AUDIT QUALITY AND FINANCIAL PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA

Abstract

 This study examined the relationship between audit quality and the financial performance of deposit money banks in Port Harcourt, Nigeria. The research was driven by persistent concerns about financial misstatements, delayed disclosures, and weak corporate governance in the Nigerian banking sector. Guided by Stakeholder Theory and Financial Intermediation Theory, the study focused on two dimensions of audit quality auditor independence and audit report lag and their effects on financial performance indicators, namely return on assets (ROA). A survey research design was adopted, combining primary data from 200 distributed questionnaires (180 retrieved, 90% response rate) administered to auditors, compliance officers, and financial managers, with secondary data from audited financial reports covering the period 2019– 2025. Data were analyzed using descriptive statistics, Pearson correlation, and multiple regression analysis. The findings revealed that auditor independence had a positive and significant effect on both ROA, indicating that greater independence enhances asset utilization and shareholder returns. Conversely, audit report lag exhibited a negative and significant relationship with ROA, suggesting that delays in audit reporting undermine profitability and investor confidence. The study concludes that audit quality plays a pivotal role in improving financial performance in Nigerian banks and recommends strengthening auditor independence, minimizing audit delays, and enforcing regulatory compliance to enhance the credibility of financial reporting and sustain shareholder value.