The effect of audit committee characteristics on compliance with IFRS for related party disclosures

Abstract

Purpose The purpose of this paper is to examine the effect of audit committee (AC) characteristics (size, independence, the number of meetings and expertise) on compliance with International Financial Reporting Standards (IFRS) for related party disclosures (CRPD) in the South African context. Design/methodology/approach This paper is based on an analysis of the consolidated financial statements of 120 non-financial firms listed on the Johannesburg Stock Exchange (JSE) for the period 2012 to 2014. Panel regressions have been used. Findings The findings of this paper reveal that CRPD is positively influenced by AC independence. However, AC size and the number of AC meetings do not affect CRPD. Regarding expertise, the authors find that there is a positive and significant relationship between CRPD and have combined industry expertise with accounting and financial expertise. However, while accounting expertise by itself is associated with CPRD, industry expertise by itself is not associated with CRPD. Originality/value To the best of the authors’ knowledge, there are no empirical studies that have addressed the effect of AC characteristics on compliance with IFRS for CRPD.

Corporate Governance, Internal Audit and Profitability: “Evidence from P.I.G.S. Countries”

“…It became clear that the integration of external members with financial / accounting training and experience in the audit committee leads to higher performance. Similarly, according to Aldamen et al (2012) and Sellami and Fendri (2017), the higher the percentage of experienced executives that compose an audit committee, the higher the performance is expected to be. It, therefore, appears that financial / accounting expertise positively affects a company's profitability in the market.…”

Corporate Governance and Firm’s Compliance on Disclosure of International Financial Reporting Standards–Indonesian Evidence

“…Additionally, the independence of audit committee had been argued as an obligatory requisite for an audit committeein order toaccomplish its responsibility objectively [24,1]. Previous research performed by Sellami and Fendri find a positive association between the independence of audit's committee and the level of IFRS disclosure compliance [57], whereas Al-Akra, Eddie, and Ali find that audit committee's independence positively affects IFRS disclosure compliance level [6]. The finding of Al-Akra et al was confirmed by Juhmani who finds that the audit committee's independence positively affects IFRS disclosure compliance level [38].…”

Controlling shareholders, audit committee characteristics, and related party transaction disclosure: Evidence from Indonesia

“…The level of related party transactions disclosure in Indonesia is 74.20 percent (Utama & Utama, 2014). Meanwhile, the related party transactions disclosure level in South Africa is 77 percent (Sellami & Fendri, 2017). While Elkelish (2017) finds that the level of related party transactions disclosure in the United Arab Emirates is 12 percent, based on the evidence above, it can be concluded that there are no studies that uncover the level of related party transactions disclosure reaching the percentage of 100 percent; whereas the disclosure of related party, the transaction is a mandatory process in which the level of disclosure must be 100 percent.…”

“…Consequently, information asymmetry can be reduced. Effective audit committees are expected to improve the quality of financial statement disclosure including related party transaction disclosure (Haldar & Raithatha, 2017;Sellami & Fendri, 2017). The formation of the audit committees in Indonesian public companies has been obligated since 2004, which was regulated in Decision of the Chairperson of Bapepam Number: KEP-29/PM/2004.…”

“…Research audit committee and disclosure in international context i.e. audit committee on intellectual capital disclosure (Li, Mangena, & Pike, 2012;Haji, 2015), ethical disclosure (Othman et al, 2014), voluntary disclosure (Mensah, 2018), and related party transaction disclosure (Sellami & Fendri, 2017). Furthermore, research Controlling shareholders, audit committee characteristics, and related party transaction disclosure: ...…”