AN EMPIRICAL STUDY OF THE RELATIONSHIP BETWEEN AUDITOR INDEPENDENCE, MANDATORY ROTATION, AND AUDIT QUALITY IN NON-FINANCIAL INSTITUTIONS IN NIGERIA

Abstract

This study investigated the relationship between auditor independence, mandatory auditor rotation, and audit quality in non-financial institutions in Nigeria. The study was guided by two research questions, objectives, and hypotheses. Key concepts explored include auditor independence, mandatory rotation, and audit quality. A detailed review of empirical literature was conducted to uncover existing findings and gaps regarding the influence of auditor-related policies on the quality of audit outcomes in non-financial sectors. The study was underpinned by three theoretical frameworks: Agency Theory, the Independent Auditor Theory, and the Audit Tenure Theory. A correlational research design was adopted due to the reliance on historical data. Auditor independence and mandatory rotation were treated as independent variables, while audit quality served as the dependent variable. Data analysis involved the application of descriptive statistics and correlation analysis. The results revealed that auditor independence had a significant positive relationship with audit quality, while mandatory auditor rotation also significantly influenced the quality of audits in the sampled firms. Based on the findings, the study recommended strengthening independence safeguards and enforcing structured rotation policies to enhance audit transparency and trust in financial reporting within the non-financial sector.