The Role of Ethical Standards in Improving Audit Quality in Nigeria: A Case Study of KPMG Clients
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Background of the Study
Ethical standards are the backbone of the auditing profession, ensuring the integrity, objectivity, and professionalism of auditors. High ethical standards enhance audit quality by promoting transparency, reducing bias, and ensuring that audit outcomes are credible and reliable (Adams et al., 2024). In Nigeria, ethical standards in auditing are guided by principles established by professional bodies such as the Institute of Chartered Accountants of Nigeria (ICAN) and the Financial Reporting Council of Nigeria (FRCN). However, lapses in adherence to ethical guidelines have been linked to substandard audit quality and financial scandals.
KPMG, as one of the leading global audit firms operating in Nigeria, serves clients across various industries. The firm’s commitment to ethical standards provides a useful case for studying the impact of ethics on audit quality. This study investigates the relationship between ethical standards and audit quality, focusing on the experiences of KPMG clients.
Statement of the Problem
Despite the existence of ethical guidelines in Nigeria, cases of audit failures and compromised integrity persist. This has raised concerns about the effectiveness of ethical standards in enhancing audit quality. Weak enforcement mechanisms, conflicts of interest, and pressure from clients often undermine adherence to these standards.
While KPMG is recognized for its robust ethical practices, it operates in an environment where ethical breaches are common. This study seeks to explore how adherence to ethical standards influences audit quality in the Nigerian context, using KPMG clients as a case study.
Objectives of the Study
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To examine the ethical standards applied in audits conducted by KPMG in Nigeria.
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To evaluate the relationship between adherence to ethical standards and audit quality.
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To identify challenges faced by auditors in maintaining high ethical standards in Nigeria.
Research Questions
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What ethical standards are applied in audits conducted by KPMG in Nigeria?
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How does adherence to ethical standards influence audit quality?
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What challenges do auditors face in maintaining high ethical standards in Nigeria?
Research Hypotheses
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H₀: Ethical standards are not effectively applied in audits conducted by KPMG in Nigeria.
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H₀: Adherence to ethical standards does not significantly influence audit quality.
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H₀: Auditors do not face significant challenges in maintaining high ethical standards in Nigeria.
Scope and Limitations of the Study
The study focuses on audits conducted by KPMG in Nigeria from 2023 to 2025. It evaluates the application of ethical standards and their impact on audit quality, with attention to challenges in maintaining these standards. Limitations include restricted access to client-specific audit details and reliance on secondary data for analysis.
Definitions of Terms
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Ethical Standards: Principles and guidelines that govern the behavior and practices of auditors, ensuring integrity and professionalism.
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Audit Quality: The degree to which an audit provides accurate and reliable information about an organization’s financial statements.
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KPMG: A global professional services firm providing audit, tax, and advisory services.
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