This contains research articles published by lecturers in the department of Accounting

Permanent URI for this collectionhttps://repository.nileuniversity.edu.ng/handle/123456789/103

Browse

Now showing 1 - 20 of 27

Islamic perspective of management accounting decision making techniques
(Journal of Islamic Accounting and Business Research, 2013-02-02) Zayyad Abdul-Baki; Uthman Ahmad Bukola; Atanda Aliu Olanrewaju; Solihu Aramide Ibrahim
Purpose– This paper aims to argue that the methodologies adopted by the conventional management accounting in selecting between or among two or more alternative courses of action, both in the long-term and the short-term decision making endeavours conflict with the overall objective ( falah) of Islamic enterprises. Design/methodology/approach– The paper explores relevant literatures (including the Qur’an and the Hadeeth) to ascertain the objective of an Islamic enterprise and suggest an alternative approach, in making a choice among alternative courses of action, that aligns with the Islamic socio-economic objective (falah). Findings– The paper suggests that both in long-term and short-term decision making endeavours, cost-benefit comparison (where cost includes negative externalities) rather than discounted cashflow techniques or contribution margin should be adopted in making a final choice among alternatives to achieve falah. Research limitations/implications– The paper has not considered other objectives that may be pursued by an organisation beside profit maximization whether short-term or long-term. Practical implications– The paper expands the frontiers of knowledge in Islamic accounting by exposing the inadequacy of the conventional management accounting decision making methods. Originality/value– This paper explores the Islamic perspective of the conventional management accounting which is rare among scholars of accounting.
The value-relevance of accounting information in Nigeria
(Journal of Accounting and Management, 2014-02-02) Uthman Ahmad Bukola; Zayyad Abdul-Baki
This study investigates the effect of IFRS adoption on the value-relevance of accounting information in Nigeria. The study builds on the explanation of extant finance theories on the value and timing of information. IFRS was measured with more disclosure of economic events as well as the fair valuation of economic events under IFRS. The opinions of a number of financial analysts with the aid of e-mail questionnaire were sourced. A log-linear test was run to test the interaction of the variables and the significance of such interaction. A significant relationship was found between the each of the independent variables and the dependent variable at 5% level of significance. The study therefore offers explanations regarding the IFRS adoption as a bridge of the gap between accounting and finance measurement of information. Hence, concludes that IFRS adoption has enhanced the value relevance of accounting information in Nigeria. However, recommendation was made that more measures should be put in place to ensure full compliance of IFRS by all affected Nigerian entities.
Audit Pricing, Start-Up Cost and Opinion Shopping
(Journal of Accounting and Management Information Systems (JAMIS), 2014-02-02) Tijani, Oladipupo Muhrtala; Uthman Ahmad Bukola; Abdul-Baki, Zayyad; Oke, Lukman Adebayo
The purpose of this paper is to predict the association between the effect of start-up cost and audit opinion shopping on the pricing strategies of medium-sized audit firms. Using a sample of 753 local –office-year observations between 2006 and 2011, we find evidence of a positive association between higher audit pricing of new private client and audit opinion shopping. We also find that start-up cost is a good predictor of higher initial fees charged by auditors for private clients. While earnings risk management (ERM) and financial performance risk (FPR) are significant factors in audit pricing, litigation risk (LR) however failed to evolve as a direct significant predictor. Although this study focused on the effects of start-up costs and opinion reporting, it fails to differentiate between firm cost allocation and apportionment. The model can be used to assist audit firms not only to develop pricing strategies that fully reflect the effective cost allocation, but also to be receptive to the implications of opinion reporting on service pricing.
