Title: Audit Attributes And Earnings Quality Of Quoted Oil And Gas Firms In Nigeria
Authors: Andrew E.O Erhijakpor, FCA, UYO, Elohor
Volume: 10
Issue: 4
Pages: 73-82
Publication Date: 2026/04/28
Abstract:
The oil and gas sector of the Nigerian economy is a major source of revenue for the nation, thus financial statement disclosed in this sector is crucial to retain investors' confidence. However, there have been growing concern as the sector has been reporting cases of earnings manipulations despite the regulatory reforms. The study was motivated by the persistent cases of audit failures, earnings manipulation and financial misreporting in the oil and gas sector in Nigeria which has eroded investors' confidence and credibility of financial disclosures. It is on this basis that the study examined the effect of audit attributes on earnings quality of quoted oil and gas firms in Nigeria from 2014 to 2024. The study was anchored on agency, signaling and stakeholder theory. Secondary data were extracted from the audited annual reports of quoted oil and gas firms in Nigeria. Earnings quality being the dependent variable was measured by discretionary accruals derived using the modified Jones model, while audit attributes, the independent variable was measured by audit firm fees (AFS), audit firm size (AFZ), audit firm rotation (AFR), audit report timeliness (ART) and audit committee financial expertise (ACX) with firm size as control variable. Panel data were analyzed using the generalized linear model (GLM) estimation technique. The findings revealed that AFS exert positive significant effect on earnings quality. AFZ and ACX had positive but statistically insignificant effect on earnings quality. Conversely, AFR and ART displayed negative but insignificant effect on earnings quality of quoted oil and gas firms in Nigeria. The study concludes that audit attributes influences earnings quality of quoted oil and gas firms in Nigeria but their influence varies in direction and magnitude. The study recommends that Financial Reporting Council of Nigeria (FRCN) should collaborate with professional bodies such as ICAN, ANAN, etc. to develop a standardized benchmark audit fees charged by external auditors so as to discourage charging of fees that threatens auditor objectivity in order to ensure transparency. Also, SEC should set deadlines for publication of audited reports to enhance investors' confidence and timeliness of information.