The Effect of Audit Committee on Audit Quality


This study investigated the effect of audit committee on audit quality for a period of ten years (2007-2016). This research work was necessitated by the fact that quoted manufacturing companies on the Nigerian Stock Exchange has undergone many turbulent times caused by the crumbling interest of investors in quoted manufacturing companies with volatile stock prices.

This study adopted descriptive research design as it relied on secondary source of data extracted from the annual reports of fourteen quoted manufacturing companies. The population for this study was the Consumer Goods Companies listed on the Nigerian Stock Exchange. Data from the annual report were basically drawn from the statement of comprehensive income and statement of financial position.

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The data collected for this study were analyzed Linear Regression with the aid of Statistical Package for Social Sciences. Result from the analysis showed that that audit committee meetings (β= 0.33, t= 0.449, p˃0.05), financial expertise (β= -0.318, t= -0.765, p˃0.05), tenure (β3= -0.031, t= -0.609, p˃0.05) and level of education (β4 = 0.063, t= 2.092 ρ>0.05) have no significant effect on audit quality.

The implication is that audit committees of these companies are yet to rise to their duties in terms of proper oversight function over the accounting and auditing functions of these companies. Since the tests revealed that audit committee does not have significant effect on the audit quality, it is recommended that the structure and duties of audit committee be reviewed for operational efficiency.


CHAPTER ONE: Introduction
1.1 Background to the Study
1.2 Statement of the Problem
1.3 Objective of the Study
1.4 Research Questions
1.5 Research Hypotheses
1.6 Significance of the Study
1.7 Scope and Limitations of the Study
1.8 Operational Definition of Terms
CHAPTER TWO: Literature Review
2.1 Conceptual Review
2.1.1 Concept of Audit Committee (AC)
2.1.2 Elements of Audit Committee
2.1.3 Functions of audit committee
2.1.4 Audit Committee and Its Qualitative Characteristics
2.1.5 Concept of Audit Quality
2.1.6 Measurement of Audit Quality
2.1.7 Audit Committee Size and Audit Quality
2.1.8 The relevance of audit quality to financial reporting
2.1.9 Auditor’s independence and audit quality
2.1.10 Firm Size and Audit Quality
2.1.11 Firm Profitability and Audit Quality
2.1.12 Accounting Ethics and Audit Quality in Nigeria
2.1.13 Financial Reporting
2.1.14 Global Economy Meltdown
2.2 Theoretical Review
2.2.1 The Agency Theory
2.2.2 The Institutional Theory
2.2.3 Stakeholder Theory
2.2.4 Positive Accounting Theory (PAT)
2.3 Empirical Review
2.3.1 Effect of Audit Committee Meetings on Audit Quality
2.3.2 Effect of Financial Expertise of Audit Committee on Audit Quality
2.3.3 Effect of audit Committee Tenure on Audit Quality
2.3.4 Effect of Level of Education of Audit Committee on Audit Quality
CHAPTER THREE: Research Methodology
3.1 Research Design
3.2 Population of the Study
3.3.1 Sampling and Sample Techniques
3.4 Source of Data
3.5 Re-statement of Hypotheses
3.6 Model Specification
3.7 Method of Data Analysis
CHAPTER FOUR: Data Analysis and Presentation
4.1 Introduction
4.2 Tests of Hypotheses
4.3 Discussion of Findings
CHAPTER FIVE: Summary, Conclusion and Recommendations
5.1 Summary
5.2 Conclusion
5.3 Recommendation
5.4 Suggestion for Further Studies




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