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.
Highlights
Literature on audit quality is increasing as the time goes by
This study examined audit committee attributes and audit quality with emphasis on the specific requirements of the 2011 Security and Exchange Commission (SEC) code
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
Summary
Literature on audit quality is increasing as the time goes by. The reason for this may be hinged on the importance attached to it. Chadegani (2011) and Dang (2004) opined that auditor size is the most commonly used proxy for audit quality The popularity of this concept in literature can be traced to the American Institute of Certified Public Accountants (AICPA), who in 1967 recommended the establishment of audit committee boards in order to assist with reporting process. Based on the expectation of the codes of corporate governance in Nigeria specifying that at least one person must be able to read and interpret the financial statement, this study hypothesize that: H3: There is a significant relationship between the expertise benchmark for Audit committees in Nigeria and audit quality. This study hypothesize that: H4: There is a significant relationship between the audit committee effectiveness and audit quality
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