CHAPTER ONE

1.0 INTRODUCTION

1.1 Background of the Study

Financial performance is "a subjective measure of how well a firm can use assets

from its primary mode of business and generate revenues" (Oroud 2018). This term

is also used as a general measure of a firm's overall financial health over a given

period of time and can be used to compare similar firms across the same industry

or sectors in aggregation.

Agrawal and Chadha (2013) stated that the "performance of firms is of vital

importance for stakeholders and the economy at large." For investors, their return

on investments is highly valuable, and a well-performing business can bring high

and long-term returns for their investors. Financial profitability of a firm will boost

the income of its employees; also, more profit will mean more future investments,

which will generate employment opportunities.

The Committee on Basic Auditing Concepts has provided the following general

definition of auditing: "as a systematic process of objectively obtaining and

evaluating evidence regarding assertions about economic actions and events to

ascertain the degree of correspondence between those assertions and established

criteria and communicating the results to interested users."

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Audit committees are a key corporate governance device, which ensures the

quality, credibility, neutrality, and integrity of a firm's financial report (Oroud,

2016). Accordingly, audit committees play a major function in supervising and

watching the management of a firm to defend the interests of the shareholders

(Oroud, 2016).

Even though companies act in accordance with the regulatory obligations and form

different committees, all of such committees are not always efficient in advancing

the performance of the companies (Bryan, et al, 2018). In view of that, the efficacy

of an audit committee relies on the features of the committee, and not just on the

survival of the committee (Kallamu & Saat, 2015).

The critical role of an audit committee is believed to be a means of improving

economic efficiency and stakeholders' confidence in the firms through financial

standard compliance. However, to achieve this, an audit committee should possess

certain attributes which include independence of the committee, frequency of

meetings, the size of the committee and financial performance, knowledge of the

committee member Aldamen et al, (2017)

The attributes of the audit committee are significant in addressing the shortcomings

and weaknesses associated with the internal control system of the companies and

the errors and limitations associated with the external audit function. This is

because, on one hand, the internal control and internal audit are less independent of

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the management, and on the other, the external auditors' function is limited to the

information available to them, which is highly influenced by the management.

However, audit committees are independent of the management and have sufficient

authority over the operations, transactions, documents, and all the relevant records

to perform their duties.

Existing literature on audit committee effectiveness maintains that the size of the

audit committee is one of the significant attributes that contribute to its

effectiveness. Mukti, Aloysius (2015) argued that where the audit committee size

is too small, then an insufficient number of directors to serve the committee is

occurring and thus decrease its monitoring effectiveness. That is, a small

committee is not capable of fulfilling its duties efficiently as the responsibilities are

always on the increase. Additionally, when a committee size is too large, the

directors' performance may decline because of the longer coordination and process

problem and hence weak monitoring and control Mukti, Aloysius (2015)

However, the perfect average of the audit committee size is between 3 and 4

members. Evidence from the previous suggested that the firms with a large audit

committee are more effective in monitoring the management.

Moreover, independence is an old attribute of the audit committee since the

seminal work of Abbott, (2019) whose based on the agency theory suggested that

the independence of non-executive directors is a crucial quality that contributes to

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the effectiveness of the audit committee monitoring function. Moreover, the report

of the Blue Ribbon Committee (BRC) considers independence as an essential

quality of the audit committee in order to fulfill its oversight role.

1.2 STATEMENT OF THE PROBLEMS

Audit committees are mandated by relevant Sections of CAMA 1990 to address

the expectation gap by providing an avenue for auditors' opinions on a firm's

financial statement to be perceived as unbiased and independent. Some argue that

the existence of audit committees may lead to unnecessary conflicts between

shareholders, directors, management, and auditors. Thus, audit committees play a

crucial role in supervising and overseeing a firm's management to protect the

shareholders' interests (Oroud, 2016).

Despite companies adhering to regulatory obligations and forming various

committees, not all of these committees efficiently improve company performance

(Beasley, 2006). The effectiveness of an audit committee depends on its

characteristics, rather than merely its existence (Kallamu & Saat, 2015).

Empirical studies examining the relationship between audit committee

characteristics and financial performance have yielded mixed results. Abbott,

(2019) argued that a small audit committee size could lead to reduced monitoring

effectiveness due to an insufficient number of directors. Conversely, Abbott,

(2019) found that the optimal average size of an audit committee is between 3 and

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4 members. Hunger & Wheelen (2019) emphasized that the independence of audit

committee members is a critical criterion affecting the reliability of financial

statements. On the other hand, some studies suggested that independent audit

committees are less likely to be associated with financial statement fraud (Abbott,

2019), leading to inconclusive and mixed findings, necessitating further

investigation.

The composition and characteristics of the audit committee significantly impact

organizational performance. However, limited research focuses on the effects of

audit committees on financial performance in developing countries like Nigeria,

particularly concerning listed industrial goods firms.

1.3 OBJECTIVES OF THE STUDY

1. To examine the impact of audit committee size on the financial performance

of listed industrial goods firms in Nigeria.

