Audit Committee Financial Expertise and Audit Reporting Quality of Industrial Goods Firms in Nigeria

Abstract

This study examined the effect of audit committee financial expertise on audit quality among industrial goods firms listed on the Nigerian Exchange Group (NGX) between 2015 to 2024. The specific objectives are; to examine the effect of audit committee financial expertise on audit quality using firm size, and firm age as control variables. The study employed an ex post facto research design, using panel data from 11 purposively selected firms based on data availability. Secondary data were collected from the published annual financial statements of the sampled firms and were analyzed using descriptive statistics, spearman correlation analysis, and panel regression technique. The hypotheses were tested using linear panel regression model under Random Effect model at a 5 percent level of significance. The findings showed that: Audit committee financial expertise has a positive and significant effect on audit quality (β = 0.342; p = 0.021). Firm size has a negative but non-significant effect on audit quality (β = –0.039; p = 0.355). Firm age has a positive but non-significant effect on audit quality (β = 0.001; p = 0.704).The study concludes that improving the financial expertise of audit committee members is essential for promoting higher audit quality among listed industrial goods firms in Nigeria. Consequently, firms should prioritize the appointment of members with adequate accounting and financial knowledge to their audit committees in order to enhance the effectiveness of the audit process and improve the quality of financial reporting. The study recommended that, Industrial goods firms in Nigeria should ensure that their audit committees comprise members with adequate accounting, auditing, and financial management expertise. Management of both large and small firms should establish effective internal control systems and corporate governance mechanisms capable of sustaining high audit quality irrespective of organizational size. Both newly established and long-standing firms should continuously update their financial reporting systems and strengthen audit practices through regular staff training and adherence to evolving accounting and auditing standards.