Determinants of abnormal audit fees in international financial reporting standards-based financial statements

Abstract

This study essentially examines the audit effort as a possible determinant of the abnormal audit fees evinced in International Financial Reporting Standards-based financial statements. Therefore, the secondary data were sourced from the audited annual reports and the relevant financial statements of the Nigerian listed banks for the period of observation (2010-2019). An analysis was performed using the relevant techniques that include descriptive statistics, the correlation matrix and panel regression. The findings showed that the IFRS, the client complexity (CPX) and the client size (SIZ) were negatively correlated with abnormal audit fees (ABFEE), whereas joint audit (JAD) recorded a positive correlation with such abnormal audit fees. Lucidly, joint audit showed a stronger relationship with abnormal audit fees, whereas the client size showed a significant, but negative relationship with abnormal audit fees. Similarly, the fact that, with a probability value 0.9494, the relationship between ABFEE and the client complexity was not significant was noticed. Given these research outcomes, it can be concluded that abnormal audit fees are primarily motivated by extra or unexplained audit efforts and the costs associated with them. It is, therefore, recommended that, proportionately with the service(s) rendered, accounting professional bodies should review, harmonize and tactically institute a limit for professional charges through the enforcement of regulated benchmarks for audit fees payable by clients.

Chief Executive Officer (CEO) attributes and the value of quoted firms in Nigeria

“…Below are the outcomes of the Variance Inflation Factor (VIF) test performed to determine whether there was multicollinearity. Indications from Table 4 is that the range of the VIF for the independent variables did not exceed the maximum threshold of 10 (see Jeroh & Ekwueme, 2015;Jeroh, 2016;Jeroh, 2016a;Odjaremu & Jeroh, 2019;Jeroh, 2020c;Monye-Emina & Jeroh, 2022;Jeroh, 2023). The VIF scores, as can be seen, ranged from 1.15 (for CGEND) to 1.02 (for EVAD).…”

Corporate governance and financial statements’ fraud: Evidence from listed firms in Nigeria

“…Importantly, is has been reported that the difference in the outlook of corporate organizations in terms of sizes, activities and coherent presentation of their financial statement does not indicate the presence of fraud (Egolum, Ugonabo & Okonenwa 2021) [10] . Presumably, the establishment and application of uniformed financial reporting procedures may not have envisioned fraudulent practices within corporate organizations as the last decades have witnessed an upsurge in accounting frauds resulting in the unpopular upheaval in the accounting profession with implicit impact on legislative and regulatory frameworks, jobs, and several economic indices (Monye-Emina & Jeroh, 2014; Ibadin, Ohidoa & Ohidoa 2019; Sinebe, 2019; Sinebe, 2020, Sinebe, 2020a) [21,14,[25][26][27] . According to research evidence, financial statement/reporting fraud may be accomplished through forgery, falsification, alteration of accounting records, falsification of supporting documents used in the preparation of financial statements, and other disclosure of accounting information (ACFE, 2018) [2] .…”