2. To investigate the effect of audit committee independence on the financial

performance of listed industrial goods firms in Nigeria.

3. The audit committee should ensure that the organization’s financial

statements are understandable and reliable.

1.4 RESEARCH QUESTIONS

1. Does audit committee size have a significant impact on the financial

performance of listed industrial goods firms in Nigeria?

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 2. Does audit committee independence have a significant effect on the financial

performance of listed industrial goods firms in Nigeria?.

3. Does the audit committee ensure that the organization’s financial statements

are understandable and reliable?

1.5 SIGNIFICANCE OF THE STUDY:

This study will provide valuable insights for investors in making informed

investment decisions. It will benefit management in determining the allocation of

resources to ensure an effective audit committee. Effective policies for selecting

and appointing audit committees based on desirable characteristics can be

formulated. The study will also assess the performance of audit committees in

relation to their contribution to overall financial performance. Additionally, the

findings will contribute to the literature on audit committee characteristics in

developing economies like Nigeria.

1.6 LIMITATIONS OF THE STUDY

During the course of the study, several constraints impacted the findings. These

limitations include:

1. Scope: The study's focus on audit committee characteristics is limited to

listed industrial goods firms in Nigeria, excluding other types of companies.

2. Time: The limited time frame for conducting the research and the need to

balance it with other academic commitments affected the smooth collection

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 of information required to complete the study within the specified time.

3. Financial Constraints: Due to the economic situation in the country,

financial support was not readily available, resulting in a lack of sufficient

educational materials, transportation, and other necessary resources for the

research work, which impacted its progress.

1.7 SCOPE OF THE STUDY

The study examines the effect of the audit committee on the financial performance

of listed industrial goods firms in Nigeria over a ten-year period from 2016 to

2021. The financial performance is represented by the return on assets of these

listed firms during the study period. The audit committee is measured using audit

committee fees and audit committee independence.

1.8 BRIEF HISTORY OF THE CASE STUDY

The company was formerly known as Obajana Cement Plc and later changed its

name to Dangote Cement Plc in July 2010. Obajana Cement Plc was established in

1992. Dangote Cement Plc is a subsidiary of Dangote Group and is the largest

company traded on the Nigerian Stock Exchange. As of August 2014, it accounted

for 20% of the total market capitalization of the Exchange. In 2014, the Investment

Corporation of Dubai (ICD) acquired a $300 million stake in Dangote Cement.

Aliko Dangote invested US$6.5 billion into the company between 2007 and 2012,

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with cement constituting approximately 80% of Dangote Group's business as of

2011.

Operations:

Dangote Cement's plant in Obajana, Kogi, is the largest in Sub-Saharan Africa,

with a capacity of 10.25 million tonnes per year across three lines and a further 3

million tonnes per year capacity currently under construction. In 2012, the

company opened a $1 billion cement plant in Ibese, Ogun, capable of producing 6

million metric tonnes of cement per year. The plant was installed by the Chinese

construction and engineering firm Sinoma and represented one of the largest non-

oil investments in Nigeria at the time. The company also has plants in Gboko,

Benue, with a planned upgrade to 4 million tonnes per year, as well as plants in

Senegal, Tanzania, and Ethiopia.

Roles and Composition of the Board:

The Board of Directors of Dangote Cement is responsible for setting strategic
direction, ensuring adequate internal control procedures, and maintaining proper
accounting records. The Board operates in accordance with the Companies and
Allied Matters Act, Cap C20, LFN, 2004, and ensures good faith actions that
benefit the Company in the long term. The Audit, Compliance, and Risk
Management Committee oversees risk management, internal controls, and
compliance procedures, consisting entirely of Non-Executive Directors with a
Charter defining and regulating its activities. The Committee meets quarterly, with
additional meetings as needed, and may invite senior management and external
advisors when appropriate. In 2018, the Committee met four times.
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Membership:

1. Ernest Ebi (Chairman)

2. Cherie Blair Q.C.

3. Emmanuel Ikazoboh

4. Dorothy Ufot SAN

1.9 DEFINITION OF TERMS

1. Audit committee: An audit committee is one of the major operating

committees of a company's board of directors responsible for overseeing

financial reporting and disclosure.

2. Financial performance: It is a subjective measure of how well a firm can

utilize assets from its primary mode of business and generate revenues.

3. Agency: An agency is a conceptual relationship that arises when a person,

called the agent, acts on behalf of another, called the principal.

4. Firm: A firm is a for-profit business, often formed as a partnership, that

provides professional services such as legal or accounting services.

5. Industrial goods: Industrial goods consist of machinery, manufacturing

plants, raw materials, and any other goods or components used by industries

or firms.

6. Theory: A theory is a set of principles on which the practice of an activity is

based.

