AUDIT COMMITTEE, AUDIT PRICE AND REPORTING QUALITY OF FIRMS IN NIGERIA

ABSTRACT This research paper examines audit committees and their connection with the financial reporting quality. The research model has been formulated based on non-redundant hypotheses and employs a panel data of 10 firm-year observations. The results show that bigger audit committees that are constituted of directors and shareholder representatives would be more effective in minimizing earnings management that involves artificial smoothing and excessive amount of management discretion over reported earnings. The research is also of the opinion that more audit committee is related to a high audit fee. It is also worth noting that increased audit price seems to decrease the probability of earnings manipulation and as such, stricter audits can be seen to enhance the quality of the financial reporting. The implications of these findings on regulators and policymakers include the effect of the audit pricing in facilitating stricter oversight, reduction of earnings manipulation and eventual increase in the reliability and transparency of the financial statements.