Audit Committee, Internal Control and Financial Reporting Quality of Listed Service Companies in Nigeria

AKANDE, Faith Yetunde (2022) Audit Committee, Internal Control and Financial Reporting Quality of Listed Service Companies in Nigeria. Masters thesis, Landmark University, Omu Aran, Kwara State.

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Abstract

As a way of curbing corruption and unethical practices that usually lead to corporate failure, organizations are expected to inculcate the habit of quality financial reporting in their operation procedures. The study examined the relevance of audit committee and internal control on financial reporting quality of listed service firms in Nigeria between the period of 2010 and 2020. Audit committee size, meeting, composition and female members were used as proxy for audit committee; control activities, risk assessment, monitoring, information and communication were used as proxy for internal control while accruals was employed as proxy for financial reporting quality. Furthermore, questionnaire was used to collect data regarding the internal control while audit committee data was collected through the annual reports of the listed service companies and a multi-stage sampling technique was used to determine a sample size of 50 from 74 listed service firms on the Nigerian Stock Exchange while 189 survey questionnaire statement was returned from 250. A mixed method approach of quantitative and qualitative analysis was used to analyse the data to determine the nature of relationship that exist between the explanatory and explained variables of the study. The study also carried out the descriptive statistics and test for outliers to establish the stationarity of data collected but Cronbach’s test was employed to establish the reliability of the primary data collected. Multiple linear regression analysis was adopted to test the hypotheses through the use Statistical Packages for Social Sciences (SPSS 23). The result of the test of hypotheses showed that audit committee size, female members, control activities, risk assessment and monitoring have significant influence on accruals, while audit committee meeting, composition, information and communication have insignificant relationship on accruals. Therefore, the study concludes that the relevance of audit committee characteristics and internal control components have significant relationship with quality financial reporting. This study recommends that 50%of the audit committee members should be female. Risk assessment, control and monitoring activities of the internal control should be done more frequently to be able to identify both internal and external hostile as they occur.

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