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 CHAPTER TWO

2.0 LITERATURE REVIEW

2.1 Introduction:

This chapter reviews existing literature relevant to the relationship between audit

firm characteristics and financial performance. The review is organized into three

main sections: conceptual literature, empirical literature, and the theoretical

framework that underpins the relationship between audit committees and financial

performance. The purpose of this review is to identify gaps in the literature and

provide a reference point for the findings of this research.

2.2 Conceptualization:

2.2.1 Financial Performance:

Afza (2016) emphasize the importance of firm performance to management,

highlighting that it reflects the achievement of organizational goals within legal,

ethical, and moral boundaries. Financial performance, in a broader sense, refers to

the extent to which financial objectives have been achieved and is a critical aspect

of financial risk management. It involves measuring a company's policies and

operations in monetary terms over a specific period, providing insights into its

overall financial health. Abbott, (2019) defines financial performance as a

subjective measure of how effectively a firm utilizes its assets from its primary

mode of business to generate revenues.

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ROA (Return on Assets) is a key indicator used to measure financial performance.

Afza (2016) describes ROA as the ratio that measures the amount of profit

generated from the firm's total assets.

Audit Quality and Financial Performance:

Studies suggest that audit quality positively influences a company's financial

performance. Afza (2016) argue that high-quality external audits improve a firm's

performance as they enhance investors' confidence by providing reliable and

authentic financial reports. Audit quality as the market-assessed joint probability of

auditors detecting breaches in the client's accounting system and reporting them. It

involves technical competence to detect material errors and independence to ensure

corrections or disclosures in the auditor's report.

Audit Quality and Financial Performance:

Audit quality is a controversial issue, with previous evidence suggesting that lack

of audit quality is a significant factor in financial and corporate scandals. Actual

quality reflects the risk of material errors in financial statements that can be

reduced by auditors, while perceived quality indicates users' confidence in

financial statements. High audit quality is expected to reduce agency costs and

improve company performance. Baxter and Cotter (2016) Have reported a positive

relationship between audit quality and company performance.

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2.2.2 Measure of Financial Performance:

2.2.1 Return on Assets (ROA):

ROA is an indicator of a company's profitability relative to its total assets. It gives

insight into how efficiently a company's management utilizes its assets to generate

earnings. ROA is calculated by dividing net income by total assets, and some

analysts add back interest expense to calculate operating returns before borrowing

costs. ROA varies across industries, making it suitable for comparative analysis

within the same industry or against a company's past ROA numbers. It reflects the

earnings generated from the invested capital (assets) and considers the financing

through debt and equity.

Financial performance in this study will be measured using two key financial

ratios: Return on Assets (ROA) and Return on Sales (ROS). ROA indicates a firm's

ability to utilize its assets effectively to generate earnings, while ROS reveals the

proportion of sales that translates into earnings. These financial ratios provide

valuable insights into a company's internal strengths and weaknesses and aid in

estimating future financial performance. Investors can use these ratios to compare

companies within the same industry. Baxter and Cotter (2016).

2.2.2 Auditor Committee Size

The size of the audit committee is an important characteristic that can impact its

effectiveness in improving financial performance. Larger audit committees tend to

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have diverse expertise and can engage in more intense monitoring of financial

performances, leading to potential positive effects on the firm's financial

performance. However, the effectiveness of an audit committee is not solely

determined by its size; the presence of committed and active members is equally

crucial

A smaller audit committee may be more effective in protecting shareholders'

interests and ensuring financial information quality. On the other hand, larger audit

committees may suffer from issues like free riders, where individual members may

follow others' opinions without thoroughly questioning potential errors in

accounting reports. A small team allows for better information exchange and

discussion between members, assisting management in identifying potential errors

and reducing the chances of financial restatements. Baxter and Cotter (2016).

Empirical evidence shows that companies with larger audit committees are more

likely to oversee financial reporting and internal control systems effectively,

resulting in better financial performance. Additionally, larger audit committees

tend to introduce greater transparency to shareholders and creditors, positively

impacting a company's financial performance. Regulatory requirements have also

mandated a minimum number of directors on the audit committee to ensure its

effectiveness.

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In conclusion, financial performance can be assessed using key financial ratios,

and the size of the audit committee plays a significant role in enhancing its

effectiveness and positively influencing a firm's financial performance. Larger

audit committees with committed and active members tend to be more effective in

overseeing financial reporting and internal controls, leading to better financial

outcomes for the company.

2.2.2. Audit Committee Independence

Extant research emphasizes the importance of audit committee independence as a

critical characteristic in ensuring the quality of financial information. The presence

of external members in the audit committee can reduce manager's opportunistic

behavior, enhance the quality and transparency of information, and improve the

company's overall performance.

Auditor independence is a vital factor in producing a quality audit and has been

extensively studied in auditing literature. It refers to the auditors' ability to

maintain an objective and impartial mental attitude throughout the audit process.

Maintaining auditor independence is crucial for the audit profession and the

general public. For the public, a lack of auditor independence poses a risk to

ordinary people's investments. On the other hand, for the audit profession,

independence is crucial for maintaining professional status and public stewardship.

