Moderating Effect Of Audit Committee Independence On Board Characteristics and Audit Quality Of Listed Commercial Banks in Nigeria

This study examines the moderating effect of audit committee independence on the relationship between board attributes and audit quality among Deposit Money Banks (DMBs) listed on the Nigerian Exchange Group (NGX). Specifically, it investigates the effects of board characteristics— such as board size, board independence, and board financial expertise on the quality of audits conducted for these banks. Using a purposive sampling technique, the study analyzes data from 15 DMBs, covering the period from 2014 to 2023. Logistic regression is employed to estimate the probability of high audit quality based on the selected governance attributes. In contrast, board independence was found to have an insignificant impact on audit quality. Furthermore, board size was positively associated with improved audit quality,. Additionally, the study finds that the audit committee’s independence serves as significant moderators, strengthening the relationship between board financial expertise and audit quality. The study concludes by recommending that the FRCN should prioritize the independence of audit committees by enforcing strict criteria on membership. Audit committees should be composed solely of independent non-executive directors with no financial interests in the company, thereby reinforcing the objectivity of the auditing process. FRCN can work with firms to ensure audit committees are adequately empowered to oversee external auditors and ensure the accuracy and integrity of financial reporting.