CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
The governance structure of an entity can play an important role in monitoring and safeguarding the independence of its external auditor. The exact form of an entity governance structure and the role any government body perform in relation to the external auditor may vary depending on the requirements of national laws. In some jurisdictions, a single body commonly known as a “audit committee” oversee all matters relating to the external auditors. Stricter standards of accountability cannot be achieved without an eective internal control structure. One way that public oicials can enhance accountability and demonstrate proper stewardship over public funds is to establish and support on adequate control environment within their organizations. A critical element of the control environment is an independent of management on matters of financial reporting and internal control. An eective audit committee can provide several important aspect of control including ensuring the independence of the internal auditing function and ensuring appropriate action is taken on audit findings. The audit committee serves in a unique capacity as an important communication link between external and internal auditors and operating management and means of reducing the risk management override of key elements of the organization internal control structure. Hence an attempt to find out what will determine the audit committee independence in corporate government is what this research work seeks to address.
1.2 Statement of Problem
One of the foremost functions of the audit committee is to review the financial data of the company on continuous basis and strengthen internal accounting controls, in order to enhance reliability and integrity of financial reporting. The spate of audit failure in the world, especially in Nigeria, has brought great disappointments to the users of financial reports. The cause of the problem has been linked to lack of effective oversight of audit committee which has also been linked with creative accounting. In Nigeria, the challenge of audit committee and audit quality reporting have not attracted much empirical studies beyond mere unreliable opinions. Given the above scenario, the major problem for this study is to determine whether audit quality can significantly be influenced by audit committee characteristics of Nigerian Listed firms. The study attempts to ascertain and establish whether there are significant relationships between audit committee independence and corporate governance in Nigerian Listed firms.