AUDIT EFFORTS AND LITIGATION RISK: A STUDY OF SELECTED FIRMS IN NIGERIA

Abstract

Audit failures and allegations of professional negligence have increasingly brought the quality of audits and the potential legal consequences audit firms face into the spotlight. The study examined audit efforts and litigation risk of selected firms in Nigeria. Design ex-post-facto was used. Two hypotheses were developed and evaluated at a significance level of 0.05. The study employed secondary data from published financial records of sampled firms between 1999 and 2022. A sample of 10 audit firms were used. E-views version 9 was used to do an ordinary least square regression analysis on the collected data. The results showed a substantial correlation between the number of audit hours and the Nigerian businesses' lawsuit risk. It was recommended that audit firms should intensify their efforts in terms of the hours they put into auditing jobs to ensure that mis presentation of figures in financial reports are completely eliminated.