Determinants of Audit Quality amongst Small and Medium Sized Audit Firms in Nigeria: An Analyses of the Impact of Audit Fee, Client Retention, and Market Expansion Drives
Ogoun, Stanley. PhD; Owota, George Perelayefa

Abstract
The paper examined the effect of audit fee, client retention, market expansion drives in small and medium-sized audit firms on audit quality, and the long run relationship. The study was conducted against the background of the empirical evidence in the literature that audit firm size and audit fee are key determinants of audit quality. The study obtained data through a structured questionnaire administered to panel of small and medium-sized audit firms in Nigeria. The data so obtained was analyzed using the E. View econometric software. It was observed that audit fee and market expansion drives impact positively on audit quality amongst this category of firms, while client retention strategies impacts negatively on audit quality in the short run. However in the long run, it was observed that all three variables impact positively on standard audit practice, as the need to retain clients becomes dependent upon on a firm’s capacity for improved client satisfaction via the quality of audit services rendered. Thus, it is evident that the impact of the variables interrogated in this current study on audit quality is not audit firm size dependent. Therefore the paper recommends the need for small and medium-sized audit firms to strive to offer competitive services that are in tune with global best practices and in conformity with International Auditing Standards (IAS) to enhance their growth. This would enhance their continuous relevance in the emerging and expanding audit market in Nigeria.

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