ABSTRACT

The study determined the effect ofAuditors’ report on financial performance of banking sector in Nigeria. The specific objectives are to; determine the effect of audit quality on return on asset, ascertain the effect ofauditfirm size on return on equity, determine the effect of auditors’ report on profit after tax of banks in Nigeria. The study adopted ex postfacto research design and extracted data from cross section of commercial banks over a period of 7 years, audit quality, audit firm size werejointly used as proxiesfor audit report -while return on asset, return on equity and profit after tax -were employed as proxyforfinancial performance. Based on the nature of data extracted, the panel leas squares method of data analysis -was engaged to investigate the relationship ofthe variables. It wasfound that auditors’ report has no significant effect on return on assets of banks, auditors’ report has significant effect on return on equity of banks, there is significant effect of auditors’ report on profit after tax of banks. The study therefore concludes that thefinancial crisis amongstsome notablefirms has raised doubts about the credibility offinancial reporting hence investors have made the provision of high quality financial reporting by external auditors a requisite. Based on the findings it -was recommended that; banks should continue to engage reputable audit firms so as to enhance their procedures and banking operations, managements ofbanks should ensure that various organs that enforce compliance are not compromised to quality reporting, audit firms should always exhibit professionalism in conducting their auditfunction so that reportedprofits reflects thefinancialposition ofbanks.