Curbing Financial Crimes with Anti-Graft Bureaus in Nigeria
(Journal of Accounting and Management Information Systems (JAMIS), 2015-02-02) Uthman Ahmad Bukola; Oke, Lukman Adebayo; Ajape, Mohammed Kayode; Abdul-Baki, Zayyad; Tijani, Murhtala Oladipupo
Corruption, be it financial or non-financial is a global cankerworm that has eaten deep into the fabrics of many nations and war against it has been a recurring decimal in every economy. In Nigeria, recent attempts at nipping corruption in the bud gave rise to some anti-graft agencies such as the Economic and Financial Crimes Commission (EFCC). Against this background, opinion of 140 accountants in various capacities was sought on the efficacy of the anti-graft agencies in curbing financial crimes through a survey questionnaire. The study found that respondents group perceived the anti-graft agencies as highly effective but could not establish that accountants in various walks of life differ significantly in their perception of the efficacy of the Nigerian Anti-graft bureaus (Overall Mean= 2.98, F= 2.263 and P>0.05)using ANOVA as statistical analysis tool. It was recommended that Nigerian government should strengthen the Anti-financial crimes agencies given that the influence of highly placed offenders, the dignity, societal bondage and shame inherent in financial crimes may affect the potency of anti financial crimes measures put in place.
Accounting ethics education in Nigeria
(Academic journal of economic studies, 2018-02-02) Salami, Abdulai Agbaje; Sanni, Mubaraq; Uthman Ahmad Bukola
The symbiotic relationship between good ethical disposition and accounting profession is incontestable. Aside from the previous infamous global corporate scandals, the recent fraudulent practices revelation in the Nigerian public life is a serious source of concern. This study examines the impact of ethics education on the potential accountants to establish whether the propriety of their conduct in the future is guaranteed. This necessitates the survey of accounting students based on the three forms of ownership of university in Nigeria. The findings of the survey based on the structured questionnaire using Kruskal-Wallis tests show that, the students’ groups agree on the value-relevance of ethics education, its ability to expose them to means of resolving future ethical challenges and their readiness to become whistle-blowers. However, the students’ groups’ failure to agree on the necessity of ethical competence for accountants and their disagreement on their confidence to tackle unfamiliar problems signal what is expected of accounting educators for students to become more ethically equipped. Also, the expectation of the reinforcement of whistle-blower protection is evident from its intertwining with disclosure of unethical practices. The timing and implications of this study on the activities of accounting educators and policy makers accentuate its uniqueness.
Bank Capital, Operating Efficiency, and Corporate Performance in Nigeria
(Acta Univ. Sapientiae, Economics and Business,, 2018-02-02) Abdulai Agbaje Salami; Uthman Ahmad Bukola
This study examines the impact of bank capital and operating efficiency on the Nigerian deposit money bank financial performance with a view to resolving risk-based and non-risk-based capitals’ dichotomy existing in the bank literature. Using bank-specific data obtained from the annual reports and accounts of 15 banks listed on the Nigerian Stock Exchange between 2012 and 2015, the panel data regression analyses revealed the superiority of standard capital ratio of equity-to-total-assets, a non-risk-based capital, over other measures. While all measures, both risk-based and non-risk-based capitals, showed significantly positive effects on bank performance as measured by return-on-asset, mixed results were obtained from other indicators: return-on-equity and net-interest-margin. Overall, only equity-to-total-assets influenced all adopted performance indicators positively. It was also found that operating efficiency measured by cost-to income ratio had negative impact on bank performance, but on the average it appeared too high. Thus, incorporating the standard capital ratio of equity-to-total assets into regulatory regime by the banks’ regulator is recommended to ensure its relevance is not overshadowed.
Internal Brand Equity of Universities and Students’ Academic Performance
(Sona Global Management Review, 2018-02-02) Musiliu Babatunde Abina; Uthman Ahmad Bukola
Internal branding occupies the core of internal marketing thus sifting out the values at the behest of an organization in achieving stated objectives. Bearing this in mind, this study adopts a survey technique to identify the perception of consumers (students) on internal brand equi ties of academic institutions in the shadows of the minimum academic standards requirement as determinants of academic performance. The ingenuity of this work thus lies in the ability of the study to examine internal brand equities of academic institutions/services. A test of difference was conducted to understudy the interplay between the academic performance of students among five cohorts distributed based on academic performance of students. The analysis made use of Kruskal-wallis test with the application of Wilcoxon signed rank tests with the Bonferroni Correction as post hoc analysis to identify the direction of the differences. The research identified how students are segregated on the basis of their academic performances and the variables helpful to their academic performances. Chiefly, high-flying students present unequivocal views on the usefulness of ‘facilities’, ‘library services’ and ‘working hours’ to the academic performance of students. On this note, the study recommends that attention of government can be directed to areas of Library services, academic services and physical facilities as all students except the high-flyers are having conflicting view with respect to their ranks on internal brand variables. More so, non-academic services should be improved upon as it is disregarded as a helpful variable by the ‘high flying students.
