EFFECT OF AUDIT COMMITTEE EFFECTIVENESS AND AUDIT EVALUATION ON AUDIT QUALITY: A CRITICAL LITERATURE REVIEW

Purpose - This paper focused on the critical review of literature on the effects of audit committee effectiveness and audit evaluation on audit quality and any research gaps in the area of audit quality and recommends any for future research. Methodology – This is was a review of literature on audit committee effectiveness, audit evaluation and audit quality. Findings – The study finds that audit committee effectiveness has a major effect on the audit quality in organizations. In addition, variations in different research methodologies used in the literature explain the inconsistencies in research findings by academicians. Further the study finds that independence of the audit committee, qualification of its members as reflected on the knowledge and expertise and the size of the committee is believed to improve the financial reporting quality which results in high audit quality. Implication – The findings imply that there is no clearly agreeable audit quality framework and how audit committee effectiveness affects audit quality. Value – The study recommends a further investigation on the effect of audit committee qualification on audit quality; the link between audit quality framework, audit quality indicators and audit quality using longitudinal and correlation approaches. The critical literature review points at a number of significant drivers of audit quality which are not fully identified in the expert role of audit committee including the roles of key players in the financial reporting chain viewed as improving financial reporting quality.