Effect of Audit Quality on Sustainability Reporting in Local Government

Abstract

This study examines how audit quality affects sustainability reporting (ESG disclosures) in local government institutions throughout Ghana. It addresses the roles of auditor independence, auditor competence, audit committee effectiveness, and audit tenure in order to enhance transparency and accountability in public sector reports. The methodology was quantitative, involving 180 respondents across metropolitan, municipal, and district assemblies. Structural Equation Modeling (SmartPLS 4.0) was used to test the hypothesized relationships between the variables. After analysing the results it could be seen that auditor independence (β = 0.28, p < 0.01) and audit committee effectiveness (β = 0.35, p < 0.001) significantly affect ESG disclosure quality. On the other hand, auditor competence does have a (moderate) influence (β = 0.17, p < 0.05). Audit tenure was found to have no statistical significance. The model accounts for 62% of the variance in sustainability reporting (R² = 0.62). Quality audits improve transparency and accountability on sustainability. These results offer policy implications on improving audit governance and sustainability frameworks in Ghana’s local government sector.