The role of accounting and accountants in the oil subsidy corruption scandal in Nigeria
(Elsevier, 2019-02-02) Zayyad, Abdul-Baki; Uthman, Ahmad Bukola; Abubakar, S. Kasum
Accounting firms have long been profit-orientated ventures, and their pursuit of profits has overshadowed the protection of the public interest they avow. This study investigates how corruption, as an institutionalized practice in Nigeria, has led two accounting firms to support and engage in corruption rather than guard against it in an oil subsidy corruption scandal in Nigeria. Adopting Dillard, Rigsby, and Goodman’s (2004) model of institutional theory, the study argues that the institutionalization of corruption, through its pervasiveness at the social, economic and political level, is a premise for its institutionalization at the organizational field level (the oil subsidy scheme). Because the two accounting firms were both involved in the operation of the oil subsidy scheme, their practices were essentially forced to conform to the institutionalized practice—corruption—as opposed to the protection of the public interest.
Prospect for Accounting Academics
(Management & Accounting Review, 2019-02-02) Uthman Ahmad Bukola; Mubaraq Sannib; Abdulai Agbaje Salamic
The future of accounting education rests on the development of accounting academics. In the social space of competing job opportunities for both graduate and professional accountants, this paper considers how the interest of prospective accounting graduates in Nigerian universities could reshape the widely reported shortage of accounting academics. Viewing through the lens of the Circumscription Theory, it examines how career choices of undergraduate accounting students affect the prospect of accounting education. The survey technique was adopted to sample students’ opinions across three universities in their career decisions, the factors that affect such decisions and their key referents. The respondents were divided based on their preference for academic jobs and the Mann-whitney U test was conducted to examine the differences in factors that affect their preferences. The study revealed that financial rewards account for students’ preference for non-academic jobs. Hence, only 10% of the respondents showed an intention to pursue a career in the academia. Other factors such as job leisure, ambitiousness and career prestige are also responsible for students’ preference for non-academic jobs. The results of the study confirmed the prediction of the Circumscription Theory. It is therefore recommended that academic jobs should be made attractive for accounting graduates by improving the financial rewards of academic staff generally. More so, attention should be further directed towards factors such as job leisure, holiday travels, prestige and easy achievement of ambitions since students get swayed from academic jobs because of those factors.
An Empirical Investigation into the relationship between Capital Structure and Firm`s Market Value in Nigeria
(Journal of Accounting, Finance and Development, 2019-02-02) Okoye, Peter Anija; Ayogu Sunday
Following the Modigliani and Miller theory (1963), there have been considerable debates on the nature of relationship that exists between a company`s capital structure and its market value. This study seeks to empirically investigate the relationship between corporate capital structure and a firm`s market value in Nigeria.. Dataset from selected companies listed on the Nigerian Stock Exchange for the period of 2013- 2017 were used for analysis. Results from the analysis show a positively significant relationship between a firm`s capital structure and its market value.. Hence, the study recommends that listed companies in Nigeria should optimize their capital structure in order to maximize their market value for the benefit of all the stakeholders.
DETERMINANTS OF BANK PERFORMANCE IN NIGERIA
(VGWU Press, 2020-02-02) Mubaraq Sanni; Abdulai Agbaje Salami; Uthman Ahmad Bukola
The failure of banks in Nigeria has hitherto become a recurring phenomenon. Worried by the syndrome, this paper examines the determinants of bank performance in Nigeria taking into cognizance the duality of financial measures of bank performance. From an analysis of 115 bank-year observations of a sample of 17 Nigerian deposit money banks and macroeconomic data for the period 2012 2018 using Arellano-Bover one-step system GMM estimation approach, differences in the explanatory potential of these factors between the models with risk-neutral and risk-adjusted measures of performance as dependent variables are empirically established. This suggests that there is a higher probability of investors, depositors and other stakeholders being indecisive when analyzing the performance of banks. However, relying on the assumptions of risk-return hypothesis and level of risk embedded in banks' operations could warrant them opting for determinants of risk-adjusted returns in their decision making. This study is exceptional in the bank performance literature for its long list of measures and drivers of bank performance.
