Audit Firm Rotation: An Examination of Auditor’s Tenure in Nigeria Listed Banks

The relationship between auditor tenure and audit quality has been a debatable issue with most studies providing evidence which suggest that longer auditor tenure improves audit quality. In spite of this, most regulatory authorities place cap on the length of auditor's tenure. Nigeria is yet to settle fully on any particular period but is considering five or ten years. The objective of this study is to determine how long an audit firm should remain with a particular client company in Nigeria. The sample consists of five banks that met the criteria set for inclusion in the sample from a population off ifteen banks listed on the Nigerian Stock Exchange. Audit quality is proxied by discretionary accruals and data collected were analyzed using paired sample t-test. Findings show that audit quality at the end of the tenth year period is three times higher than it was at the end of the fifth year. The study concludes that longer auditor tenure is beneficial in audit process since it is associated with higher audit quality. The study recommends that Financial Reporting Council of Nigeria should adopt ten year auditor tenure for all listed companies in Nigeria.