The effect of audit committee characteristics on compliance with IFRS for related party disclosures

2017 ◽  
Vol 32 (6) ◽  
pp. 603-626 ◽  
Author(s):  
Yosra Mnif Sellami ◽  
Hela Borgi Fendri
Keyword(s):  
Financial Reporting ◽  
Audit Committee ◽  
Stock Exchange ◽  
Empirical Studies ◽  
Consolidated Financial Statements ◽  
Content Type ◽  
Johannesburg Stock Exchange ◽  
Panel Regressions ◽  
Accounting Expertise ◽  
Industry Expertise

Purpose The purpose of this paper is to examine the effect of audit committee (AC) characteristics (size, independence, the number of meetings and expertise) on compliance with International Financial Reporting Standards (IFRS) for related party disclosures (CRPD) in the South African context. Design/methodology/approach This paper is based on an analysis of the consolidated financial statements of 120 non-financial firms listed on the Johannesburg Stock Exchange (JSE) for the period 2012 to 2014. Panel regressions have been used. Findings The findings of this paper reveal that CRPD is positively influenced by AC independence. However, AC size and the number of AC meetings do not affect CRPD. Regarding expertise, the authors find that there is a positive and significant relationship between CRPD and have combined industry expertise with accounting and financial expertise. However, while accounting expertise by itself is associated with CPRD, industry expertise by itself is not associated with CRPD. Originality/value To the best of the authors’ knowledge, there are no empirical studies that have addressed the effect of AC characteristics on compliance with IFRS for CRPD.

Audit committee impact on the quality of financial reporting and disclosure

2016 ◽  
Vol 39 (12) ◽  
pp. 1639-1662 ◽  
Author(s):  
Mahdi Salehi ◽  
Mohammadamin Shirazi
Keyword(s):  
Financial Reporting ◽  
Audit Committee ◽  
Stock Exchange ◽  
Panel Data Analysis ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Fiscal Year ◽  
Corporate Disclosure ◽  
Content Type

Purpose The purpose of this study is to shed further light on the characteristics of an audit committee (AC) and its probable relationship with the quality of financial reporting and disclosure. Based on the findings of extant research that there are different factors that may have implications for the AC’ effectiveness, the authors posit an association between the aforementioned financial aspects and AC presence. Design/methodology/approach The authors test their hypotheses by performing panel data analysis on a sample of 100 companies listed on the Tehran Stock Exchange (TSE) during 2013-2014. The tests were conducted by using Eviews software. Findings Examining previously tested characteristics of an AC, the authors indicate that the number of AC meetings held during fiscal year is negatively associated with the quality of corporate disclosure, whereas AC expertise and size are positively associated with the quality firm’s financial disclosure. Their findings are also indicative of a non-significant relationship between other AC attributes and financial reporting quality (FRQ) except for AC independence, which is positively associated with FRQ. Finally, they provide some evidence that the size of a firm positively affects the quality of its financial reporting and disclosure. Research limitations/implications Although the study has been thoroughly considered and cautiously planned, some limitations have yet arisen. Initially, this research was conducted in an Iranian setting where the formation of ACs is on the verge of regulation; therefore, the data utilized for the study only contains the two-year period of ACs’ statutory activity. In addition, a lack of consensus on the precise measures of an AC’s effectiveness could be considered as a restrictive factor. Originality/value The authors’ study contributes to the AC literature by providing empirical evidence of an association between ACs’ different attributes and financial aspects in a newly regulated environment like the TSE. The results provided in this paper could be fruitful for auditors, regulators, institutional investors and policymakers.

Corporate governance and compliance with IFRS 7

2020 ◽  
Vol 35 (3) ◽  
pp. 448-474 ◽  
Author(s):  
Yosra Mnif ◽  
Oumaima Znazen
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Audit Committee ◽  
Stock Exchange ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
Content Type ◽  
Ifrs 7 ◽  
The Impact ◽  
Mean Compliance

Purpose This paper aims to investigate the impact of the characteristics of two corporate governance mechanisms, namely, board of directors and audit committee (hereafter AC), on the level of compliance with International Financial Reporting Standard [hereafter International Financial Reporting Standards (IFRS)] 7 “Financial instruments: Disclosures” (hereafter FID). Design/methodology/approach Using a self-constructed checklist of 128 items, this research measures the compliance with IFRS 7 of 63 Canadian financial institutions listed on the Toronto Stock Exchange during a period of three years (2014-2016). Fixed effect panel regressions have been used to capture the individual effect present in authors’ data. Findings Empirical results show that the mean compliance level with IFRS 7 requirements is about 77 per cent and identify various areas of non-compliance. This level of compliance has a positive linkage with the board size and independence. Similarly, the AC independence and financial accounting expertise are shown to positively affect authors’ dependent variable. Nevertheless, CEO/chairman duality, AC size and meeting frequency are not significantly correlated with the level of compliance with IFRS 7. Originality/value This study expands prior compliance literature in the Canadian setting by examining the determinants of compliance with IFRS mandatory disclosures. Also, and to the best of the authors’ knowledge, this paper is among the first studies that have investigated the effect of corporate governance characteristics (hereafter CGC) on compliance with all IFRS 7 requirements in general.

