Evaluating the Effectiveness of Audit Committees in Public Sector: A Case Study of Chingola Municipal Council

Finance

  • Author Chimfwembe Shula
  • Published January 2, 2024
  • Word count 1,016

Name: CHIMFWEMBE SHULA

SIN: 21900332

Program: Master in Accounting And Finance

Institution: Copperbelt University

Title: Evaluating the Effectiveness of Audit Committees in Public Sector: A Case Study of Chingola Municipal Council

Abstract:

Audit committees (ACs) play a crucial role in ensuring good corporate governance structures, particularly in the public sector. This research aims to evaluate the effectiveness of ACs in the public sector, using the case study of the Chingola Municipal Council in Zambia. The research uses a mixed-methods approach, comprising a self-administered questionnaire and interviews with an audit specialist from the Zambia Institute of Chartered Accountants (ZICA) and the Ministry of Local Government. The study finds that the effectiveness of ACs is influenced by several factors, including the composition of the committee, the knowledge and experience of members, the size of the committee, and the frequency of meetings. Additionally, the study finds that the autonomy of the AC and the cooperation between internal and external audit units and the AC also play a crucial role in enhancing the effectiveness of ACs in the public sector. The study recommends that public sector organizations should ensure that their ACs comprise qualified and experienced members, and that they have sufficient resources and autonomy to fulfill their oversight responsibilities effectively. Keywords: Audit committees, public sector, corporate governance, effectiveness, autonomy, cooperation.

Introduction:

Audit committees (ACs) are a critical aspect of corporate governance structures, particularly in the public sector. According to KPMG (2014), ACs serve as an oversight committee, ensuring that the organization's financial reporting, internal controls, and risk management systems are effective and efficient. Effective ACs are essential for enhancing the public's trust in public sector organizations, promoting accountability, and preventing fraud and corruption. Despite the critical role that ACs play in the public sector, there is limited research on their effectiveness. This research aims to evaluate the effectiveness of ACs in the public sector, using the case study of the Chingola Municipal Council in Zambia. The research seeks to answer the following research Questions:

 What are the factors that influence the effectiveness of ACs in the public sector in Zambia?

 How does the autonomy of the AC influence its effectiveness?

 What is the extent of the relationship between the audit unit and the AC in the public sector, and how does it influence the effectiveness of the AC?

Background:

ACs have become increasingly important in the wake of corporate scandals and financial crises, which have highlighted the need for effective oversight of financial reporting and risk management systems. In the public sector, ACs play a crucial role in ensuring that public resources are managed effectively and transparently. According to Mupeta (2017), ACs are one of the most critical governance and assurance systems for ensuring accountability in the use of public resources. The effectiveness of ACs is influenced by several factors, including the composition of the committee, the knowledge and experience of members, the size of the committee, and the frequency of meetings. Additionally, the autonomy of the AC and the cooperation between internal and external audit units and the AC also play a crucial role in enhancing the effectiveness of ACs in the public sector.

Methodology:

The research uses a mixed-methods approach, comprising a self-administered questionnaire and interviews with an audit specialist from the Zambia Institute of Chartered Accountants (ZICA) and the Ministry of Local Government. The questionnaire comprises closed-ended questions, while the interviews are semi-structured. The research population comprises members of the AC at the Chingola Municipal Council, as well as internal and external auditors. Data analysis uses descriptive statistics and content analysis. Descriptive statistics are used to analyze the frequency and distribution of responses to the questionnaire, while content analysis is used to analyze the interview data.

Results:

The study finds that the effectiveness of ACs in the public sector is influenced by several factors, including the composition of the committee, the knowledge and experience of members, the size of the committee, and the frequency of meetings. Specifically, the study finds that:

I. The composition of the committee is critical to its effectiveness. Members should have the necessary qualifications and experience to fulfill their oversight responsibilities effectively.

II. The size of the committee should be optimal, neither too large nor too small, to ensure effective decision-making and communication.

III. The knowledge and experience of members are crucial to the effectiveness of the committee. Members should have a good understanding of financial reporting, internal controls, and risk management systems.

IV. The frequency of meetings is essential to ensure that the committee can fulfill its oversight responsibilities effectively. Additionally, the study finds that the autonomy of the AC and the cooperation between internal and external audit units and the AC also play a crucial role in enhancing the effectiveness of ACs in the public sector. The study recommends that public sector organizations should ensure that their ACs comprise qualified and experienced members, and that they have sufficient resources and autonomy to fulfill their oversight responsibilities effectively.

Conclusion:

In conclusion, effective ACs are critical to ensuring good corporate governance structures in the public sector. The effectiveness of ACs is influenced by several factors, including the composition of the committee, the knowledge and experience of members, the size of the committee, and the frequency of meetings. Additionally, the autonomy of the AC and the cooperation between internal and external audit units and the AC also play a crucial role in enhancing the effectiveness of ACs in the public sector. The study recommends that public sector organizations should ensure that their ACs comprise qualified and experienced members, and that they have sufficient resources and autonomy to fulfill their oversight responsibilities effectively.

References:

 Badara, M., & Saidin, S. Z. (2014). The effectiveness of audit committees: Evidence from Libya.

 Journal of Accounting in Emerging Economies, 4(2), 124-139. KPMG (2014). Audit Committee Survey 2014. Retrieved from https://assets.kpmg/content/dam/kpmg/pdf/2014/05/Audit-Committee-Survey-2014.pdf Mupeta, M. (2017).

 The role of audit committees in the public sector: A case study of Zambia. Journal of Public Administration and Governance, 7(3), 1-17. Mutaju, S. W., & Marobhe, N. J. (2013).

 The role of audit committees in enhancing corporate governance in Tanzania. International Journal of Business and Social Science, 4(5), 99-106.

My name is Chimfwembe Shula am currently the Hospital Accounta at konkola mine Hospital under konkola copper mines plc. A proud graduate of [the Zambia Institute of Chartered Accountants, i was inspired to pursue a career in accounting and finance from child wood because i would help my parents in the family Business.

Article source: https://articlebiz.com
This article has been viewed 525 times.

Rate article

This article has a 5 rating with 2 votes.

Article comments

There are no posted comments.

Related articles