Auditors' Independence and Provision of Non-Audit Tax Services in Nigeria: An Empirical Investigation

Abstract

The study investigated the influence of auditors‘ independence on non-audit tax services in Nigeria. A descriptive survey research design was utilized in this study as it permits hypotheses testing and the analysis of association between variables. Primary data was obtained from respondents through the use of research questionnaire drawn on five (5) points likert scale. A total of 125 subjects consisting of 65 auditees and 60 external users were selected using purposive sampling technique. The responses collected were analyzed using descriptive and ordinary least square statistical tools. Findings from the data analyzed indicated that auditors‘ independence has a significant association with non-audit tax services. It is concluded from the result that provisions of non-audit tax services by audit firms to audit client could influence the auditors‘ independence significantly. This is due to the fact that there could be conflict of interest and compromises when an audit firm performs both statutory audits and non-audit services for a particular client. It is therefore recommended that there should be periodic rotation of auditors by companies which should be enforced by regulatory bodies. Besides, the Nigerian government and its regulatory agencies should discourage the practice where auditors provide other paid professional services to the same firms they audit by enforcing the provisions of the law which prohibits such in line with section 7 of Audit Regulations 2020 (Financial Reporting Council of Nigeria, 2020) and Section 202 of SOX Act 2002.

Keywords

• Auditors‘ independence
• non-audit services
• tax services
• accounting services

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