By Babajide Komolafe
Institute of Chartered Accountants of Nigeria (ICAN) has queried the efficacy of board audit committees in the country.

“Although the Companies and Allied Matters Act clearly provides for the creation of Audit Committees their efficacy in the Nigerian context is another issue. The current situation is that the composition is skewed in favour of management and this reduces the visible independence of the body and tends to compromise the quality of their work”, said Professor Francis Ojaide, President of the Institute.

He spoke at the 1st annual national conference on audit quality assurance organised by Audit Committee Institute and Center for Audit Quality.

Ojaide, who delivered the keynote address called for change in composition of audit committees to enhance their effectiveness and independence.

He said, “The body should therefore/ be expanded with stakeholders having more representation. The power of the board to nominate 50 per cent of the membership of audit committees should be circumscribed. The Board should appoint only 20 per cent while shareholders will appoint 80 per cent inclusive of the chairman.

“Indeed the Audit Committee should have a special role in appointing and reviewing the performance of the chief executive officer and ensuring that internal control procedures are satisfactory. It should be well placed to act as a focal point for internal “whistleblowers” rather than senior management dealing with the issues who can ask the right questions and understand what is at stake.

In some companies, there has been a presumption that the financial statements will automatically be approved by the audit committees because their members do not possess the requisite accounting knowledge to be able to effectively scrutinize the financial statements or query accounting practices of preparers of those financial statements.”