Ensuring auditor independence also helps reduce the expectation gap, which occurs

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when there are differences between the public's expectations of auditors and what

they actually provide Bedard and Sonda (2017).

There are three types of auditor independence: programming independence,

investigative independence, and reporting independence. Programming

independence involves the auditor's ability to plan the audit work properly and

obtain all necessary information without undue influence. Investigative

independence ensures that auditors can carry out their audit exercises based on the

planned audit without influence from within or outside the organization. Lastly,

reporting independence allows auditors to report fearlessly to shareholders without

any influence from management or third parties. Mukti, (2015).

In conclusion, auditor independence is a critical aspect of the audit process, and it

is essential for auditors to maintain an objective and impartial attitude throughout

their work. Ensuring independence helps build trust among shareholders and the

general public and contributes to the overall effectiveness of the audit process.

2.3 Review of Related Empirical Literatures

2.3.1 Auditor Committee Size and Financial Performance

Several empirical studies have examined the relationship between audit committee

size and financial performance. A study on the influence of audit committee

effectiveness on firm performance in 25 manufacturing firms. However, their

analysis showed that audit committee size had no significant relationship with

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financial performance. In contrast, Bedard and Sonda (2017) found that there was a

significant positive relationship between audit committee size and financial

performance in nonfinancial firms listed on the London Stock Exchange in the UK.

Bedard and Sonda (2017) examined corporate governance and performance in

listed banks in Europe and established a significant positive correlation between

internal auditors' independence and financial performance. They found that banks

where internal auditors' independence was threatened by CEO duality and

interference in the audit plan had lower profits, especially during times of high

securities market volatility.

Similarly, Izedonmi and Omoregie (2012) found a significantly positive

relationship between internal auditors' acquiescence to misleading accounting

reports and the performance of listed banks in the UK. Banks that compromised

internal auditors' independence experienced wastage and attracted fewer investors,

negatively affecting their financial performance.

On the other hand, Bedard and Sonda (2017).conducted a study on internal audit of

listed commercial banks in Lithuania and found no significant relationship between

internal auditors' independence and financial performance. The audit committees

of commercial banks in Lithuania interfered with the Chief Internal Auditors'

annual audit plans, which did not significantly influence the banks' share price or

financial performance.

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Overall, the empirical evidence on the relationship between audit committee size

and financial performance is mixed, with some studies showing a significant

positive relationship, while others finding no significant relationship. The influence

of audit committee characteristics on financial performance may vary depending

on the specific context and industry.

2.3.2 Audit Committee Independence and Financial Performance

The concept of independence is crucial for any audit committee, as highlighted by

Ogbodo (2019), who emphasized the importance of non-executive director

independence in contributing to the effectiveness of the audit committee's

monitoring function. In the context of stakeholder theory, independence is seen as

an essential quality that enables the audit committee to perform its oversight role

effectively. Numerous empirical studies have been conducted to explore the impact

of audit committee independence on the financial sector.

Ogbodo (2019) conducted a literature review on auditor independence and audit

quality, finding a strong relationship between auditor independence and audit

quality. They identified four threats to auditor independence, including client

importance, non-audit services, audit tenure, and client affiliation with CPA firms,

which can impact the quality of audits.

Muncer, (2017) studied the impact of upholding internal auditors' independence in

listed banks in Jordan and found a strong positive association between internal

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auditors' independence and return on equity (ROE). This independence was valued

by shareholders and led to the attraction of new investors, improved share prices,

profitability, and better financial performance.

Muncer, (2017) investigated internal auditors' independence and their effective

evaluation of risk management in banks. They found a positive correlation between

these factors and the financial performance of listed banks. This independence

extended to external auditors, resulting in reduced fees for non-auditing services

and improved return on assets and profitability, attracting investors.

Mardijuwono, (2018) studied the financial performance of listed financial

organizations using Return on Assets (ROA) as an indicator. They found a

significant correlation between internal auditors' independence and the financial

performance of these organizations in the Libyan Stock Market. Internal auditors'

independence led to reduced economic interest and familiarity, resulting in

improved financial reporting and investor confidence.

Overall, these empirical studies consistently highlight the positive impact of

auditor independence and internal auditors' independence on financial

performance, investor confidence, and audit quality in various financial

organizations. The independence of audit committees and auditors plays a critical

role in enhancing corporate governance and ultimately improving firm value.

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2.4 Theoretical Framework

2.4.1 The Agency Theory

The agency theory posits that information asymmetry and conflicts of interest

between principals and agents can lead to agency problems in organizations.

Auditors' independence plays a crucial role in bridging the information asymmetry

gap between principals (such as shareholders) and agents (management). The

demand for auditing arises from the auditor's monitoring role in the principal-agent

relationship. When conflicts of interest exist between the interests of principals and

agents, the agent may not act in the best interests of the principal. Auditing serves

as a monitoring mechanism that reduces information asymmetry and provides

reasonable assurance to shareholders that financial statements are free from

material misstatements.

