Effectiveness of the audit committee to quality financial reporting in Nigeria

Effectiveness of the audit committee to quality financial reporting in Nigeria.

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

Financial reporting is the preparation of published report for users of financial statements. Theissues relating to financial reporting could be traced back to 1975 with the advent of what wasthen known as corporate report, in England. In Nigeria, following the increasing demand forfinancial   information   on   companies,   financial   reporting   has   now   assumed   an   appreciableposition   because   it   provides   information   that   is   useful   to   current   and   potential   investors,creditors and other users in making rational investment, credit, and other financial decisions. Italso enables users to assess the amount, timing, and uncertainty of prospective cash receiptsabout economic them.The issues relating to financial reporting could be traced back to 1975 with the advent of whatwas then known as corporate report, in England. In Nigeria, following the increasing demand forfinancial   information   on   companies,   financial   reporting   has   now   assumed   an   appreciableposition   because   it   provides   information   that   is   useful   to   current   and   potential   investors,creditors and other users in making rational investment, credit, and other financial decisions. Italso enables users to assess the amount, timing, and uncertainty of prospective cash receiptsabout economic them. The emergence and development of public limited liability companies brought changesin   ownership   structure   and   a   complete   divorce   between   ownership   and   management.Professional managers designated Directors are employed as “agents” to manage the business1