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AUDIT COMMITTEE ATTRIBUTES ON AUDIT FEES IN NIGERIA.

  • Type:Project
  • Chapters:5
  • Pages:44
  • Methodology:Ordinary Least Square
  • Reference:YES
  • Format:Microsoft Word
(Accounting Project Topics & Materials)
AUDIT COMMITTEE ATTRIBUTES ON AUDIT FEES IN NIGERIA.
CHAPTER ONE

INTRODUCTION
1.1 Background of the study
The audit fee to the remuneration for audit services by the external auditor that is directly associated with the audit function. It may be distinguished from non audit fee which relates to payment for other services other than that related to the audit function such as human resources management, tax advisory services amongst others. Since the early work on the audit fee by Simunic (1980), research has been stimulated to examine the role of the audit committee characteristics in audit determination (Abbort, Parker, Peters, & Raghunandan, 2003). The Canadian institute of chartered accountants (CICA), (1992, 20) defined audit committee as a committee of directors of an organization whose specific responsibility is to review the annual financial statement before submission to the board of directors.
The relationship between audit committee and audit fee is a complex one, stemming from both the demand for audit services by the client and the supply of audit services by the external auditors. (Collier & Gregory, 1996).Generally, there are two perspectives to the relationship to the relationship; the demand side and the supply side. From the demand side, the presence of an audit committee may have a positive association with audit fees by ensuring that audit hours are not reduced to a level that compromises the quality of the audit. Hence, firms with effective audit committees demand additional assurance from their auditor to preserve their reputation and avoid potential litigation. (Carcello, Hermanson, Neal,& Riley 2002) resulting in a higher audit fee. From the supply side, the audit committee’s side involvement in strengthening internal controls may lead the external auditor to reduce the assessed level of control risk. As a consequence, the auditor’s reliance on internal controls should result in less substantive testing and, hence, a lower audit fee (Collier & Gregory, 1996). So, from the supply side perspective, auditors regard audit committees as an internal control mechanism that influences the nature and extent of audit testing. In firms with effective audit committees, auditors will reduce their audit risk assessment. They would consequently reduce their audit testing, leading to lower external audit fees.
1.2 Statement of Research Problem
The result of prior literatures emphasizes the relation between audit committee and audit fees effectiveness has been inconsistent. For instance, Carcello et al (2002), using US data from the early 1990s, found that board characteristics are associated with audit fees. In contrast, Abbort et al. (2003), using US data, provided evidence of a significant positive association between audit committee attributes and audit fees; though not all attributes were significant.
Sharma (2003), using Australian data, finds a significant positive association between audit fees and 3 way interaction between independence expertise and meeting frequency. However Sarkar, Hossain and Islamand (2009) find that non- executive in the audit committee has no impact on audit fees. Lee and Mande (2005) document that audit fees increase with audit committee’s independence and financial expertise while Vafeas and Waegelein (2007) report that audit fees increase with the size of the committee.
The polarity in findings as observed suggests that research into audit committee characteristics and audit fee determination is far from settled and hence, the needs for further investigation of the subject. In addition, we also find that while the impact of audit committee characteristics on audit fee determination has received considerable research attention from several countries e.g in Australia (Stewart, & Munro 2007) In the light of the above, the following questions were streamlined.
1. What is the relationship between audit committee independence and audit fee?
2. What is the relationship between audit committee size and audit fee?
3. What is the relationship between numbers of audit committee expertise and audit fee?
4. What is the relationship between numbers of audit committee meetings and audit fee?
1.3 Objectives of the study
The broad objective of the research is to examine the effect of audit attributes on audit fee. The specific objectives were to:
1. To find the relationship between audit committee independence and audit fee.
2. To examine the relationship between audit committee size and audit fee.
3. To investigate the relationship between numbers of audit committee expertise and audit fee.
4. To determine the relationship between numbers of audit committee meetings and audit fee.
1.4 Hypotheses
To enable us achieve the objectives of this study, the following hypothesis were stated in their null form.
1. There is no relationship between audit committee independence and audit fee.
2. There is no relationship between audit committee size and audit fee.
3. There is no relationship between numbers of audit committee expertise and audit fee.
4. There is no relationship between numbers of audit committee meetings and audit fee.
1.5 Scope of the study
This study adopted the use of panel data for 16 companies for the period of 2010 to 2013 from annual reports of selected quoted companies in Nigeria.  A sample size of sixteen (16) companies of the 186 listed equities was selected using the simple random sampling technique.
1.6 Significance of the study
This study will help investors gain insight into how audit committee attributes mechanism may influence audit fees in Nigeria. The research findings would be of importance to policy makers at national levels as the design policies aimed at enhancing the accounting profession through a better audit system. Student, and other scholars who wish to undertake further study on audit attributes will find literatures arising from this study to be of great value as it will be added to existing literatures.

AUDIT COMMITTEE ATTRIBUTES ON AUDIT FEES IN NIGERIA.

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Details

Type Project
Department Accounting
Project ID ACC1632
Price ₦3,000 ($9)
Chapters 5 Chapters
No of Pages 44 Pages
Methodology Ordinary Least Square
Reference YES
Format Microsoft Word

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    Details

    Type Project
    Department Accounting
    Project ID ACC1632
    Price ₦3,000 ($9)
    Chapters 5 Chapters
    No of Pages 44 Pages
    Methodology Ordinary Least Square
    Reference YES
    Format Microsoft Word

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