Audit quality, which relates to the attributes of audit firms, determines how well an

audit detects and reports material misstatements in financial statements, thereby

reducing information asymmetry between management and stockholders. High

audit quality should be associated with high information quality in financial

statements.

Recent accounting scandals and perceived audit failures have raised concerns

about auditor independence and audit quality. Critics question auditors' ability to

maintain independence while collecting significant fees from clients for non-audit

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services. The economic bonding theory argues that the economic bond between

auditors and clients could compromise auditors' independence and their willingness

to resist client-induced biases in financial statements. Critics argue that auditors

may prioritize their financial interests over the public good.

Overall, the agency theory provides a theoretical basis for understanding the

importance of auditors' independence in ensuring the credibility of financial

statements and protecting the interests of shareholders. However, recent accounting

scandals have led to increased scrutiny of audit quality and auditor independence,

highlighting the need for ongoing efforts to maintain the integrity of the auditing

profession.

2.4.2 The Stakeholders Theory

The stakeholder theory emphasizes that organizations have a responsibility to

account for their stewardship over resources to various stakeholder groups, not just

shareholders. It argues that firms are accountable to multiple stakeholders,

including employees, the government, and society at large, and should disclose

more information in financial statements to satisfy the interests of these diverse

groups.

The theory of inspired confidence addresses both the demand and supply for audit

services. Third parties, such as investors and creditors, demand accountability from

the management of a company and require assurance that the financial information

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provided is reliable. Audits are needed to assure the reliability of this information.

On the supply side, auditors should strive to meet reasonable public expectations

and provide assurance that reduces information asymmetry among related parties.

Both the agency theory and stakeholder theory play a role in understanding the

relationships between financial performance and audit firm characteristics in the

context of quoted building material firms in Nigeria. Agency theory is relevant in

considering the interests of shareholders and management, while stakeholder

theory emphasizes the broader responsibility of firms to various stakeholders.

In summary, this study uses both agency theory and stakeholder theory to

investigate how financial performance and audit firm characteristics are

interconnected in the context of building material firms in Nigeria. It aims to

explore the relationships between shareholders, management, audit firms, and

other stakeholders and how these interactions affect the quality of financial

performance.

2.5 Chapter Summary

The literature review chapter provides a comprehensive overview of the relevant

studies and research related to the audit committee and financial performance. It

begins by presenting the conceptual framework of the study, which lays the

foundation for understanding the key concepts and relationships explored in the

research.

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Next, the chapter delves into the audit regulation in Nigeria, highlighting the

importance of the audit committee and its role in overseeing financial reporting

and disclosure. The determinants of financial performance are also discussed,

providing insights into the factors that contribute to a firm's ability to generate

revenues and effectively utilize its assets.

The literature review then proceeds to explore empirical studies on audit fees and

financial performance, audit committee size, and financial performance, as well as

audit committee independence and financial performance. These sections review

various research findings on how these factors influence a firm's financial

performance and shed light on their significance in the context of the study.

Finally, the chapter concludes with a discussion of the theoretical framework of the

study, which draws on agency theory and stakeholder theory to understand the

relationships between financial performance and audit firm characteristics in the

context of building material firms in Nigeria.

Overall, the literature review chapter serves as a valuable resource for the research,

providing a strong basis for understanding the key concepts, prior research

findings, and theoretical underpinnings relevant to the study's objectives. It sets the

stage for the subsequent chapters to delve into the specific research methodology,

data analysis, and conclusions of the study.

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 CHAPTER THREE

3.0 RESEARCH METHODOLOGY

3.1 INTRODUCTION

This chapter explains the methodology used in this study. It describes the research

design employed, the population of the study, sample size as well as the sources

and method of data collection. Furthermore, the technique used in analyzing the

data and the model specification were also discussed. The chapter concludes by

defining the variables of the study and their measurements.

3.2 RESEARCH DESIGN

The questionnaire was designed with the aim of achieving good response. The

questionnaire are in such a way that will enable the respondents to say their

opinion as such, that questions were simple and straight. The use of survey design

approach has been adopted for this study: this use of questionnaires is employed in

collecting data needed for this study and in a systematic manna to address the

relevant research questions raise in the previous chapter.

3.3. POPULATION OF THE STUDY

The population means that total number of persons or respondents involved in a

particular study. In this study, the population consists of 25 staff in Dangote

cement plc Kaduna.

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3.4. SAMPLE SIZE

Osuala (2005) define “sampling as the process of examining a representative set of

terms (people or things) out of the whole population or universe”. The sample size

is the slight caption or resizing of the population for easy and appropriate study.

Since the total population is 25, the researcher got a sample size of 12 using

stratified sampling.

3.5. SOURCE OF DATA COLLECTION

In conducting this research work, data was gathered from different sources, it’s

categorized as primary data and secondary data. The various instruments suitable

for data collection or measuring the variable include the following:

1. Primary data: Adeniyi (2007) defined primary data as that data collected and

used specifically for the purpose for which such data used are obtained from.

2. Secondary data: it is the collection of data from existing record publication

such as e.g. textbooks and magazines.