Owner Characteristics And Access To Bank Financing
(Timisoara Journal of Economics and Business, 2020-02-02) Lukman Adebayo Oke; Uthman Ahmad Bukola; Alade Ayodeji Ademokoya
The study examines the influence of owner specific factors on access to bank financing among SMEs in North Central Nigeria. Self-administered questionnaires were employed for data collection from the sampled SME owners/managers in the study area. A sample of 280 SMEs was drawn from the population of 1030 SMEs. Logistic regression was used in analyzing the data. The study found that gender, personal networking and personal relationship with the bank, which are significant at 0.05, 0.1 and 0.1 respectively, are the owner characteristics influencing SMEs’ financial access, whereas the owner’s age, education, experience, financial literacy and personal wealth do not have significant influence on SMEs’ access to bank financing in the region. The study concluded that while all the identified owner’s attributes are complementarily important in financial access, banks are more gender biased, value personal relationship and networking ability of firm owners. The study therefore, recommended among others, the need for SME owners to establish and maintain more improved relationships with their banks and form strong linkages with relevant stakeholders in the external environment for better resource exchange including financial access.
IFRS Adoption and Audit Quality in Nigeria
(Global Journal of Accounting, 2021-02-02) Uthman Ahmad Bukola; Abdulai Agbaje Salami
Incessant audit mistakes as unveiled by the Financial Reporting Council of Nigeria (FRCN’s)sanction on audit firms as well as the consequential ligation of the ‘prestigious’ audit firms suggest the need to examine the quality of audits. This aim of this study is to find out how the relationship between audit quality and International Financial Reporting Standards (IFRS) Adoption is moderated by auditor industry specialization of listed companies in Nigeria. The study drew data mainly from secondary sources. That is, extracted data from financial reports of 52 listed companies in Nigeria covering periods between 2005 and 2019 were used. The period covers both pre IFRS and IFRS period to ensure a balanced spread of data across both periods across all industries. The overall observation totaled 517 and the analysis of data was carried out with the use of longitudinal econometric models. The findings of the study are: (i) adoption of IFRS significantly affects audit quality suggesting an improvement in audit quality due to IFRS adoption. In the financial services industry, the results indicate that adoption of IFRS does not significantly affect audit quality (ii) IFRS adoption led to significant reduction in the audit quality of both financial and non-financial services industries due to auditor industry specialization. The study recommends, among others, the need for the regulatory authorities to include oversight on auditor industry specialization so as to ensure it achieves a desired outcome of improved audit quality and ensure students are trained to acquire accounting skills in their industries of interest to further improve audit quality.
Impact Of Accounting Regulatory Reforms On Audit Quality Of Listed Companies In Nigeria
(PQDT-Global, 2021-02-02) Uthman Ahmad Bukola
Audit mistakes, causing confidence erosion in accounting numbers and demonstrated by takeover of banks by the Asset Management Corporation of Nigeria (AMCON) and fraud cases have become more worrisome and affected the country’s economy. However, the regulatory reform through establishment of Financial Reporting Council of Nigeria (FRCN) appears ineffective, and IFRS Adoption by the FRCN is also perceived by financial reporting stakeholders to have compounded the problems. Therefore, it became imperative to study how audit quality may have been affected by the regulatory reform efforts of the government. The specific objectives of this study are: (i) evaluate the effect of IFRS adoption on audit quality of Nigerian listed companies; (ii) assess the moderating effect of audit fee premium on the relationship between IFRS adoption and audit