The IUP Journal of Accounting Research and Audit Practices:
Determinants of Audit Fee in the Manufacturing Sector in Nigeria

Article Details
Pub. Date : Apr, 2019
Product Name : The IUP Journal of Accounting Research and Audit Practices
Product Type : Article
Product Code : IJARAP41904
Author Name : Sagin O Super and Nikhil Chandra Shil
Availability : YES
Subject/Domain : Finance
Download Format : PDF Format
No. of Pages : 14



This study attempts to examine the determinants of audit fee in the manufacturing sector in Nigeria using data of 10 companies listed on the Nigeria Stock Exchange (as on December 31, 2017) for six years from 2012 to 2017. Using the Ordinary Least Square (OLS) regression technique, the study reveals that there exists a negative significant relationship between audited-firm size, audited-firm net income and audit fee, and a positive significant relationship between audited-firm profitability and audit fee. The findings also reveal that there is no significant relationship between audit firm size, audited-firm tangibility, audited-firm turnover and audit fee in Nigeria. The study thus highlights the urgent need for regulation of audit fee in the Nigerian environment. The market framework for determining the audit fee may not readily suffice for fostering auditors’ independence.


Supervision of performance and assurance of accountability in management are keys in corporate governance, and external audit constitutes a significant tool for maintaining good governance levels. Audit fee determination has become a fundamental area of audit research in recent times, especially following the classical cases of audit failure experiences in Enron and other corporations. The disturbing dimension resulting from ex post analysis and discourses of these cases of corporate failure is that often times the client had been given a ‘clear bill of health’ and an unqualified opinion by the auditor. This therefore suggests that there had been incentives for the maintenance of an ongoing relationship between the auditor and the client and the auditor’s independence as well as audit quality had to become the opportunity cost for the survival of the interest of both the clients and the auditors.