Internal Audit Practices and Financial Reporting Quality of Listed Manufacturing Firms in Nigeria: The Role of Audit Committee

Abstract

The purpose of this study was to investigate the moderating role of audit committee on the association between internal audit practices and quality of financial reporting of listed consumer goods manufacturing firms in Nigeria. The study used cross sectional and correlational research designs with a population of twenty-one (21) while a sample of ten (10) listed consumer goods manufacturing firms were used for the study. Primary data from structured questionnaires were used for data collection after validity and reliability tests while the responses obtained from the questionnaires were analysed using univariate, bivariate and multivariate analysis of data.. The findings indicate a positive and significant relationship between internal controls, audit risk assessment, internal audit independence on quality of financial reports. The study further revealed that audit committee moderates the association between internal audit practices and quality of financial reports. On the basis of the findings, the study concluded that audit committee moderates internal audit practices and financial reporting quality of listed consumer goods firms in Nigeria. Consequently, the study recommended amongst others that Internal audit departments of Consumer goods manufacturing firms should adopt and employ internal control measures like segregation of duties, restricted access through using access passwords that are frequently changed in evaluating earning per share, this gives opportunity to professional to study, understand, and apply new development on auditing procedures and dissemination of relevant financial information which will enhance financial reporting quality.