Factors Affecting External Auditors’ Independence in Ethiopia: In the Case of Mirab Omo Zone Bero Woreda

This study aimed to assess the factors affecting the independence of external auditors in the Mirab Omo Zone in Ethiopia. The research employed an explanatory survey research design, which is well-suited to investigate the causal relationships between various factors and the level of independence exhibited by external auditors. A quantitative research approach was adopted, with external auditors in the study area comprising the population. A sample of 140 external auditors was selected, and primary data was collected through structured questionnaires. Descriptive and inferential statistical analyses, including Pearson's correlation and multiple linear regression, were performed to examine the relationships between the independent variables (regulatory environment, effect of ethical standards, client pressures, financial interests, and legal and regulatory framework) and the dependent variable (external auditor's independence). The findings indicate that the regulatory environment, the effect of ethical standards, the legal and regulatory framework, financial interests, and client pressures all have statistically significant relationships with the external auditor's independence. The study provides valuable insights for regulatory bodies, policymakers, auditing firms, and business organizations in Ethiopia, as it can inform the development and improvement of regulatory frameworks and guidelines related to auditors' independence. The research findings also help auditing firms and individual auditors understand the challenges they face and develop strategies to mitigate the factors affecting their independence. Based on these findings, recommendations include strengthening and enforcing the regulatory framework, prioritizing ethical standards and ongoing education, improving legal and regulatory systems, implementing safeguards against financial interests, and providing support for auditors facing client pressures.