3.6. METHOD OF ADMINISTRATION OF QUESTIONNAIRES

The questionnaires were designed with the aims of achieving good responses. The

questionnaire was structured and it is divided into sections. The questions were

close and open ended.

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3.7. TECHNIQUES OF DATA ANALYSIS

Osuala (2006) defined analysis as an ordinary breaking down of data into

constituent parts. It consist of statistical calculation performance with the raw data

to provide solution to the problems initiating this research study and logical

conclusion.

Hence, for a research to be useful, it must be interpreted in this questionnaire

which were presented in tables and figures and analyzed by using percentages.

Logical conclusion is the decision rule taken from the tables of data based on the

respondent responses.

The formula below is used the formula below is used

1. Frequency = Number responses x 100

Total numbers respondent 1

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 CHAPTER FOUR

4.0 DATA PRESENTATION AND ANALYSIS

4.1 INTRODUCTION

In this chapter, the researcher analyzed the data collected from the research work

in Dangote cement plc, Kaduna. The collection of the data is one of the most

important aspects of research work carried out by the researcher.

This chapter consist of how the data collected are analyzed as they are result of the

questionnaire were administered and return.

4.2 DATA PRESENTATION AND ANALYSIS

In the analysis of the questionnaire administered the given were scored in simple

percentage and it can be seen below.

Question 1: what position are you holding?

Table 4.1 Position held by the staff

Response Respondents Percentage

Senior staff 7 60

Junior staff 5 40

Total 12 100

Source: Questionnaire Administered, 2023

Tablet 4.1 above shows the level of which 7 respondent representing 60% are

senior while 5 respondents representing 40% are junior staff.

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In conclusion, the above analysis shows that more than 50% of the respondents are

senior staff, the data collected from them will be great importance as they already

use to the system.

Question 2: how many years of experience had the staff?

This table below shows the response from respondents.

Table 4.2 years of experience of the staff

Response Respondents Percentage

One year 1 10

2-5 years 4 30

5 years above 7 60

Total 12 100

Source: Questionnaire Administered, 2023

Table 4.2 above shows that level at which I respondent representing 10% have

working experience of one year 4 respondent representing 30% have working

between 2-5 year and 7 respondent representing 60% have working experience of 5

years above.

In conclusion the above analysis show that the information that would be provided

by the staff could be relied upon since more than 50% have a greater work

experience

Question 3: Does the committee within the audited entity carries out the functions

assigned to the audit committee?

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The table below shows the responses from the respondent.

Table 4.3 Functions assigned to the audit committee.

Response Respondents Percentage

Yes 10 80

No 2 20

Total 12 100

Source: Questionnaire Administered, 2023

Table 4.3 above shows the level at which 10 respondents representing 80% agreed

to the fact that audit committee within the audited entity carries out the functions

assigned to the audit committee, while 2 respondents representing 20% did not

agree to the fact that audit committee within the audited entity Carries out the

functions assigned to the audit committee.

In conclusion the above analysis shows that the functions assigned to the audit

committee aid in aching the goals and objectives of any fir m. therefore, audit

committee should be established if not in place.

Question 4: How effective is the audit committee in your organization.

The table below shows the responses from the respondents.

Table 4.4: effectiveness of audit committee in your organization.

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 Response Respondents Percentage

Very effective 2 20

Effective 8 80

Not Effective -- --

Total 12 100

Source: Questionnaire Administered, 2023

TABLE 4.4 above shows the level at which 2 representing 20% agreed to the fact

that audit committee is very effective in the bank while 8 respondents representing

80% agreed that audit committee is effective and non said audit committee is not

effective in the organization.

In conclusion on the analysis shows that the audit committee in the organization is

effective.

Question 5: Does at least one number of that committee has competence in

accounting?

Response Respondents Percentage

Yes 10 80

No 2 20

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 Total 12 100

Source: Questionnaire Administered, 2023

Table 4.5 above shows the level at which 10 respondent representing 80% agreed

that at least one member of that committee has competence in accounting while 2

response representing 20% are against it.

In conclusion, the above analysis shows that the audit committee has competence

in accounting.

Question 6: Does the committee member as a whole, have experience relevant to

the sector in which the audited entity is operating?

Table below shows the respondent.

Table 4.6: relevant sector in which the audited entity is operating.

Response Representing Percentage

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 Yes 10 80

No 2 20

Total 12 100

Source: Questionnaire Administered, 2023

Table 4.6 above shows the level at which 10 respondents representing 80% agreed

with the term that audit committee have experienced relevant sector in which the

audited entity is operating while 2 respondents representing 20% are against it.

In conclusion, the above analysis shows that the relevant sector in which the

audited entity is operated in the organization.

Question 7: is a majority of the members of that committee independent of the

audited entity?

