Effects of Audit Committee Financial Expertise on Audit Quality of Consumer Goods Companies in Nigeria

Abstract

Audit committee have a responsibility to ensure that the quality, reliability, credibility of the financial report as well as auditor's independence from their clients are not compromised through poor regulation and supervision of the auditing practice, Provision of non- audit services to the client, auditor's personal interest in the client's business among others. The purpose of this study is to investigate the effect of audit committee financial expertise on audit quality of consumer goods companies listed on the Nigeria stock exchange for the period of thirteen (13) years from 2008 to 2020. This study empirically reviewed several articles of previous related research and also reviewed a number of theories out of which resource dependence theory is adopted for this study. The study adopted ex-post facto research design and data was analyzed using panel regression techniques. Secondary data were sourced from the annual report of consumer goods companies. The independent variable is audit committee financial expertise while the dependent variable is audit quality proxied by audit report lag. The estimated statistical result shows that Audit committee financial expertise has a positive and significant impact on the Audit report lag, showing that the probability P-value is 0.037, which makes the null hypothesis to be rejected. Thereby this implies that the effect of Audit committee financial expertise on Audit quality of consumer goods companies using ordinary least square shows a positive and significant relationship and It is clear from the analysis that increase in audit committee with financial expertise will reduce audit report lag. The study therefore recommends that companies especially consumer goods companies should have more audit committee members with financial expertise so as to ensure timeliness of the annual financial encourage investors and other users of the financial report to rely on the published report.