The Effect of Audit Committee Industry Expertise on Monitoring the Financial Reporting Process

2013 ◽  
Vol 89 (1) ◽  
pp. 243-273 ◽  
Author(s):  
Jeffrey R. Cohen ◽  
Udi Hoitash ◽  
Ganesh Krishnamoorthy ◽  
Arnold M. Wright
Keyword(s):  
Financial Reporting ◽  
Audit Committee ◽  
Data Availability ◽  
Holistic View ◽  
Reporting Process ◽  
Two Measures ◽  
External Auditor ◽  
Accounting Expertise ◽  
Better Than ◽  
Industry Expertise

ABSTRACT Calls from practice suggest that audit committee members with industry expertise can improve audit committee effectiveness. Nevertheless, regulators and the extant literature have focused on the financial expertise of the audit committee. We posit that audit committee industry knowledge is valuable because accounting guidance, estimates, and oversight of the external auditor are often linked to a company's operations within a particular industry. Taking a holistic view, we examine two measures of financial reporting quality (financial restatements and discretionary accruals) and two measures of external auditor oversight (audit and nonaudit fees). As predicted, we find that audit committee members who are both accounting and industry experts perform better than those with only accounting expertise. We also find that in certain instances, supervisory experts who are also industry experts perform better than supervisory experts alone. Overall, these results suggest that industry expertise, when combined with accounting expertise, can improve the effectiveness of the audit committee in monitoring the financial reporting process. Data Availability: All data are gathered from publicly available sources.

The effect of audit committee characteristics on forward-looking disclosure

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mohamad Rifai ◽  
Sylvia Veronica Siregar
Keyword(s):  
Audit Committee ◽  
Stock Exchange ◽  
Least Square ◽  
Content Type ◽  
Ordinary Least Square ◽  
Financial Firms ◽  
Financial Expertise ◽  
Ordinary Least Square Regression ◽  
Accounting Expertise ◽  
Forward Looking

Purpose This study aims to examine the effect of the audit committee characteristics on forward-looking disclosure. Design/methodology/approach The characteristics of audit committee that examined are audit committee expertise, audit committee meeting frequency and audit committee size. To measure the extent of forward-looking disclosure, this study did content analysis using a checklist of 22 forward-looking items. The samples of this research are 285 non-financial firms listed on the Indonesia Stock Exchange in the year 2015. Ordinary least square regression is used for hypotheses testing. Findings The results of this study show that the audit committee accounting expertise, audit committee financial expertise, the frequency of audit committee meetings and the size of the audit committee have a significant positive effect on the forward-looking disclosure. Originality/value To the best of the authors’ knowledge, this is the first study examining the audit committee characteristics on forward-looking disclosure in the context of Indonesia, one of the emerging markets.

scholarly journals Pengaruh karakteristik komite audit terhadap fraudulent financial reporting

2020 ◽  
Vol 1 (4) ◽  
pp. 255-264
Author(s):  
Gading Ruchiatna ◽  
◽  
Pratana Puspa Midiastuty ◽  
Eddy Suranta ◽  
◽  
...  
Keyword(s):  
Financial Reporting ◽  
Audit Committee ◽  
Stock Exchange ◽  
Evaluation Model ◽  
Audit Committees ◽  
Z Score ◽  
Fraudulent Financial Reporting ◽  
Financial Expertise ◽  
Quantitative Descriptive ◽  
Accounting Expertise

