Audit Independence, Information Technology and Audit Quality Reporting of Government Parastatals in Oyo State, Nigeria

Abstract

The study analyzes the interrelationship between audit independence, information technology and audit quality of government parastatals in the Oyo State of Nigeria. In particular, it examines the direct impact of audit independence on audit quality, the direct impact of information technology adoption on audit quality and the moderating effect of information technology in the relationship between audit independence and audit quality. The study is based on the Agency Theory according to which the auditor is a monitor that minimizes the asymmetry of information between the principals (citizens and taxpayers) and agents (parastatal management). The research design was based on survey research, as it involves the audit staff, internal auditors, and finance officers of selected government parastatals in Oyo State, Nigeria. Primary data were collected through a structured questionnaire, and analysed by descriptive and inferential statistics, such as regression analysis, to test the three hypotheses formulated. The finding indicated that the effect of one unit of improvement of audit independence was significant (R = 0.412, t = 5.873, p < 0.001) where audit quality reporting increased by 0.412 units. Moreover, further outcomes have revealed the adoption of information technology (R = 0.387, t = 5.214, p < 0.001), is significantly positive on the quality of audit reporting. Overall, the results suggest that audit independence and information technology significantly influence audit quality reporting (R² = 0.073, p < 0.05) which mean that the combination of independence and information technology produces better audit quality reporting than the individual effects. The study concluded that the Oyo State government parastatals where fiscal transparency lags in the average, enhancing audit independence is not enough. The policymakers and audit institutions need to invest in the information technology infrastructure, training on digital skills and ethical safeguards at the same time in order to achieve meaningful change in the quality of auditing reporting.