Abstract:
The obvious limitations in corporate governance of companies and the cases of accounting and audit failures have increased the concern of investors about corporate reports. For that reason, the need for the establishment of Audit Committees to ensure the credibility of financial statements cannot be over emphasized. This study seeks to evaluate the impact of Audit Committees (AC) on the performance of Quoted Manufacturing firms in Nigeria. The specific objectives of the study are to evaluate the impact of components of Audit Committees (independence and meetings) on return on assets. The study employs secondary data which was obtained from the examination of the annual report for five years of five Quoted Manufacturing companies in Nigeria. The analysis of the empirical data was done using ratio analysis, regression analysis, correlation, and other statistical instrument to determine the rate at which the independence and frequency of meetings of audit committees have affected the performances of these companies. The study reveals that there is a negative and significant impact of the composition of the audit committee on financial performance. It also reveals that there is a positive and significant impact of audit committee tenure on financial performance thus, the chances of fraud because of this are also reduced as well as the cost of debt. The study concludes that there is a weak negative relationship between the meeting frequency of the audit committee and financial performance of Quoted manufacturing firms. The study, therefore, recommends that there should be strategy towards creating enabling environment for improve the sustainability of Audit Committee for enthronement of good corporate governance practices.
