Influencing factors for internal audit effectiveness in the Indian context
Prem Lal Joshi; Govindan Marthandan
Afro-Asian J. of Finance and Accounting, Vol. 13, No. 2 (2023) pp. 253 - 276
This research is to assess the empirical evidence on the critical determinants of internal audit (IA) effectiveness in Indian Nifty500 companies. IA effectiveness is arguably a result of the interplay among different factors that may have an immense effect but have not been thoroughly investigated in the Indian environment. Using the proportionate stratified sampling technique, 64 usable questionnaires were received and the response rate was 28.2%. Non-response bias and common method bias were tested. From the factor analysis and multiple regression models, the following critical determinants were established: 1) 'interaction between internal auditor and audit committee'; 2) 'risk-based planning and guidelines'; 3) 'moderating role of management support with Big Data Analytics' for IA effectiveness in Indian context. The implications are the critical determinants that potentially influence this effectiveness in the changing business and technological environment which are important for policy decision purposes.
Tag: audit committee
The effect of audit committee on audit opinion through earnings management as mediation variable
The effect of audit committee on audit opinion through earnings management as mediation variable
Juniarti; Fany; Devie
Afro-Asian J. of Finance and Accounting, Vol. 12, No. 6 (2022) pp. 790 - 803
This study aims to examine the mediating effect of earnings management on the influence of the audit committee on audit opinion. The research samples are listed companies in the IDX in the sectors of infrastructure, utilities, and transportation for 2011-2017. This selection of industrial sectors due to these sectors obtains many qualified audit opinions in the study period compared to other sectors. This study adds control variables, namely firm size and leverage. We measure audit committee using two approaches, the first is the total score of each component of audit committees including size, independence, expertise, and meeting and the second is the partial score of each attribute of the audit committee. The results show that the audit committee influences the audit opinion and there is a negative significant influence of earning management and audit opinion, but, this study fails to prove the mediating effect of earning management in the relationship of the audit committee and audit opinion.
Audit committee and financial reporting quality: the mediating effect of audit price in Nigeria
Audit committee and financial reporting quality: the mediating effect of audit price in Nigeria
Hussaini Bala; Noor Afza Amran; Hasnah Shaari
Afro-Asian J. of Finance and Accounting, Vol. 11, No. 2 (2021) pp. 167 - 197
This study examines the mediating effect of audit price on the link between the audit committee and financial reporting quality. The model was developed based on a complementary hypothesis and employs a panel dataset comprising 440 firm-year observations. We found that a larger audit committee comprising directors and shareholders is more likely to reduce earnings manipulation in the form of artificial smoothing and managers' discretion on earnings. The study also establishes that larger audit committee size is linked to an increase in audit price. Interestingly, we found that an increase in the price of auditing services minimises the likelihood of earnings manipulation. Also the audit price partially and significantly mediates the link between the audit committee and financial reporting quality. This study also informs regulators and policy makers of the importance of audit price in limiting earnings manipulation and boosting audit quality, which, in turn, enhances financial reporting quality.
The effect of audit committee characteristics on earnings management: the case of Indonesia
The effect of audit committee characteristics on earnings management: the case of Indonesia
Doddy Setiawan; Lian Kee Phua; Hong Kok Chee; Irwan Trinugroho
Afro-Asian J. of Finance and Accounting, Vol. 10, No. 4 (2020) pp. 447 - 463
We investigate the effectiveness of audit committee in mitigating earnings management in the context of Indonesia. Audit committee is expected to reduce earnings management. This study examines the effect of several audit committee characteristics: independence of audit committee members, number of audit committee members, number of meetings, expertise in finance and gender on earnings management. We study 393 Indonesian listed firms during the 2006-2010 period. Results show that female member(s) of audit committee mitigate earnings management. However, financial expertise and number of meetings have positive effect on earnings management. This result shows that both variables might not be effective to constraint earnings management. On the other hand, number of audit committee members and independence of audit committee member do not have any significant influence on earnings management. Further, this study shows that audit firms and leverage have negative effect on earnings management. However, institutional investors tend to push earnings management higher and growth has no significant effect on earnings management.