Purpose : This study aimed to prove whether audit committees were proxied financial expertise and meetings related to fraudulent financial reporting. Research methodology: This type of research was quantitative descriptive with an evaluation model of Beneish M-Score and Altman Z-Score in predicting fraudulent financial reporting. The sample in this study was non-financial companies listed on the Stock Exchange with an observation period of 2010-2018. The technique of taking samples with purposive sampling obtained the number of observations 551. Data processing was done via SPSS through logistic regression. Results : The results of the study showed that the characteristic of the audit committee that influence the fraudulent financial reporting is financial expertise possessed by the members of the audit committee, while the number of audit committee meetings has no effect on the fraudulent financial reporting. Limitation: This study only used a sample of non-financial companies listed on the Indonesia Stock Exchange in 2010-2018 and met the criteria. The dependent variable fraudulent financial reporting measured through the Beneish M-Score and Altman Z-Score models. The independent variable was financial and or accounting expertise from the members of the audit committee and the Audit Committee Meeting. Contribution: Investors can consider this research in making decisions to be more careful in investing, as well as a reference for further research. The results of this study are expected to provide an overview and understanding of the role of the audit committee in suppressing fraudulent financial reporting using the Beneish M-Score and Altman Z-Score. Keywords: Fraudulent financial reporting, Audit committee characteristics, Leverage

scholarly journals Effect of Audit Committee Expertise and Meeting on Earnings Quality in Indonesian Listed Companies: A Conceptual Approach

2017 ◽  
Vol 3 (1) ◽  
pp. 47-54
Author(s):  
Lidya Primta Surbakti ◽  
Hasnah Binti Shaari ◽  
Hasan Mohammed Ahmed Bamahros
Keyword(s):  
Corporate Governance ◽  
Conceptual Framework ◽  
Financial Reporting ◽  
Audit Committee ◽  
Stock Exchange ◽  
Earnings Quality ◽  
Empirical Studies ◽  
Annual Reports ◽  
Conceptual Approach ◽  
The Impact

Purpose: The purpose of this paper will focus on monitoring and improving corporate governance through earnings quality. In particular, audit committee effectiveness is seen as a significant factor in ensuring effective corporate governance and in view of this, the aim of this paper is to develop a conceptual framework that will examine the impact expertise, meeting and meeting attendance on the earnings quality of companies. Methodology: Future empirical studies could be conducted quantitatively with secondary data. The report from annual reports of companies listed in Indonesia Stock Exchange (IDX) starting from the period of implementation of the new code on implementation guideline in 2013. Implication: In fact, the main issue was centered on financial reporting manipulations and there is need to examine and develop a mechanism that in addition, agency theory is expected to explain the above three factors in providing explanation to accounting information that relates to the earnings quality under study. Finally, it is expected that future empirical studies with this conceptual framework can enhance earnings quality for users of financial statements such as: investors, creditors, shareholders and other stakeholders in Indonesia and beyond.

scholarly journals Audit Committee Chair Attributes and Audit Report Lag in an Emerging Market

2020 ◽  
Vol 11 (4) ◽  
pp. 475
Author(s):  
Ayad Ahmed Mohammed Al-Qublani ◽  
Hasnah Kamardin ◽  
Rohami Shafie
Keyword(s):  
Financial Reporting ◽  
Audit Committee ◽  
Stock Exchange ◽  
Emerging Market ◽  
Future Research ◽  
Kuala Lumpur ◽  
Audit Report ◽  
Committee Chair ◽  
Accounting Expertise ◽  
Audit Reports

This study is motivated by the new listing requirement of Bursa Malaysia (formerly known as Kuala Lumpur Stock Exchange, KLSE) concerning the shorter timeframe of annual report release. Similarly, the call for future research on the efficacy of audit committee chair (ACC) attributes with audit report lag (ARL) has further driven this study. Therefore, this paper aimed to analyse the relationship between the ACC expertise and ACC tenure with the ARL of companies in the Main Market of Bursa Malaysia in 2015 using a sample of 139 companies. Furthermore, other audit committee (AC) attributes such as AC overlap and AC independence were also examined. Results of the study revealed an average of 95 days is required by the companies to conclude their respective audit reports. ACC with accounting expertise enhanced the ARL, whereas AC overlap and AC independence did not reduce the ARL. Concurrently, other control variables like AC size, frequency of AC meetings, firm size, leverage, and profitability depicted significant relationship with the ARL. Hence, this research is relevant to the current ARL literature via the provision of evidence and justification regarding the important role of ACC with accounting expertise towards the AC effectiveness, thus enhancing the timelines of financial reporting.