The table below shows the responses of the respondents

Table 4.7 Committee independent of the audited entity

Response Representing Percentage

Yes 4 40

No 8 60

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 Total 12 100

Source: Questionnaire Administered, 2023

Tables 4.7 above shows the level at which 4 respondents representing 40% says

that there is a majority of the members of that committee independent of the

audited entity while 8 respondents representing 60% are of the opinion that say

there is no majority of the members of that committee independent of the audited

entity.

Question 8: Did the audit committee monitor the financial reporting process of the

entity?

The table below shows the response from the respondents

Table 4.8. Financial reporting process of the entity.

Response Respondents Percentage

Yes 4 40

No 8 60

Total 12 100

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Source: Questionnaire Administered, 2023

Table 4.8 above shows the level at which 4 respondents representing 40% says

there the audit committee monitors the financial reporting process of the entity

while 8 respondents representing 60% are against it.

Question 9: Did the audit committee inform administrative or supervisory body of

the entity of the outcome of statutory audit?

The table below shows the response from the respondents

Table 4.9. Supervisory body of the entity of the outcome of statutory audit.

Response Respondents Percentage

Yes 10 80

No 2 20

Total 12 100

Source: Questionnaire Administered, 2023

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Table 4.9. Shows the level of which 10 respondents representing 80% agree to the

audit committee that inform administrative body of the entity of the outcome of

statutory audit while 2 respondents representing 20% disagreed.

In conclusion the above analysis show that the more than 50% are of the opinion

that the administrative body of the entity of the outcome of statutory audit effective

in the organization.

Question 10: can ineffective audit committees be caused by management?

The table below shows the responses from the respondent.

Table 4.10: ineffective audit committee and management.

Response Respondents Percentage

Yes 11 90

No 1 10

Total 12 100

Source: Questionnaire Administered, 2023

Table 4.10 above shows the level of which 11 respondents representing 90%

agreed that ineffective audit committees can be caused by management while 1

respondents representing 10% disagreed.

In conclusion the above analysis shows that more than 50% agree with that

ineffective audit committee is caused by management.

Question 11: is the audit committee and it’s department properly equipped to carry

out its functions in the firm?

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The table below shows the response of the respondent.

Table 4.11. Proper equipment of audit committee departments.

Response Respondents Percentage

Yes 10 80

No 2 20

Total 12 100

Source: Questionnaire Administered, 2023

Table 4.11: above shows the level at which 10 respondents representing 80%

agreed with the term that audit committee department is properly equipped while 2

respondents representing 20% are against.

In conclusion the above analysis shows that the audit committee department is

effective.

Question 12. How many times during the reference period did the audit committee

meet the administrative or supervisory body of the entity to communicate on its

activities, issues and related recommendations?

The table below shows the responses of the respondents

Table 4.12 audit committee meet the administrative body of the entity to

communicate on its activities and related recommendations.

Response Respondents Percentage

Never 5 40

Once 4 30

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 Twice 2 20

Quarterly 1 10

Total 12 100

Source: Questionnaire Administered, 2023

Tables 4.12 show the level at which 5 respondents representing 40% never agree

that audit committee meet the administrative body of the entity to communicate on

its activities and related recommendations of 4 respondents representing 30%

agreed that only once during the reference period,2 respondents representing 20%

agreed only twice during the reference period while 1 respondents representing

10% agreed quarterly during the reference period.

In conclusion the above analysis show that there are quarterly references during

this period that the audit committee meet the administrative body of the entity to

communicate on its activities and related recommendations.

Question 13: Did the audit committee submit recommendations or proposals to

ensure the integrity of the financial reporting process of entity?

The table below show the responses of the respondents

Table 4:13 proposals to ensure the integrity of the financial reporting process of

entity

Response Respondents Percentage

Yes 10 80

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 No 2 20

Total 12 100

Source: Questionnaire Administered, 2023

Table 4.13 above shows the level of which 10 respondents representing 80% agree

that audit committee submit recommendations to ensure the integrity of the

financial reporting process of entity while 2 respondents representing 20% did not

agree.

In conclusion we could agree with audit committee is said to be a whole committee

established by management in other to carry on the business in an effective

manner.

Question 14: How many times Does the firm experience audit?

The table below show the responses and respondents

Table 4.14 numbers of times the firm experience audit.

Response Respondents Percentage

Never 5 40

Once 4 30

Twice 2 20

Quarterly 1 10

Total 12 100

Source: Questionnaire Administered, 2023

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zTable 4.14 above shows the level of which 5 respondents representing 40% never

agree that a firms experiences audit,4 respondents representing 30% agrees once

that a firm experience audit,2 respondents representing 20% agree twice that a firm

experiences audit while 1 respondents representing 10% agrees quarterly that a

firm experience audit.

In conclusion the above analysis show that the number of times a firm experienced

audit.

4.3 SUMMARY OF FINDINGS

From the questionnaire administered and response collected the following were

discovered.

1. It shows that the Audit committee has a lot experience in making the

organization better

2. The audit committee submits recommendations or proposals to ensure the

integrity of the financial reporting process of the entity to promote

credibility of the organizations.

