ASHU FABRICE ENOW (Ph.D)

Department of Accounting,

Faculty of Social and Management Sciences

University of Buea, South West Region, Cameroon

E.MAIL: [email protected]/ [email protected]

Abstract

The study identified the determinant of audit fees in the Nigeria manufacturing sector, by examining the effect of Z score (proxy for financial distress) and firm size as control variable on audit fees. In order to gather secondary data from the financial statements of forty-six industrial companies listed on the Nigerian Exchange Group (NGX), the study used an ex post facto research design for a period of ten years (2013 to 2022). The researcher used panel data and multi-level mixed-effect regression to estimate the specified model based on 460 firm-year observation extracted from the financial statements of the units of analysis. The model estimation results show that while firm size has control variable has a negative and non-significant effect on audit fees, financial distress has a positive and non-significant effect in audit fees. Based on the findings, it was concluded that financial distress and firm size are not determinant of audit fees in the Nigeria manufacturing sector. It was therefore recommended amongst others that manufacturing companies in Nigeria should implement robust monitoring mechanisms to detect early signs of financial distress and take proactive measures to mitigate risks. This can help prevent potential audit fee increases associated with escalating distress levels.

Key Words: Audit fees, financial distress, Firm size.