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TABLE OF CONTENT: CHAPTER ONE INTRODUCTION 1.1
Background of the Study 1.2
Statement of the Research Problem 1.3
Objectives of the Study 1.4
Significance of the Study 1.5
Research Questions 1.6
Research Hypothesis 1.7
Conceptual and Operational Definition 1.8
Assumptions 1.9
Limitations of the Study CHAPTER TWO LITERATURE REVIEW 2.1
Sources of Literature 2.2
The Review 2.3
Summary of Literature Review CHAPTER THREE RESEARCH
METHODOLOGY 3.1
Research Method 3.2
Research Design 3.3
Research Sample 3.4
Measuring Instrument 3.5
Data Collection 3.6
Data Analysis 3.7
Expected Result CHAPTER FOUR DATA ANALYSIS AND
RESULTS 4.1
Data Analysis 4.2
Results 4.3
Discussion CHAPTER FIVE SUMMARY AND
RECOMMENDATIONS 5.1
Summary 5.2
Recommendations for Further Study Bibliography |
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CHAPTER
ONE |
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1.1
INTRODUCTION One mechanism that has
been widely used in worldwide organizations to monitor the financial
reporting process is the establishment of an audit committee comprising a
majority of independent directors. The existence of an audit committee could
improve the monitoring of financial reporting and internal control. This
could be done by bridging the communication gap between the auditors and
management and through strengthening the role of the internal auditors.
Although audit committees have been in existence for decades, there are
criticisms of the practices of audit committees and a large amount of
research have been undertaken to identify an ideal audit committee that would
act in the interest of shareholders (Abbott and Parker, 2000; Krishnan,
2005). Audit committees serve
as a bridge in the communication network between internal and external
auditors and the board of directors, and their activities include review of
nominated auditors, overall scope of the audit, results of the audit,
internal financial controls and financial information for publication (FCCG,
1999). Indeed, the existence of an audit committee in a company would provide
a critical oversight of the company’s financial reporting and auditing
processes (FCCG, 1999; Walker, 2004). Audit committee could
also enhance auditor independence. Knapp (1987) discovered that an audit
committee is more likely to support the auditor rather than management in
audit disputes and the level of support is consistent across members of the
committee, regardless of whether the member is in a full-time or part-time
position, such as managers,
academicians and retired partners. In addition, audit
committees could play a role in selecting auditors, determining their
remuneration and in the dismissal/retention of auditors. Goldman and Barlev
(1974) pointed out that audit committees could observe the financial
reporting process and provide recommendations in the selection of auditors,
negotiation of fees and termination of external auditors, which would
ultimately diminish management’s power over the auditor. An audit committee
is anticipated to ensure that a business organization has sufficient internal
controls, proper accounting policies, and independent external auditors that
will prevent the incidence of fraud and promote high quality and timely
financial statements. 1.2 STATEMENT OF RESEARCH PROBLEM Audit committees are by reference to relevant
Sections of CAMA 1990 expected to bridge the expectation gap in providing a
means by which the opinion expressed by auditors on a firm’s financial
statement can be seen to be unbiased and independent. It is argued that the
presence of Audit Committees is likely to lead to unnecessary rift between
shareholders and directors as well as management and auditors. Also, were the
managing director is a very influential member in the board and succeeds in
hijacking authority from others, the audit committee would have no choice but
to dance to his tune, given the composition of the audit committee of equal
number of directors and representatives of the shareholders of the company
subject to a maximum of six (6) members. This makes the appointment of the
committee unnecessary. In view of the above, the study intends to find
answers to the following questions: 1.
How relevant
is the establishment of audit committee to the financial reporting of
organisations in Nigeria? 2.
Does the frequency of audit committee
meetings in a given financial reporting year determine to a large extent, the
effectiveness of that audit committee? 3.
How
effective are audit committee composition of equal number of directors and
representative of shareholders? 1.3 OBJECTIVES OF THE STUDY The basic objective of this study
among others is to evaluate audit committees to financial reporting in
contemporary Nigeria. Moreso, for the purpose of clarity, simplicity and
avoidance of ambiguity, this study intends to; 1.
Find out
the relevant of the establishment of audit committee to the financial
reporting of organisations in Nigeria. 2.
Examine whether the frequency of
audit committee meetings in a given financial reporting year determine to a
large extent, the effectiveness of that audit committee. 3.
Verify how
effective are audit committee composition of equal number of directors and
representative of shareholders. 1.4
RESEARCH HYPOTHESIS The following hypotheses have been formulated to
serve as a base for this research; Hypothesis I Ho: The establishment of
audit committee is not relevant to financial reporting of organisations in
Nigeria. H1: The
establishment of audit committee is relevant to financial reporting of
organisations in Nigeria. Hypothesis II Ho: The frequency of audit committee meetings
in a given financial reporting year does not determine to a large extent, the
effectiveness of that audit committee. H1:
The frequency of audit committee
meetings in a given financial reporting year determines to a large extent,
the effectiveness of that audit committee. Hypothesis III Ho: There
is no significant relationship between audit committee composition of equal
number of directors and representative of shareholders. H1: There
is a significant relationship between audit committee composition of equal
number of directors and representative of shareholders. 1.5
SCOPE OF THE STUDY This research work is an empirical study of audit
committees to financial reporting in Nigeria. The population of the study is
Nigeria, while the sample is some selected companies in Benin City, Edo
State. This study will involve assessing the effectiveness of audit
committees and financial reporting in Nigeria. It will also look at the
performance of audit committees in Nigeria. 1.6
SIGNIFICANCE OF THE STUDY This research work
on its conclusion, together with whatever solution or findings that may arise,
will prove useful to some particular group of persons or otherwise for
various reasons in accordance with their varying needs. Beneficiaries
-
Stakeholders:
This study will be important and
beneficial to stakeholders of organisations to know the essence of the audit
committee and financial reporting in Nigeria. -
The
Government: It will acquaint the government of
the importance of audit committee and financial reporting and how it should
be properly managed. -
The
public: This study will help to restore the
lost confidence of the public as regard audit committee and financial
reporting in Nigeria. -
Academic/future
researcher: Both academic and other future
researchers in this similar subject matter will find it a useful source of
learning and research. |
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