study examines audit committee and corporate reporting in Nigeria. The broad
objective of the study is to ascertain if there is any relationship between
audit committee roles and the quality of financial report in Nigeria and also
to examine if the quality of audit committee is associated with the quality of
internal control in Nigeria business environment. The primary source of data
collection was adopted in this study. The random sampling method was used to
select 78 respondents which serve as the sample size of the study. The
chi-square statistical tool was used to test the stated hypotheses. The
findings revealed that there is a relationship between audit committee roles
and the quality of financial report in Nigeria and that the audit committee
members have no separate equity holding. It was concluded that audit committee plays a very pivotal role not only in
assisting and coordinating audit related activities in the firm but also in
ensuring high audit quality. The study recommends among others that audit
committee member should be separated from equity ho1ders and that audit committee should be diligent in their duty by
meeting frequently to deliberate on audit matters so as to enhance audit
Title Page i
Table of Contents vi
Chapter One: Introduction 1
to the Study 1
of Problem 5
of the Study 6
of Hypotheses 7
of the Study 8
of the Study 8
of the Study 9
of Terms 10
Two: Review of Related Literature
2.1 Introduction 13
Audit Committee 15
Committee Report 17
Financial Statements 20
Committee and External Auditors 22
Committees Independence and Corporate
Committee and Corporate Reporting 31
2.10 Factors Influencing Corporate Reporting 35
2.11 Problem associated
with Audit Committee in
Corporate Reporting in Nigeria 38
Chapter Three: Research Method and
of the Population of the Study 40
of Data Collection 41
of Data Presentation 42
of Data Analysis 42
Chapter Four: Data Presentation, Analysis and
of Data 44
Five: Summary of Findings, Conclusion and
5.1 Introduction 63
5.4 Recommendations 65
1.1 Background to the Study
the years, public organization has experienced monetary loss due to fraud, lack
of documentation of statement of fund. This occurs as a result of lack of
auditor and audit committee in corporate organization.
(2013) showed that audit
committee quality, characterized on having more financial accounting expertise
and non-financial accounting expertise, is an important determinant of internal
control weaknesses. In addition, he found out that auditor independence
calculated as the ratio of audit fee to total fee, is also a determinant of
internal control weaknesses.
is the examination of records and reports of a company in order to check that
what is provided is relevant and accurate. That is to say, it asset and liabilities
are properly recorded which lends to the preparation of the financial statements.
This assessment is done through two methods. Firstly, by assessing internal
control procedures by checking the consistence of the book.
(2011) considered an audit as the examination of an organization financial statement by an auditor to show the
evidence from which the final revenue account and financial statement of an organization
have been prepared, in order to ascertain that they present a true and fair
view of the summarized transactions for the period under review and of the financial
statements of the organization at the end date, thus, enabling the auditor to
has a significant effect to firms, it helps to determine whether the overall
financial statement is presented fairly in accordance with the established
criteria, the extent to which rules, policies, laws audit and tracing funds or
assets identification and recovery, investigating the existence, nature.,
extent and identification of employee who misappropriate asset.
a private organization, auditing is done by an internal and external auditors
as it deem fit by the organization (owners) of the firms. Whereas in
public/corporate organization, the audit committee is been set up to examine
the financial transaction of the organization before it is been reported to the
board of directors of the comparing at an annual meetings.
(1990) required all public/corporate organization to constitute audit committee
as a means of ensuring the independence and effectiveness of external auditors,
the committee is defined as a committee of directors, of a company whose
reports/statement before submission to the board of directors.
to section 359 (4) of the Company and Allied Matter Acts (1990) stated that the
audit committee shall consist of an equal number of the company subjects to
maximum of six (6) members. Their functions are to examine the auditors report
and make recommendation from there on the annual general meeting as it may
term audit tenure has created some expectation gap this gap has led to failure
of the auditor, to carryout is duty effectively. This is due, to the fact that
the expectation of the auditors are not met because of the familiarity that
exist between the auditors and their clients, this familiarity has made the
auditors to fail in their area of independence, credibility and confidentiality
because during long term audit tenure, auditors focus on non-audit service than
audit services, and this led to many corporate scandal.
a nutshell, the relevant of audit committee is to guide, direct and provide the
company/corporate organization the trend of development of the company through
corporate reporting and to direct any form of weakness in the part of company’s
internal control system and accounting system.
