Effect of the Auditor's Expectation Gap and Client Communication Enhancement on the Financial Reporting Quality of Listed Industrial Goods Companies in Nigeria

The study examined the effect of the auditor’s expectation gap and client communication enhancement on the financial
reporting quality (FRQ) of listed industrial goods companies in Nigeria. Specifically, the study investigated the influence of the Audit
Responsibility Gap (ARG), Audit Performance Gap (APG), and Timeliness of Auditor–Client Communication (TIM) on FRQ. The study
adopted an ex post facto research design, using secondary data from 130 observations across 10 listed industrial goods companies
over a ten-year period from 2015 to 2024. Descriptive statistics, correlation analysis, variance inflation factor (VIF), Hausman test,
heteroskedasticity diagnostics, and panel regression analysis were employed to assess the relationships among variables. The
findings reveal that ARG has a positive and statistically significant effect on financial reporting quality, indicating that stakeholders’
understanding of auditors’ responsibilities enhances perceived reporting quality. APG has a positive but statistically insignificant
effect, suggesting that variations in auditors’ performance relative to expectations do not meaningfully influence reporting quality.
TIM has a positive and statistically significant effect, highlighting that timely and effective communication between auditors and
clients substantially improves financial reporting quality. In conclusion, the study confirms that enhancing auditor communication
and clarifying auditors’ responsibilities are key to narrowing the expectation gap and improving the credibility, transparency, and
usefulness of financial reports. The main recommendation is that auditors and regulatory bodies implement timely communication
strategies and stakeholder education programs to strengthen financial reporting quality in Nigeria’s industrial goods sector.