Audit Independence and Corporate Governance: Addressing the Challenges in Public Sector

The effectiveness of public sector institutions depends largely on the strength of their audit and governance mechanisms. This study examines the role of audit independence in enhancing auditor impartiality and autonomy, as well as its influence on the effectiveness of corporate governance in public sector organizations. Adopting a quantitative research design, the study draws on Agency Theory and Institutional Theory to explain the relationship between audit independence mechanisms and governance outcomes. Data were collected through structured questionnaires administered to 286 staff members of public sector institutions within Ido Local Government, Oyo State, Nigeria, selected using stratified random sampling. Descriptive statistics and regression analysis were employed to analyze the data using SPSS. The findings reveal that audit independence mechanisms have a significant positive effect on auditor impartiality and autonomy, explaining 41.4% of the variation in auditors’ objectivity. The results also indicate that audit independence significantly influences the effectiveness of corporate governance, accounting for 45.2% of the variation in governance outcomes such as accountability, fraud reduction, and public trust. Descriptive analysis further shows that corporate governance frameworks in the public sector align moderately to highly with established governance principles, although weaknesses persist in oversight enforcement and consistency of implementation. The study concludes that strengthening audit independence is critical to improving governance effectiveness and accountability in public sector institutions. The findings provide empirical evidence to support governance reforms aimed at enhancing auditor autonomy, strengthening oversight mechanisms, and promoting transparency in public resource management. The study contributes to public sector governance literature and offers policy-relevant insights for auditors, public administrators, and policymakers seeking to reinforce institutional accountability and public trust.