Moderating Effect of Key Audit Matters on the Relationship between IFRS Adoption and Financial Performance on Deposit Money Banks in Nigeria

Abstract Amid growing concern regarding the performance of banks leading to incessant takeovers and financial constraints since IFRS adoption in Nigeria, within the context of the enforcement of key audit matters on all banks in Nigeria. This study examines the moderating effect of key audit matters on the relationship between IFRS adoption and financial performance of deposit money banks. The study drew data from secondary sources, extracted data from financial reports of 12 listed Deposit Money Banks in Nigeria. The study covers periods between 2005 and 2022 from the data employed in the study. With 214 observations, the data were analyzed using longitudinal econometric models. The study found that adopting IFRS does not significantly affect the financial performance of deposit money banks. More so, Key audit matters significantly affect the financial performance of deposit money banks in Nigeria. The study submits that IFRS adoption does not improve financial performance, but key audit matters led to a reduction in financial performance when introduced into the deposit money banks during the IFRS period. The study recommends, among others, the need for the CBN and other audit regulatory agencies to be gradual in introducing regulation so that the performance of the regulated firms will not be eroded while making efforts to comply as indicated by the reduced performance to the compliance of banks with audit rotation and key audit matters. Keywords: Key audit matters, financial performance, IFRS adoption