Regulatory Framework and Auditor Independence: A Conceptual Perspective
Abstract A strong regulatory environment is a critical necessity for enhancing audit practice. This, without doubt, will fully integrate audit reports into a more competitive global architecture recognized by international standards. Regulatory framework is an essential structure required to protect, guarantee and regulate auditor independence and the general audit practice in Nigeria. Against this backdrop, this paper employs a conceptual cum-theoretical approach in examining the nexus between regulatory framework and auditor’s independence in Nigeria. It reviews the key theoretical, empirical and policy issues and the state of play in the debate. It was observed that a strong regulatory framework is needed to protect the independence of the auditor, particularly with respect to potential threats to the independence of the auditor. It maintains that weak regulatory and institutional framework act to weaken auditor independence in Nigeria. Other contributory factors are negligence on the part of audit regulators, the absence of unified and uniform code of corporate governance in Nigeria and the multiplicity of accounting professional bodies as well as decline in ethics. In the light of the foregoing, the paper recommends that the relevant codes and standards governing audit practices be harmonized and unified. Strict regulatory procedures and penalty should be created and penalties for violators of established codes and audit attributes should also spelt out. This should be supported with regulatory and institutional strengthening to guarantee the independence of auditors in Nigeria JEL Classification: L5, M41, M42, M48 Keywords: Regulatory framework, Auditor independence, Institutional structures, Consistency of audit reports
Keywords: Regulatory framework, Auditor independence, Institutional structures, Consistency of audit reports
Citation: Ogbaisi, S.A., & Afensimi, E. (2024). Regulatory Framework and Auditor Independence: A Conceptual Perspective. International Journal of Innovative Research in Accounting and Sustainability, 9(4-Special Issue), 1-8.