeria as second generational bank. The study was guided by the Auditors theory of inspired confidence, Stakeholders’ theory and agency theory. The data was gathered from annual reports of the banks covering the period of four years (2014-2023). The data was analysed using descriptive statistics, correlation and regression analysis. The study revealed that audit firm size does not have a significant impact on return on asset of money deposit banks in Nigeria. Further, audit fee has no significant impact on return on asset of money deposit banks in Nigeria and audit lag does not have a significant impact on return on asset of money deposit banks in Nigeria. The study concluded that there is a need for financial institutions to focus more on the quality of audit services rather than the firm's size or audit completion time when considering factors that influence financial performance. The recommended among others that since audit firm size does not significantly impact return on assets (ROA), money deposit banks should focus on the expertise, integrity, and track record of auditors rather than the size of the audit firm. Regulatory bodies should also ensure that audit standards are upheld across all firms, regardless of their size. Given that audit fees significantly impact ROA, banks should carefully assess their audit budgets to strike a balance between cost and quality. Regulatory authorities should provide guidelines to prevent excessive fees while ensuring that audits remain comprehensive and effective.