The Role of Professional Skepticism in Enhancing Audit Quality in Nigeria: A Study of PwC Nigeria
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Background of the Study
Professional skepticism is a fundamental aspect of auditing, requiring auditors to critically assess audit evidence and maintain a questioning mindset throughout the audit process. It involves being alert to potential misstatements or irregularities and applying professional judgment to detect fraud and errors (IAASB, 2024). High levels of professional skepticism are essential for achieving audit quality, as they enhance the auditor’s ability to provide reliable assurance to stakeholders.
In Nigeria, audit firms such as PwC play a critical role in ensuring the integrity of financial reporting. However, challenges such as audit fatigue, resource constraints, and client pressures may undermine the application of professional skepticism. Recent financial scandals in Nigeria have highlighted the need for enhanced audit quality to restore public trust and confidence in financial statements.
This study investigates the role of professional skepticism in enhancing audit quality, focusing on PwC Nigeria as a case study. It examines the challenges auditors face in maintaining skepticism and the strategies for fostering a culture of skepticism within audit firms.
Statement of the Problem
Despite the emphasis on professional skepticism in auditing standards, its application in Nigeria has been inconsistent, contributing to audit failures and financial misstatements. Auditors often face challenges such as familiarity threats, insufficient training, and time constraints, which hinder their ability to exercise skepticism effectively.
While prior studies have explored audit quality in Nigeria, there is limited research on the specific role of professional skepticism. This study addresses this gap by examining the factors influencing professional skepticism at PwC Nigeria and its impact on audit quality, providing recommendations for improving audit practices.
Objectives of the Study
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To assess the role of professional skepticism in enhancing audit quality at PwC Nigeria.
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To identify the challenges auditors face in applying professional skepticism in Nigeria.
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To recommend strategies for fostering professional skepticism within audit firms.
Research Questions
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How does professional skepticism enhance audit quality at PwC Nigeria?
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What challenges do auditors face in applying professional skepticism in Nigeria?
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What strategies can foster professional skepticism within audit firms?
Research Hypotheses
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H₁: Professional skepticism significantly enhances audit quality at PwC Nigeria.
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H₂: Challenges such as audit fatigue and client pressures negatively impact the application of professional skepticism.
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H₃: Fostering a culture of professional skepticism improves audit practices and outcomes.
Scope and Limitations of the Study
The study focuses on PwC Nigeria, analyzing the role of professional skepticism in audit quality between 2023 and 2025. Limitations include potential bias in self-reported data and the difficulty of measuring skepticism quantitatively.
Definitions of Terms
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Professional Skepticism: A questioning mindset and critical assessment of audit evidence by auditors.
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Audit Quality: The reliability of an audit in detecting and reporting material misstatements in financial statements.
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PwC Nigeria: A leading audit and assurance firm operating in Nigeria.
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