Effect of Audit Committee Attributes on the Effectiveness of Audit Committees: Evidence from Regulatory Authorities in Tanzania

Abstract

This study examined the effect of audit committee attributes on the effectiveness of audit committees in the context of regulatory authorities in Tanzania. The sample size was 300 participants from 18 regulatory authorities consisting of board members, management, accountants and auditors. Data was collected using a structured survey questionnaire with a 5-Likert Scale where 241 participants responded, equivalent to 80.3 percent. Data analysis was performed using the IBM SPSS Statistics. The study results indicate that the five audit committee attributes: the audit committee’s advisory role, financial expertise, independence, size and frequency of meetings had a significant effect on the effectiveness of the audit committee. The audit committee’s advisory role, which was derived from the resource dependence theory, significantly contributed to the agency theory. The study recommends that regulatory authorities in Tanzania assess their audit committee members’ attributes and establish optimal audit committee size, financial expertise, independence, frequency of meetings and capacity to discharge their monitoring and advisory roles.