Internal Audit Functions and Timeliness Financial Reporting Quality of Pharmaceutical Companies in Nigeria

to Zenith Bank Plc, Nigeria. Data obtained from the audited annual reports of Zenith Bank Plc that covered a period of 2009 – 2016. The study utilised both descriptive and inferential statistics to analyse the data. Results indicated that there is a strong relationship between financial reporting quality and investment decision Suryana (2018) study within the Indonesian context investigated the role of the internal audits to the quality of financial reporting, with a focus on the listed banks. The study used descriptive and verification methods for data collection while the use of census approach by distributing questionnaires to 43 banks that listed on the Indonesia Stock Exchange for the period of 2014-2016 was the population and sampling size determination. The unit of analysis was the bank that listed on the Indonesia Stock Exchange with the audit committee, the internal audit manager, the finance and accounting managers as respondents. Primary data was used and gathered through the use of questionnaire respondents’ feedback and secondary data is obtained from the listed bank’s annual reports. Validity and reliability tests were conducted on the questionnaire’s feedback that was collected. Data were anlysised with the use of regression analysis. The result of the study indicated that there are significant role of internal audit to the quality of financial reporting. The quality of financial reporting is higher if the internal audit role has a role in completion and understanding the objectives, management, and scope of work, the application of the principles and implementation of the internal audit function. Gap in literature From the empirical reviews, it has shown the need for further research based on gaps identified. Most of the studies focused on audit quality and financial performance (Adeyemi et al., 2012; Ebere&Chukuma, 2016), others are on internal control and financial performance (Kinyua et al., 2015; Mohammed, 2016; Ibrahim et al., 2017; Salameh, 2019; Dashibuyah et al., 2019; Orche et al., 2018), thus creating a gap in scope and variable for which the study attempts to fill. Few studies in Nigerian context (Adeyemi&Olarewaju, 2019; Amosun&Owolabi, 2020) focused on internal control and financial reporting quality again creating a variable gap since internal controls is part of internal audit functions, thus creating a research gap. Therefore, this study attempts to fill the gap by investigating the audit function and financial reporting quality looking at the variables of financial audit, procedural audit, compliance audit (for audit functions dimensions) and fundamental characteristics of relevance, timeliness as well as the enhancing characteristics of understandability for measures of financial reporting qualityof pharmaceutical companies in Nigerian within the periods of 2009– 2019. Furthermore, while some studies have focused on insurance firms (Fariba&Mehran, 2016; Chukwu&Ordu, 2018; Unachukwu, 2019), however they did not investigate the relationship between audit function and reporting quality, rather looked at IFRS adoption and reporting quality again leaving the need for audit functions and financial reporting quality for the pharmaceutical companies. Methodology This study, being a case (Nigeria), is thus structured based on the adoption of the quantitative methodological approach and thus designed to capture data, within non-contrived, uncontrolled quasi-experimental settings, using the relevant quantitative data generating tools and instruments. Hence the cross-sectional survey design was adopted.The population of the study consists of the Ten (10) listed Pharmaceutical companies in Nigeria as at 31st December, 2019. Primary and secondary sources were used. Primary data were obtained with the use of survey through the administration of copies of questionnaire. Secondary data will be obtained from literature reviews, from journals, textbooks, and regulatory bodies reports; websites of Pharmaceutical companies and other government reports such as stock exchange reports. The method of data collection is via the use of copies of questionnaire or research instruments. Research instrument is a device for collecting the data or measuring the variables used for answering the research questions and testing the hypotheses. For this study the primary data was utilized. Questionnaire and oral interview were adopted as the research instrument. Construct and face validity were used to establish the validity of the instrument. This implies that firstly, the copies of questionnaire were given to some experts – the supervisor and other lecturers and some fellow scholars to ascertain its validity and improve on the instrument thereby validating it. the reliability value of 0. 6 – 0.8 was the threshold set out for the instruments and when obtained it was deemed to be reliable for this study. This was ascertained with the help of SPSS and presented in the tables below.The questions were structured in the form of “strongly agree to strongly disagree and undecided options. The numbers assigned to them includes 0= Undecided, 1= strongly disagree, 2= disagree, 3= Agree and 4=strongly agree (Nworgu, 2006). The questionnaire was clear regarding questions about Internal Audit function and financial reporting quality using the characteristics of relevance, timeliness and understandability. In line with these, 150 copies of questionnaire (according to the distribution table) were issued to respondents from the 10 selected companies in Port Harcourt. A non-parametric statistical which involves little or no assumptions concerning the form of the variables distributions (Campbell &Swiscow, 2009) will be used here for data analysis. The statistical tool to be used in testing for the hypotheses is the Pearson Product Moment Correlation coefficient and regression analysis, and descriptive statistics. The moderator variable was tested with Partial correlation analysis. The correlation coefficient measures the degree of relationship between two sets of ranked observations. It was adopted for this research because it will show the relationship between audit functions and financial performance of the quoted manufacturing companies with the region of the study. The computations will be done and result analysed with the aid of Statistical Package for social sciences SPSS version 21. The justification of regression and correlation analysis used here was due to the data. On one hand, data gathered were ordinal scale data and thus made is suitable for parametric statistical tools of analysis such as PPMC as well as T test statistics amongst others (Campbell &Swiscow, 2009). On the other hand, the test done is relationship studies, thus regression analysis is suitable for this study (Igwenagu, 2011). Model Specification Using the Ordinary Least Square multiple regression formula which states: Yi = b0 + b1x1j + b2x2j + ........+bkxkj+ ej, where yi is the dependent variable from the population of the interest, b0, b1.....bk are the population partial regression coefficients and X1j X2j ......Xkj are observed values of the independent variables X1, X2......Xk, respectively. In view of the above, the following models were developed for this study: FSQ = f --------------------- (1) TML = f(FA, PA, CA)........................(2) In the linear form, Equation (2),(3) & (4) convert to: TML = b0+b1(FA) +b2 (PA)+ b3 (CA) +e Where: bo1-b2 = are coefficient of regression parameters e= error term. For hypothesis testing, the following models applies TML = b0+b1(FA) +e -------------------------- (3) TML = b0+b1 (PA) +e --------------------------- (4) TML = b0+b1(CA) +e ------------------------------(5) COE = b0+b1(IAF, FRQ) +e------------------------------(6) Using Statistical Package for Social Sciences software, the variables were subjected to complementary statistical test and the results were used for analysis and for hypothesis verification. Analysis, Results and Discussion