of markets has meant that financial statements are increasingly used by foreign
inventory and analysis, hence clear labeling of the particular accounting and
auditing framework is essential. To the extent, audit committee is been set to
monitor implementation of recommendation from external and internal audit
functions. The audit committee scrutinizes the recommendation and the
implementation given to the board of corporate reporting.
the research study, on attempt is made to look at the extent to which audit of
the committee have contributed to the independence of the auditors. Also to
carry out an evaluation of the relevant of audit committee to corporate
reporting in Nigeria
1.2 Statement of Problem
study seeks to show light on the relevance of audit committee to corporate
reporting in Nigeria using Guinness Nigeria Plc as the case study. The problem
encountered by the audit committee can be summarized as; low moral and the inactive
attitude of the auditors when carrying out their duties, political interference
and instability, overstaffing, bribery and corruption.
1.3 Research Questions
1. To what extent is audit committee roles
related to the quality of financial report in Nigeria?
2. To what extent is the quality of audit
committee related to the quality of internal control in Nigeria business
3. Does audit committee members have separate
1.4 Objective of the Study
main objective of this study is to relate the role of audit committee to corporate
governance. The specific objectives are;
1. To ascertain if there is any relationship
between audit committee roles and the quality of financial report in Nigeria.
2. To examine if the quality of audit
committee is associated with the quality of internal control in Nigeria
3. To find out if audit committee members have
separate equity holding.
HO: There is no relationship between audit
committee roles and the quality of financial report in Nigeria.
is a relationship between audit committee roles and the quality of financial
report in Nigeria.
The quality of audit committee is not
associated with the quality of internal control in Nigeria business
The quality of audit committee is associated with the quality of internal
control in Nigeria business environment
audit committee members have a separate equity holding.
The audit committee members have no
separate equity holding.
1.6 Significance of the Study
The result of this research will be helpful for:
Amplify the need for audit committee
to corporate reporting in Nigeria.
Identify problems associated with
audit committee to corporate reporting in Nigeria in Nigeria society.
Fund solution to the problems
associated with audit committee to comporting in Nigeria.
Services as a basis for further
research work on evaluation of relevance of audit committee to corporate
reporting in Nigeria.
of the Study
study is within the shoes of Guinness Nigeria Plc: Although the population of
the sector is high enough to represent the entire Nigeria brewery beer industry,
further research would need to be conducted in other sector for a more valid
and efficient generalization to be established. For effective result, a sample
size of 78 was used.
1.8 Limitations of the Study
The study is faced with some constraints
which may likely affect the generalization of findings; the constraints include
the following below:
Coverage: Factor that may likely affect the work is the issue
of investigating all accounting firms in the country. Due to the spread of
accounting firms all over major cities in the country, the researcher could not
be able to cover the whole areas.
of sourcing for material: The research was faced with
problems of getting current materials, textbooks, journals, seminar papers in
relation with this research topic. In the final analysis most interviewed and
investigated could not give some vital information that would have acted as
ingredients in the work.
problem of retrieving the questionnaire: Some questionnaires
issued to respondents were lost during the attitudes of the respondents to
disclose their personal information.
1.9 Definition of Terms
the purpose of this study, the following terms have been used as defined here:
1. Audit: Is the
examination of all relevant records and reports of a company in order to check
that what is provided is relevant and accurate
Auditor: This is the person(s) who
examine all relevant document, reports and records of finance prepared by the
company’s accountant or department to verify the reliability, adequacy and
accuracy of the reports prepared by the department.
is the act of proper checking of all records, document and the financial
statement of a company and tracing it asset and liabilities to concertinaed
that it corresponds with what is written in documentation.
This is the act of caring out finding to ascertain the correctness of a report
the act of relating or interpreting the finding gathered from the investigation
of a given phenomenon or statements.
Limited Company: This
is company made up of at least seven members and unlimited member as
shareholders. The numbers of shareholders are restricted only by the member of
Auditor: These are made up of the company employees whose area is to carry
out the auditing of company’s record, assets and liabilities of the company
over a given period of time.
is an independent person employed by a company shareholder to carry out
investigation over the prepared documents and statement of account, previously
audited by company internal auditor to ascertain correctness and base his
opinion on fairness and accuracy of the financial statement.
9. Financial Statement: They
are report, which summaries the financial position and operating result of business.
This report comprising of balance sheet, income statement, financial summaries,
cash flow statement, notes on the account.
controlled by or depending on another. These external auditors exercise when
examine financial statement and other relevant document and when forming his
11. Opinion: What the auditor think about a financial
statement examine by him.