Auditing Systems and Financial Reporting Quality in Selected Ministries in Delta State, Nigeria

This study examined the relationship between auditing systems and financial reporting quality in selected ministries in Delta State, Nigeria. The study was motivated by persistent concerns regarding the credibility, transparency, and accountability of financial reporting within public sector institutions despite the implementation of various public financial management reforms in Nigeria. Specifically, the study investigated the effects of audit queries, audit monitoring quality, revenue performance, expenditure performance, International Public Sector Accounting Standards (IPSAS) compliance, and internal control weaknesses on financial reporting quality. An ex-post facto research design was adopted using secondary data obtained from audited financial statements, audit reports, budget performance reports, and other official government records from ten selected ministries covering the period 2019–2025. The balanced panel dataset comprised seventy ministry-year observations and was analysed using descriptive statistics and panel regression techniques in STATA Version 13. Diagnostic tests confirmed the absence of serious multicollinearity and first-order autocorrelation, while heteroskedasticity was addressed through robust estimation. The Hausman specification test supported the Random Effects Model, and the Robust Random Effects Generalized Least Squares (GLS) estimator was used for hypothesis testing. The findings revealed that audit queries and IPSAS compliance exerted significant positive effects on financial reporting quality, whereas internal control weaknesses had a significant negative effect. Audit monitoring quality, revenue performance, and expenditure performance did not significantly influence financial reporting quality. The study concludes that strengthening auditing systems remains essential for enhancing transparency, accountability, and the credibility of public sector financial reporting. It recommends strengthening audit review mechanisms, improving compliance with IPSAS, reinforcing internal control systems, and ensuring the timely implementation of audit recommendations across government ministries. These findings provide empirical evidence that can support ongoing public financial management reforms in Delta State and other sub-national governments in Nigeria.