Audit committee attributes and cosmetic accounting in Nigeria

2019 ◽  
Vol 35 (2) ◽  
pp. 177-206
Author(s):  
Hussaini Bala ◽  
Noor Afza Amran ◽  
Hasnah Shaari
Keyword(s):  
Financial Reporting ◽  
Audit Committee ◽  
Negative Relationship ◽  
Reporting Quality ◽  
Audit Fees ◽  
Financial Accounting ◽  
Audit Committees ◽  
Financial Reporting Quality ◽  
Content Type ◽  
Accounting Expertise

Purpose The literature on the influence of audit committees (ACs) and cosmetic accounting (CSA) is scarce. This paper aims to examine the influence of AC attributes on CSA and how this relationship is moderated by the audit price (AUPR). Design/methodology/approach The study used pooled logistic regressions to analyse 624 firm-year observations of listed companies in Nigeria from 2008 to 2016. Findings The results show that AC financial accounting expertise, AC legal expertise and female AC membership were negatively related to CSA. The negative relationship is highly pronounced when a firm incurs higher audit fees. Results for the robustness checks were similar, even with changes to the measurements of dependent and independent variables and alternative estimation. Practical implications This study can benefit policymakers and regulators, enabling them to better appreciate the importance of AC attributes and AUPR in curtailing artificial manipulation and enhancing financial reporting quality. Social implications This study can benefit policymakers and regulators, enabling them to better appreciate the importance of AC attributes and AUPR in curtailing artificial manipulation and enhancing financial reporting quality. Originality/value The findings provide an initial insight into the moderating effect of AUPR on the relationship between AC attributes and CSA.

Audit committee chair accounting expertise and audit report timeliness

2019 ◽  
Vol 27 (2) ◽  
pp. 273-306 ◽  
Author(s):  
Saeed Rabea Baatwah ◽  
Zalailah Salleh ◽  
Jenny Stewart
Keyword(s):  
Financial Reporting ◽  
Fixed Effects ◽  
Audit Committee ◽  
Moderating Effect ◽  
Audit Report ◽  
Content Type ◽  
Multiple Directorships ◽  
Robust Tests ◽  
Accounting Expertise ◽  
Audit Reports

Purpose The purpose of this paper is to investigate whether the characteristics of the audit committee (AC) chair affect audit report timeliness. In particular, the direct association between AC chair accounting expertise and audit report delay, and the moderating effect of other characteristics of AC chair on this association are examined. Design/methodology/approach To achieve the purpose of this study, the characteristics examined by this study are AC chair expertise, shareholding, tenure and multiple directorships. Furthermore, a sample of Malaysian companies during the period 2005–2011 and the fixed effects panel data method are utilized. Findings The results suggest that an AC chair with accounting expertise is associated with a reduction in audit delay. The reduction is more obvious when the chair holds shares in the company, but is weakened by longer tenure and multiple directorships. These results are robust after conducting several robust tests. Using mediating analysis, the authors also document that an AC chair with accounting expertise can enhance the timeliness of audit reports even when the quality of financial reporting is lower. The reported result is supported by additional analysis that finds that AC chairs with accounting expertise and AC chairs with accounting expertise and shareholding are significantly associated with shorter abnormal audit delay. Originality/value This study provides comprehensive analysis concerning the association between AC chair and audit report timeliness using a unique setting. It is among the limited evidence that reports the moderating effect of AC chair characteristics on the role of such chair on audit report timeliness.

The effectiveness of audit committees for low‐ and mid‐cap firms

2011 ◽  
Vol 26 (7) ◽  
pp. 623-650 ◽  
Author(s):  
Won Sil Kang ◽  
Alan Kilgore ◽  
Sue Wright
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Audit Committee ◽  
Stock Exchange ◽  
Reporting Quality ◽  
Audit Committees ◽  
Financial Reporting Quality ◽  
Governance Reform ◽  
Content Type ◽  
Significant Measure

PurposeThe purpose of this paper is to investigate the effectiveness of recommendations made by the Australian Stock Exchange (ASX) relating to audit committees in Australia, and whether they have improved financial reporting quality for low‐ and mid‐cap listed firms.Design/methodology/approachThe authors examine the relation between characteristics of the audit committee and financial reporting quality for listed companies not mandated to comply with these requirements, i.e. low‐ and mid‐cap firms. For a sample of 288 firms, the authors regress measures of audit committee independence, expertise and activity and size on alternative measures of earnings management.FindingsA significant association is found between all three characteristics and lower earnings management. The significant measure for independence is the proportion of independent directors on the audit committee; for expertise, it is that at least one member of the audit committee has an accounting qualification; and for activity and size, it is the frequency of audit committee meetings.Practical implicationsThe results provide support for the mandatory establishment of audit committees for the top 500 (high‐ and mid‐cap) firms introduced by the ASX and suggest those audit committee characteristics which could improve financial reporting quality for low‐ and mid‐cap firms.Originality/valueThe paper examines low‐ and mid‐cap firms in order to complement previous similar studies done for high‐cap firms. It identifies the effects on financial reporting quality of voluntarily choosing to have an audit committee and of the choice of audit committee characteristics, in the period after substantial corporate governance reform. It includes a new measure among audit committee characteristics, industry expertise, which is required in Australia and is new to the literature.

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