The Effect of Audit Firm Reputation on Audit Quality in Nigeria: A Study of KPMG Clients
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Background of the Study
Audit quality is a cornerstone of financial transparency and corporate accountability. The reputation of audit firms significantly influences stakeholders' perceptions of audit reliability and integrity. Globally renowned firms like KPMG are often associated with high standards of professionalism and technical expertise, which enhance the credibility of their audit reports (Eze & Chukwuemeka, 2023).
In Nigeria, audit quality has come under scrutiny due to instances of financial misreporting and corporate scandals. The reputation of audit firms, which reflects their adherence to professional standards, experience, and independence, plays a crucial role in maintaining investor confidence (Olowu & Adebisi, 2024). This study examines the effect of KPMG’s reputation on audit quality among its Nigerian clients, focusing on the factors that contribute to stakeholder trust.
Statement of the Problem
Despite the presence of reputable audit firms like KPMG, concerns persist regarding the quality of audits in Nigeria. Issues such as auditor independence, regulatory compliance, and professional ethics have been identified as factors that can compromise audit quality (Adelakun & Yusuf, 2025). This raises questions about the extent to which the reputation of audit firms influences the perceived and actual quality of their audits.
KPMG’s operations in Nigeria have been lauded for their professionalism. However, there is limited empirical research examining how its reputation impacts audit quality. This study seeks to address this gap by evaluating the relationship between audit firm reputation and audit quality in Nigeria.
Objectives of the Study
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To assess the influence of KPMG’s reputation on the quality of audits conducted for its Nigerian clients.
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To examine factors contributing to stakeholder perceptions of audit quality in relation to audit firm reputation.
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To recommend strategies for maintaining and enhancing audit quality in Nigeria.
Research Questions
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How does KPMG’s reputation influence the quality of audits conducted for its Nigerian clients?
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What factors contribute to stakeholder perceptions of audit quality in relation to audit firm reputation?
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What strategies can enhance audit quality among reputable audit firms in Nigeria?
Research Hypotheses
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KPMG’s reputation significantly influences the quality of audits conducted for its Nigerian clients.
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Stakeholder perceptions of audit quality are positively associated with audit firm reputation.
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Strategies to enhance audit firm reputation lead to improved audit quality in Nigeria.
Scope and Limitations of the Study
This study focuses on the clients of KPMG in Nigeria, examining the relationship between audit firm reputation and audit quality. Limitations may include restricted access to client-specific audit data and potential biases in stakeholder responses.
Definitions of Terms
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Audit Quality: The degree to which an audit meets professional standards and provides assurance to stakeholders.
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Audit Firm Reputation: The perception of an audit firm’s credibility, professionalism, and adherence to ethical standards.
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Stakeholder Trust: Confidence in the reliability and integrity of financial and audit reports.
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