The Influence of Audits on Tax Compliance Among Manufacturing Firms in Ogun State

This study investigates the influence of tax audit activities on compliance behaviour among manufacturing firms operating in Ogun State, South West Nigeria. Ogun State hosts one of Nigeria's largest concentrations of light and heavy manufacturing enterprises, benefiting from proximity to Lagos and well-developed industrial estates. Tax audits by the Federal Inland Revenue Service and state revenue agencies are intended to deter under-reporting and promote accurate self-assessment. However, the deterrent and corrective effects of audits on compliance remain empirically understudied at the state level in Nigeria. A descriptive survey design is employed, drawing on primary data from 120 manufacturing firms in the Sagamu, Ota, and Abeokuta industrial corridors. The questionnaire assesses audit experience, changes in compliance behaviour post-audit, perceived fairness of audit processes, and associated compliance costs. Secondary data from FIRS audit outcome statistics supplement primary findings. Analysis employs descriptive statistics and logistic regression. The study anticipates that firms subjected to rigorous audits exhibit higher subsequent compliance, but that overly aggressive audit practices increase compliance costs and adversely affect investment decisions. Recommendations include adopting risk-based audit selection frameworks that minimise disruption to genuinely compliant firms while concentrating resources on high-risk taxpayers. Improving the transparency and consistency of audit processes is also proposed. Keywords: tax audit, compliance, manufacturing firms, Ogun State, deterrence.