quality of listed companies Nigerian; (iii) examine whether audit firm size moderate the relationship between IFRS adoption and audit quality of listed companies in Nigeria; (iv) investigate if the effect of IFRS adoption on audit quality of listed companies Nigerian is moderated by auditors’ industry specialization; and (v) examine how FRCN rules and pronouncements have affects audit quality of listed companies in Nigeria. The study drew data from primary and secondary sources. Extracted data from financial reports of 52 listed companies in Nigeria covering periods between 2005 and 2019 form the secondary data employed in the study. With 517 observations, secondary data were analysed with the use of longitudinal econometric models. The primary sources involved interview of 11 respondents comprising of auditors, accountants and staff of the FRCN. Schematic analysis was conducted on the primary data and corroborated with document analysis. Evidence from both sources were triangulated to conduct mixed-method research. The findings of the study are: (i) adoption of IFRS significantly affect audit quality (t=-1.66, p<0.10 & t=-1.66, p<0.10) in the non-financials ervices industry. In the financial services industry, the results indicate that adoption of IFRS does not significantly affect audit quality (t=-0.78, p>0.10 & t=-0.16, p>0.10); (ii) audit fee premium after the IFRS adoption led to significant reduction in audit quality for the non-financial firms (t=4.88, p<0.01 & t=4.87, p<0.01). For firms in financial services, the relationship of IFRS adoption and audit quality was not significantly affected by audit fee premium as indicated by the results. (t=4.312, p>0.10 & t=12.16, p>0.10); (iii) audit firm size after the IFRS adoption led to the reduction in audit quality for the non-financial firms (t=4.68, p<0.01 & t=4.68, p<0.01) indicating that Big 4 firms audit quality significantly reduced for the non-financial services sector while there was indifferent moderation of audit firm size on the effect of IFRS adoption on audit quality given the result IFRS (t=-0.89, p>0.10 & t=0.02, p>0.10) in the financial services sector; (iv) IFRS adoption led to significant reduction in the audit quality of both financial (f=6220.57, P<0.01 & f=6225.71, P<0.01) and non-financial services (t=1.69, p<0.10 & t=1.69, p<0.10) industries; and (v) the rules and pronouncements of the FRCN were all found to improve audit quality with the exception of monitoring and review rules which has not been initiated. The study concluded that different aspects of regulatory reform affected audit quality differently. It specifically submits that IFRS adoption improves audit quality but there are aspects of FRCN, such as monitoring and review, which do not improve audit quality. The study recommends, among others, the need for the FRCN regulation to include oversight on audit fee, auditor industry specialization and audit firm size to inform better audit quality.
Bank-Specific Variables and Banks’ Financial Soundness
(Zagreb International Review of Economics & Business, 2021-02-02) Abdulai Agbaje Salami; Uthman Ahmad Bukola; Mubaraq Sanni
This study examines the explanatory power of capital adequacy, asset quality, management soundness, earnings quality, liquidity and sensitivity to market risk (CAMELS) framework as well as a number of other variables on the financial soundness (measured by regulatory capital adequacy ratios) of banks in Nigeria. The findings, using ordinary least squared (OLS) regression subsequent to the establishment of no panel effects among the sampled banks, reveal the significant explanatory potentials of these bank-specific variables though some give a reversal of their prior expectations. Apart from reawakening the investors’ and depositors’ interest, the findings further have policy implications on the regulation and operation of these financial institutions. The study breaks new grounds in the measurement of capital adequacy using gross revenue ratio and leverage ratio, asset quality using in-come statement impairment charges for loan losses, and in the inclusion of the sensitivity to market risk most especially in the Nigerian context.
