Audit Committee Effectiveness and Audit Fee among Listed Deposit Money Banks in Nigeria

Abstract

The persistent cases of corporate accounting scandals which have rocked the Nigerian banking sector in spite of auditor certification of financial statements as free from material error have raised concern not only on the effectiveness of audit committees but also on audit services despite the huge amount charged on their clients. Hence, this study examined the effect of audit committee effectiveness on audit fee of listed deposit money banks in Nigeria. Using an ex-post facto research design, the data sourced through the annual reports of twelve (12) banks for the period between 2012 and 2018 were analysed using random-effect regression analysis. The result of the study revealed that audit committee effectiveness proxy with audit committee audit committee expertise (t-value =3.22 & p-value = 0.000), audit committee diligence (t-value = 3.57, & p-value = 0.000) and audit committee gender diversity (t-value = 3.85 & p-value =0.000) has significant positive effect on audit fee of listed deposit money banks in Nigeria. This implies that an effective audit committee would demand for high audit quality service from the auditor, thereby increasing the audit efforts and time which subsequently result to higher audit fee. The study concluded that an effective audit committee would demand high audit service from the external auditor thereby ensuring that the financial statement published is relevant and of faithful representation.