Audit Partner Rotation and Audit Quality: Evidence from Listed Consumer and Industrial Goods Companies in Nigeria

Abstract

This research examines the influence of audit partner rotation on audit quality of listed consumer and industrial products firms in Nigeria. An ex post facto research design, involving secondary data defined from listed firms' annual reports within a ten-year timeframe, was utilized. Discretionary accruals and audit report lag were used in proxying audit quality, whereas partner tenure and rotation frequency were utilized in gauging audit partner rotation. Panel regression analysis was utilized in testing hypothesized relationships. The findings indicate that audit partner rotation possesses a significant and beneficial relation with audit quality, which implies that frequent rotation of partners improves the independence and professional skepticism of auditors, thus mitigating earnings management. Additionally, the findings suggest that longer tenured partners are related to decrease audit quality, whereas on-time rotation improves the credibility of financial reporting. It is concluded that the use of the audit partner rotation is a significant governance tool for the enhancement of audit quality within Nigeria. The recommendation is that regulators and audit firms ought to enforce stricter compliance with the policy of rotating partners in order to foster greater credibility, transparency, and investor faith in financial reporting.