Signalling behaviour and bank provisioning policies in Nigeria
(Brno University of Technology, Faculty of Business and Management, Brno, 2021-02-02) Salami, Adbulai Agbaje; Uthman Ahmad Bukola; Abdulrauf, Lukman Adebayo-Oke
Purpose of the article: Based on the propositions of the signalling hypothesis and prospect theory, this study examined the extent of attempt by Nigerian deposit money banks (DMBs) to solve the issue of adverse selection via signalling their financial prospects using loan loss provisions (LLPs). The empirical test was subject to the DMBs’ riskiness and changes in the accounting rule given failure of a number DMBs and the adoption of the International Financial Reporting Standards (IFRSs) respectively in Nigeria in the recent past. Methodology: Bank-level unbalanced panel datasets of a sample 16 DMBs, which are related to the variables of the study, were hand-extracted from their annual reports and account between 2007 and 2017. The analysis was conducted using the Prais-Winsten regression correlated with panel corrected standard errors (PCSE-PW) owing to the presence of heteroscedastic and autocorrelated residuals in the study’s regression models. Scientific aim: The study examined the relationship between LLPs and one-year-ahead changes in earnings before taxes and LLPs to establish whether Nigerian DMBs signal their financial strength via LLPs. Findings: The study largely found that Nigerian DMBs, regardless of accounting regime and risk of insolvency, do not use LLPs to signal their financial strength. However, where the evidence of signalling via LLPs was evident the coefficient of earnings signalling was insignificant, where it was significant signalling was achievable via discretionary LLPs (DLLP) rather than actual LLPs (TLLP) suggesting manipulative provisioning in the use of LLPs to signal. Conclusions: The study’s findings included empirical communication alerts to the regulators and Nigerian DMBs on the need for improvement in earnings signalling, as the present scenario may be interpreted as a sign of a non-going concern by analytical stakeholders. Limits of research: The generalisation of the study’s findings may be limited by the focus on one regime (IAS 39) of IFRS loan loss reporting but mitigated by the partial implementation of the second regime (IFRS 9) for the first four years in the country.
Bank Loan Loss Cyclicality in Nigeria
(Renaissance University Journal of Management and Social Sciences, 2022-02-02) Abdulai Agbaje Salami; Uthman Ahmad Bukola; Kayode Mohammed Ajape
The occurrence of global and local meltdowns and the subsequent instability experienced by the Nigerian banking sector necessitate empirical test of the nexus between business cycle and loan loss provisions (LLPs). This study examined the loan loss cyclicality behavior of Nigerian deposit money banks (DMBs) taking into consideration economic-boom-bust-cycles. Bank-level and macroeconomic data were obtained from sampled 16 DMBs’ annual reports and CBN Statistical Bulletin respectively between 2007 and 2017 covering both periods of global financial meltdown (2008-2009) and local economic recession (2016-2017). The study’s hypotheses were tested using Prais Winsten regression with correlated Panel Corrected Standard Errors (PW-PCSE). The results generally showed that provisioning behavior by Nigerian DMBs is pro-cyclical. This was based on significantly negative coefficients of loans growth (ΔLOAN) and real GDP growth rate (GDPGR) representing bank-specific and macroeconomic loan loss pro-cyclicality respectively. In contrast, loan loss counter-cyclicality was found during global financial crisis against majority evidence in the literature. Meanwhile, loan loss pro-cyclicality was peculiar to Nigerian DMBs during local economic recession. While the loan loss pro-cyclical behaviour of Nigerian DMBs represents imprudent provisioning policies and might have been incidental to the collapse of some Nigerian banks in the past, the counter-cyclicality during global meltdown is traceable to the fact that the crisis had no substantial negative influence on Nigeria’s financial system. To address the problem of pro-cyclicality, it was recommended that bank regulators ensure that macroeconomic prediction models adopted by Nigerian DMBs be made relative perfect. There is also need for strengthening bank capital buffers in record time and conduct of stress tests for individual DMBs rather extant consolidated approach among others.
Bank Funding Strategy and Income Smoothing Practices in Nigeria
(Global Journal of Accounting, 2022-02-02) Abdulai Agbaje Salami; Uthman Ahmad Bukola; Rahji Ohize Ibrahim; Kamaldeen Ibraheem Nageri
The regulators’ provision of bailouts to troubled banks accentuates the connection between level of funding and bank financial condition. This scenario has been characteristic of Nigerian deposit money banks (DMBs) in the last decade and followed by a number of reforms including adoption of International Financial Reporting Standards (IFRSs). This prompted the study’s examination of nexus between bank funding strategy and income smoothing practices achievable via adjustments to loan loss provisions (LLPs) considering IFRSs adoption and solvency risk. Bank-level unbalanced panel data were hand-extracted from the annual reports of a sample of 16 DMBs for the period 2007-2017. Data were analyzed using appropriate panel regression model subsequent to derivation of discretionary provision for loan losses (DPL) used to measure income smoothing and index of funding strategy (FSI) as a measure of overall funding strategy. The results showed that bank funding drive prompts Nigerian DMBs’ income smoothing practices via DPL regardless of their solvency status and reflects majorly in their motive for external financing, deposit and non-deposit funding other than internal funding strategy. However, reduction was noticeable during IFRS given the observed inverse relationship between funding strategy and Nigerian DMBs’ income smoothing practices. Despite improved financial reporting quality during IFRS, the mixed results obtained in the funding strategy-DPL nexus of Nigerian DMBs threatened by risk of insolvency call for increased level of oversights and additional reforms by the regulators. The need for regulators to re-sharpen their supervisory tools as Nigerian DMBs switch from IAS 39 to more discretions-inclined IFRS 9 for loan loss reporting was also advocated. This study is unique for derivation of FSI and joint test of IFRS-solvency risk moderating influence.
