Audit Client Characteristics and Audit Fees of Listed Pharmaceutical Firms in Nigeria

Abstract

This study aimed at investigating the relationship between audit client characteristics and audit fees of listed pharmaceutical firms in Nigeria for a 6-year period from 2012 to 2017. The study adopted a historical research design and secondary data were obtained from the sample size of seven out of the population of eleven listed pharmaceutical firms in Nigeria and was analysed using descriptive statistics, correlation and multiple regression technique. The study found that audit client size and level of debt significantly determine audit fees, while profitability and inherent risk of audit clients have an insignificant effect on audit fees. Based on these findings, the study concludes, among others, that key audit client characteristics such as size and debt level are relevant in the determination of audit fees. consequently, the study recommends, among others, that management of listed pharmaceutical firms in Nigeria should be proactive in efficient management of assets to ensure full utilization, accurate valuation and reporting as well as maintain optimum and ensure judicious use of debt funds to eliminate incidences of giving wrong impressions to auditors regarding assets mismanagement that would serve as the basis of increasing the amount of audit fees charged by statutory auditors.