EFFECT OF AUDIT CHARACTERISTICS ON FINANCIAL REPORTING QUALITY OF NIGERIAN DEPOSIT MONEY BANK : THE GENERALISED LEASE SQUARE APPROACH

Abstract
This study explores the impact of audit characteristics, specifically Audit Committee Meetings (ACM) and Audit Committee Composition (ACC), on the Financial Reporting Quality (FRQ) of Nigerian deposit money banks using the Generalized Least Squares (GLS) approach. Utilizing an ex-post facto research design, secondary data were collected from the annual reports and accounts of eight deposit money banks with international authorization licenses, listed on the Nigerian Stock Exchange, over a five-year period from 2019 to 2023. The study employed the census technique, ensuring that all relevant banks within the population were included in the analysis. Panel data were analyzed using panel regression to examine the relationships between the variables. The findings reveal that ACM has a statistically significant but modest negative impact on FRQ, suggesting that increasing the frequency of audit committee meetings does not necessarily lead to improved financial reporting quality. Conversely, ACC shows a strong positive effect on FRQ, underscoring the critical role of a well-structured audit committee in enhancing the accuracy, transparency, and reliability of financial reports. Based on these findings, several recommendations are made. Banks should prioritize enhancing ACC by strategically selecting members who can contribute effectively to financial reporting quality. Additionally, efforts should be made to mitigate the negative impact of ACM by ensuring that meetings are productive and focused on key issues. A balanced approach to resource allocation is advised, alongside continuous monitoring and evaluation of audit committee practices. Further research is recommended to explore the specific factors within ACM and ACC that most significantly influence FRQ. These insights are essential for regulators, stakeholders, and policymakers aiming to optimize financial reporting practices in the Nigerian banking sector.
Keywords
Audit Committee Meetings, Audit Committee Composition, Financial Reporting Quality, Deposit Money Banks