Impact Of Auditor Industry Specialization On The Audit Quality Of Listed Non-Financial Firms In Nigeria
(Nigeria Journal of Risk and Insurance, 2022-02-02) Uthman Ahmad Bukola; Salami, Abdulai Agbaje; Ajape, Kayode Mohammed
Audit quality improvement depends on several factors documented in the literature. Auditors are able to attract patronage if clients perceive their services to produce quality outcomes. Auditors therefore garner experience and acumen in the activities of specific clients’ industries in order to attract the largest market share and improve their portfolio of clients in certain industries as a result, they attain the status of ‘specialization’ in the audit of such industries. In spite of this ‘specialization’, indices of dwindling audit quality continue to surface in the corporate entities occasioned by untimely takeovers and abrupt mergers. Therefore, this study examines the nexus between audit industry specialization and audit quality in the listed non-financial firms in Nigeria Data were drawn from financial reports of 40 listed firms in Nigeria covering periods between 2005 and 2019 and the total observation stood at 517. Data analysis was carried out with the use of longitudinal econometric models. Evidence from the study support the rejection of the null hypothesis (t=-1.72, p) for the two models thereby supporting the proposition that audit quality improved significantly improved as a result of audit industry specialization. It specifically isolates the oil and gas as well as service industries for significant improvement in audit quality as a result of industry specialization of auditors while pointing to the possibility of improving the agricultural and consumer service industries due to their negative but insignificant coefficients. The study recommends that regulatory authorities should disaggregate regulatory functions among industries to be able to better understand the interplay of audit industry specialization and thus make policies that inform better audit quality.
Managerial discretions and loan loss provisions in Nigerian banks
(Central European Review Of Economics And Management, 2022-02-02) Abdulai Agbaje Salami; Uthman Ahmad Bukola; Ruth Oluwayemisi Owoade
Aim: The high level of non-performing exposures and the existing crisis in the Nigerian banking sector is a source of concern. To create a basis for solving the troubles caused by the loan loss crisis, this study investigated the managerial discretionary use of loan loss provisions (LLPs) by Nigerian deposit money banks (DMBs). This is considered in the context of solvency risk and reforms embedded in the adoption of International Financial Reporting Standards (IFRSs). Design/research methods: Datasets related to the variables of the study were hand-collected from annual reports of a sample of 16 Nigerian deposit money banks over the period of 2007-2017. The analyses were performed using principal components analysis to derive the managerial discretions index (MDI), Prais-Winsten ordinary least square regression to segregate LLP into reported LLPs (TLLP) and discretionary LLPs (DLLP) and appropriate panel data regression models to test the study’s hypotheses subsequent to series of diagnostic tests. Conclusions/findings:The results revealed that managerial discretions negatively influence TLLP and DLLP represented by absolute value of DLLP (ADLLP). This represents an increase in profitability without manipulatingloan loss provisions. However, the reforms embedded in IFRSs revealed the use of LLPs for managerial discretions despite reduction in provisioning level noticeable during IFRS. The situation of Nigerian banks threatened by solvency risk use of LLPs for managerial discretions while attempting to increase profit was exemplified in the increase in ADLLP rather than TLLP. However, improvement was noticeable for risky Nigerian banks during IFRS. The managerial discretionary use of LLPs especially during IFRS was engendered by use of LLPs for capital management and earnings smoothing rather than earnings signalling as further revealed. This shows that adoption of International Financial Reporting Standards reduces reporting quality of Nigerian banks in their loan loss decisions.