THE INFLUENCE OF AUDIT QUALITY ON THE FINANCIAL EFFICACY OF LISTED CONSUMER GOODS ENTERPRISES ACROSS SUB-SAHARAN AFRICA

Abstract

This study was undertaken to investigate the influence of auditor industry specialisation (AUDIDSP), audit report type (AUDTYPE), and discretionary accruals (DISAC) on the financial performance of listed consumer goods companies across Sub-Saharan Africa. Specifically, the study examines how these proxies of audit quality affect the return on equity (ROE) of selected firms in the region. A purposive sampling technique was employed to select six representative consumer goods enterprises, namely Nestlé Nigeria Plc, Unilever South Africa, Kenya Tea Development Agency (KTDA), Kasapreko Company Ltd of Ghana, Bakhresa Group, Tanzania, and Nile Breweries Ltd of Uganda. The study utilises time-series data spanning the period 2014–2024, extracted from the firms’ audited financial statements.The empirical analysis adopts Ordinary Least Squares (OLS) regression, complemented by econometric techniques including the Augmented Dickey-Fuller (ADF) test for stationarity and the Johansen Cointegration test for long-run relationships. Findings indicate that discretionary accruals (DISAC) significantly influence the disclosure of key audit matters, thereby affecting organisational financial performance. Conversely, auditor industry specialisation (AUDIDSP) and audit report type (AUDTYPE) appear to have a limited direct impact on ROE. The study concludes that enhancing the quality of audit processes and promoting effective communication between management and auditors can significantly improve the credibility of financial reports. Recommendations include fostering greater transparency and adherence to audit best practices, strengthening auditors’ awareness of intended disclosures, and encouraging management engagement with auditors to mitigate potential adverse effects on organisational performance.