AMJD Volume. 10, Issue 1 (2021)

A quality audit serves as a means to uncover errors, spurious, and manipulations, a signal of the credibility of corporate financial statements. Reports of systemic failure and conflicting findings by scholars on the financial health of Nigerian Deposit Money Banks (DMB) raised some queries on its audit report. This study examined the effects of Audit Quality Variables (AQV) on Earning Response coefficient (ERC) of Quoted Deposit Money Banks in Nigeria. Secondary data were used as obtained from the financial report of selected banks purposively. Representative variables employed for Audit Quality in the study are Audit Firm Size (AUDS), Auditors Independence (AUDIN), and Non-Audit Services (NAS) with ERC measure using Unexpected Earnings (UE). Mean Ranking Analysis was used to evaluate determinants of Audit Quality of DMB and Ordinary Least Square Regression was used to evaluate the influence of Audit Quality on Earnings Response Coefficient of DMBs in Nigeria at 0.05 level of significance. Findings revealed that AUDS (0.667), AUDN (10.2), and NAS (2.5) constitute the major determinants of audit quality variables of DMB. Result of analysis (t = 1.30, p = 0.003; t =1.21, p = 0.004; and t = 1.95, p = 0.001) further showed that all identified audit quality variables such as AUDS, AUDIN, and NAS had a positive significant influence on ERC.The study, therefore, recommended that DMBs in Nigeria should employ the services of big audit firms whose policy considers audit quality variables to improve audit quality practice that will pave way for greater earnings quality and lower earnings management.