EFFECT OF AUDIT COMMITTEE ATTRIBUTES ON AUDIT REPORT TIMELINESS OF LISTED FINANCE SERVICE FIRMS IN NIGERIA

Abstract
This study explores audit committee attributes that influence the timeliness of auditor’s report of a sample of 29 finance service firms listed on Nigerian Stock Exchange for a period of five years (2014-2018). The study specifically investigates the effect of audit committee frequency of meeting and financial expertise on timeliness proxied by audit report lag. Regression analysis was used for the estimation and the results reveal that on the average, the sampled financial firms used 153 days after the year end for the release of their financial reports. Audit committee financial expertise, audit committee meetings, and auditor type have a negative significant relationship with audit reporting lag. The study recommends that regulatory agencies like the Security and Exchange Commission should include as part of the requirement that audit committee should meets regularly in a year. This is because the frequency of audit committee meetings significantly reduces the delay in audit report and audited financial reports.
Keywords: Audit committee, Attributes, audit reporting lag, timeliness
Introduction
One of the vital objectives of an audit report is to produce data regarding the responsibility of the monetary reports of a company which will assist external users in decision-making. This data, however, is needed to be made accessible within a brief amount of time from the end of the reportable period; otherwise, it loses a number of its measure (Al-Ajmi, 2018). Timeliness becomes one of the foremost vital characteristics of monetary accounting data, and by extension, the audit report for the accounting profession (Soltani, 2012). Timeliness can even be viewed as the simplest way of reducing data imbalance by a rising valuation of securities, and by mitigating trading, leaks, and rumours within the market, and reducing the chance to unfold rumours regarding the companies’ monetary health and performance. Audit report lag is the range of days from financial year finishes to audit report date, or excessive audit lag, compromise the standard of monetary reportage by not providing timely data to investors. Timeliness of audit report brings about privy and assured investment choices that will drive the economy of any given country. Investors trust heavily on audited financial statements, and therefore, the audit report back to assist them in the higher cognitive process.
The reliance on the audit report and audited financial statements of corporations by the stakeholders enlightened the requirement and importance for such data to be promptly accessible within a timeframe that’s logically helpful. Many factors that may contribute and have an effect on the provision of an audit report and audited financial statements of a company of that audit committee is one among such factors. Audit committees are thought to be integral to the quality and timely monetary reportage. Corporations are required to determine audit committees to enhance the quality of monetary reportage practices and earnings.
The fundamental functions of the audit committee are to oversee the financial reportage method and to watch managers’ tendencies to control earnings in addition as guarantee diligent and timely audited financial reports. Regulators, in recent years, have questioned the effectiveness of audit committees in making certain that financial statements are fairly declared and square measure while not earnings management. In recent times, analysis has been conducted within the space of audit committee and audit quality, audit committee and audit report, audit committee and firm price, however, studies administered within the space of audit committee and timeliness of audit report are largely completely different economy during which case the generalization of findings to the Nigerian economy isn’t possible as a result of different legal demand on the characteristics of the audit committee and report timeliness. Where the studies are conducted in the Nigerian economy, it’s discovered that among the proxies for an audit committee, audit committee size is employed by most of the studies. However, this study finds no justification for the employment of audit committee size as one of the proxies for audit committee characteristic as a result, there’s already a legal demand on the scale of the audit committee in and of itself all corporations with audit committee cannot transcend or below the legal demand regarding the size. Also, most studies reviewed on the audit committee and reportage timeliness created use of standard least sq. Regression (OLS) as a tool of research. Since the proxy for audit reportage timeliness employed in most studies is the range of days it takes for audit report and audited plan to be reported; it then implies that the variable quantity could be count as information thus, it’s expected to follow a Poisson distribution which suggests that Poisson regression ought to be used as see in.
However, a study that was reviewed that created use of Poisson regression targeted on Governance Mechanisms and monetary reportage timeliness. The findings from these studies are often noted as faulty as a result of the incorrect tool of research adopted. Insight of this, this study intends to use Poisson regression as a tool of research and conjointly to get rid of audit committee size as one of the proxies of audit committee characteristics. The remaining part of this paper review the relevant literature, methodology of the study, results, discussion, and conclusion.