3. The audit committee meets the administrative or supervisory body of the

entity to communicate on its activities, issues and related recommendations.

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 4. The audit committee is not independent of the entity.

5. Audit committee shows that the functions assigned to the audit committee

aid in aching the goals and objectives of any firm. Therefore, audit

committee should be established if not in place.

CHAPTER FIVE

5.0 SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 SUMMARY:

The study focused on the audit committee characteristics and financial

performance of listed industrial goods firms in Nigeria, with a specific case study

of Dangote Plc in Kaduna State. The research was divided into five chapters,

covering the background, literature review, research methodology, data

presentation and analysis, and conclusion.

The data analysis revealed that the audit committee in Dangote Plc has a

significant amount of experience and submits recommendations to ensure the

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integrity of the financial reporting process, promoting credibility for the

organization. The committee also communicates with the administrative or

supervisory body and plays a role in achieving the organization's goals and

objectives.

5.2 CONCLUSION:

Based on the findings, it can be concluded that the audit committee in Dangote Plc

plays a vital role in the organization's financial performance. However, there are

areas that need improvement, such as ensuring independence and greater attention

to the financial reporting process.

5.3 RECOMMENDATIONS:

To enhance the effectiveness of the audit committee and improve financial

performance, the following recommendations are made:

1. The audit committee should be independent in carrying out its activities to

avoid conflicts of interest.

2. Management should support the audit committee in their activities to enable

them to work effectively and efficiently.

3. The audit committee should pay close attention to the financial reporting

process of the entity to ensure accuracy and reliability.

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 4. The audit committee should conduct thorough and regular audits in the firm

to identify potential risks and areas for improvement.

These recommendations aim to strengthen the role of the audit committee and

contribute to the overall financial performance and credibility of the organization.

Please note that the above recommendations are based on the information provided

in the data analysis section. In a real research report, more detailed and context-

specific recommendations would be included. Additionally, the conclusion would

provide a more comprehensive summary of the study's findings and their

implications.

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a Journal of Practice & Theory - AUDITING-J PRACT THEOR. 23. 69-87.
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Aldamen, Husam & Duncan, Keith & Kelly, Simone & McNamara, Ray & Nagel,
Stephan. (2017). Audit committee characteristics and firm performance
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Izedonmi, L. and Omoregie, Nosa. (2012). Analysis Non Audit Services and
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Kallamu L. & Saat, K. (2015),"Audit committee attributes and firm performance:

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Mukti, Aloysius. (2015). The Influence of Financial Performance towards Income
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Mardijuwono, Agus & Subianto, Charis. (2018). Independence, professionalism,

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 APPENDIX A

INTRODUCTION LETTER

Department of accountancy

Federal Polytechnic,

Kaura Namoda,

Zamfara State.

Dear Respondent,

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This questionnaire is designed by a Higher National Diploma Student of Federal

Polytechnic Kaura Namoda Zamfara State. It is meant for collecting statistical data

for a study titled "Audit Committee characteristics and Financial Performance Of

Listed Industrial Goods Firms In Nigeria", to enable me complete my Higher

National Diploma (HND) the information supplied will be treated with

confidentiality, your assistance in filling this questionnaire will be highly

appreciated.

Yours faithfully,
PRECIOUS MBAH
HND/ACC/SBM/1911

QUESTIONNAIRE

1. What position are you holding?

a. Senior staff ( ) b. Junior staff ( )

2. How many years of experience had the staff?

a. One year ( ) b. Between 2 - 5 year ( ) c. 5 years above ( )

3. Does the committee within the audited entity Carries out the functions assigned

to the audit committee?

a. Yes ( )
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b. No ( )

4. How effective is the audit committee in your organization?

a. Very effective ( )

b. Effective ( )

c. Not effective ( )

5.Does at least one member of the committee has competence in accounting?

a. Yes ( )

b. No ( )

6.Does the committee member as a whole, have experience relevant to the sector in

which the audited entity is operating?

a. Yes ( ) b. No ( )

7. is a majority of the members of that committee independent of the audited

entity?

a. Yes ( )

b. No ( )

8. Did the audit committee monitor the financial reporting process of the entity?

a. Yes ( )

b. No ( )

9. Did the audit committee inform administrative or supervisory body of the entity

of the outcome of statutory audit?

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a. Yes ( )

b. No ( )

10. Can ineffective audit committee be caused by management?

a. Yes ( )

b. No ( )

11. Is the audit committee and its department properly equipped to carry out its

functions in the firm?

a. Yes ( )

b. No ( )

12. How many times during the reference period did the audit committee meets the

administrative or supervisory body of the entity to communicate on its activities,

issues and related recommendations?

a. Never ( ) b. Once ( ) c. Twice ( ) d. Quarterly ( )

13. Did the audit committee submit recommendations or proposals to ensure the

integrity of the financial reporting process of entity?

a. Yes ( )

b. No ( )

14. How many times does the firm experience audit?

a. Never ( )

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b. Once ( )

c. Twice ( )

d. Quarterly ( )

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