Audit Committee Attributes and Audit Quality: A Benchmark Analysis

Abstract

This study examined audit committee attributes and audit quality with emphasis on the specific requirements of the 2011 SEC code. The study applied the deductive approach via the expost facto research design and the Binary probit regression model in analyzing the various hypotheses put forward in study. Data used for the study were gathered for 150 firm-year observations from the annual reports of quoted companies on the floor of the Nigerian Stock Exchange. Findings from the study revealed that audit committee size, frequency of meetings, number of expertise and overall effectiveness all have a positive relationship with audit quality. However, only size and overall effectiveness was significant in their relationship. The study recommends that since the significant positive nature of audit committee effectiveness show that four attributes jointly account for effectiveness, firms are encouraged to establish audit committees that have all these attributes. Furthermore, the requirement of having a 6-member audit committee is sound and empirically proven to aid audit quality. Therefore, firms yet to subscribe to these should hasten up, while sanctions should be made for firms that do not.

Corporate diversity and corporate social environmental disclosure of listed manufacturing companies in Nigeria

“…Corporate diversity has so much influence on the quality of the board (Kruger, 2007;Osariemen et al, 2018). Diversity would foster conflict of interest, different opinion, and knowledge, but all these shortfalls are considered ideal for a good board composition aimed at providing quality and value of organization decision-making process geared toward improving the level of environmental disclosure (Carter, Simkins, & Simpson, 2003;Jackson, Joshi, & Erhardt, 2003).…”

The Factors Affecting Financial Reporting Reliability: An Empirical Research of Public Listed Companies in Thailand

“…Ma and C. Ma (2011) and Moeller (2011) concluded that the basis of COSO framework consists of five dimensions including the control environment, risk assessment, control activity, information and communication, and monitoring. Prior accounting research revealed that audit committee effectiveness is associated with financial reporting reliability (Asiriuwa, Aronmwan, U. Uwuigbe, & O. R. Uwuigbe, 2018;Kamolsakulchai, 2015;Klai, 2011;Schneider, Gramling, Hermanson, & Ye, 2009;Ashbaugh-Skaife, Collins, & Kinney, 2007). Hasan et al (2014), Spatacean (2012), and Jokipii (2010) suggested that audit committee effectiveness is providing reasonable assurance regarding the reliability of financial reporting.…”

“…Audit committee effectiveness refers to effective team of audit committee which is set and designed to prevent fraud in financial statement, prevent assets loss, and conduct its operation in an efficient and effective manner (Asiriuwa et al, 2018;Johnson et al, 2012;Jokipii, 2010;Altamuro & Beatty, 2010). Asiriuwa et al (2018) revealed that audit committee attributes include audit committee size, frequency of meetings, number of expertise, and overall effectiveness. Audit committee effectiveness is measured using three-item scale modified from Asiriuwa et al (2018), Johnson et al (2012), Jokipii (2010), and Altamuro and Beatty (2010).…”

“…Asiriuwa et al (2018) revealed that audit committee attributes include audit committee size, frequency of meetings, number of expertise, and overall effectiveness. Audit committee effectiveness is measured using three-item scale modified from Asiriuwa et al (2018), Johnson et al (2012), Jokipii (2010), and Altamuro and Beatty (2010).…”

“…Audit firm quality refers to Big 4 audit firms that are higher concentration of client's industry expertise, client experience, audit manager involvement, audit committee involvement, and skepticism (Asiriuwa et al, 2018;Tepalagul & Lin, 2015;Samelson et al, 2006;Francis, 2004;Wooten, 2003;Behn et al, 1997;Sutton, 1993;Carcello et al, 1992). Audit firm quality is measured using three-item scale modified from Asiriuwa et al (2018), Behn et al (1997), and Carcello et al (1992).…”