AUDIT INDEPENDENCE AND FAIR VALUE ACCOUNTING: NON-AUDIT FEES AND GOODWILL IMPAIRMENT

Abstract

This research paper investigated the relationship between audit independence and the use fair value accounting with specific focus on how goodwill impairment occasioned by fair value accounting practices is predicted by non-audits related fees paid to their auditors by listed manufacturing companies in Nigeria. Data for the research was collected from the audited financial reports of ten (10) manufacturing companies listed on the Nigeria Stock Exchange for a period of 10 years spanning from 2015 to 2024. The Panel least square (PLS) regression method was utilized to analyse the research data. Findings of the research showed that there was a negative relationship between audit firm independence and goodwill impairment occassioned by the use of fair value accounting methods in the valuation and disclosure of goodwill impairment. From the findings, it is comcluded that auditor independence cannot explain or predict goodwill impairment. The findings also showed that as much as 94% of the impairment in goodwill can explained or connected to variables which were not considered in this research. This is obviously a line of research that should be pursued in the future in order to determine the other factors that can be linked to goodwill impairment.