Effect of Audit Opinions and Entity's Characteristics on Audit Committees' Effectiveness in Government Entities in Tanzania
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Date
2022-12-01
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Publisher
TIA
Abstract
This paper examines the influence of audit opinions and entity characteristics on
audit committee effectiveness (ACE) in government entities. Using a large sample
of government entities in Tanzania as a reference, the paper adopted the resource
dependency theory to explain the theme. Data were collected from 230 government
entities' financial statements and Controller and Auditor General (CAG) reports
from 2014/15 to 2019/20. The ordinary least square (OLS) technique was utilised
to obtain regression results. The results show that disclaimer opinion negatively
affects Audit Committee (AC) effectiveness. Qualified Opinion and Adverse
Opinion were found to be insignificant though they had a negative relationship the
same as disclaimer opinion. Specifically, unqualified opinion is a significant
positive aspect related to AC effectiveness. Furthermore, entity structure, size, and
location significantly and positively influenced AC effectiveness. On the other hand,
firm age had statistically insignificant effect. The study findings imply that an entity
should have experienced/competent audit committee members in accountancy.
Also, the audit committee must be well-composed and have sufficient resources to
obtain a clean report. Therefore, the paper recommends inviting the national audit
office to every audit committee meeting. The board and management should
emphasise on the budget for the training AC members. Further, the President's
Office - TAMISEMI and the ministry responsible for finance should insist on the
establishment and activeness of AC in all government entities in Tanzania. As per
the author's knowledge, this paper adds new empirical knowledge by utilising CAG
reports to link the effectiveness of AC with audit opinions and entity characteristics
in Tanzania.
Description
Keywords
Audit Committee Effectiveness, Audit Opinions, Entities' characteristics.