THE EFFECTS OF AUDIT COMMITTEES ON ORGANIZATIONAL PERFORMANCE. A CASE STUDY OF AIG
This is a Masters level dissertation, Havard standard referencing is required.
The research work should be based on Mixed Methodology (combination of Quantitative and Qualitative methods). I have attached my detailed research proposal for your guidance.
The required number of sources is unlimited
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Auditing is a financial activity that is essential in business organizations to ascertain the level of accuracy in monetary affairs and encourage internal accountability. The process that is undertaken by Auditing Committees is important because it assist in influencing the level of quality performance within organizational culture. However, understanding how committees influence the performance of enterprises in long-term and short-term basis is essential. The existing literature has shown how experts are in need of understanding the factors and process of audit committees that have an impact on performance of organizations in the corporate sector. This excerpt is a research proposal that outlines a study, which seeks to examine the effects of audit committees on organizational performance based on a critical analysis of the American International Group (AIG) Multinational Company.
1.1 Background of the Study
The performance of any organization regarding financial considerations is a crucial component of the corporate sector success. A keen analysis of financial activities encourages accountability and eventually contributes to economic growth (Naser & Mokhtar, 2004). The factors revolving around financial consideration are sensitive, and they define the magnitude of success and quality of the business’ brands and services. The success of companies is associated with the methods employed to generate profit and fund expenditures based on the legal frameworks as well as the ethics consideration governing the financial undertakings (Iswatia & Anshoria, 2007). The AIG Company is a multinational organization that operates on huge capital, incur substantial expenditures, and millions of transactions are carried in each fiscal year. Understanding the effect of the auditing processes caused by the features and activities of committees involved in the performance of the organization will be vital in measuring the extent of success (Abbott et al., 2003).
1.2 Justification of the Study
Researcher and commentators have argued that there is a need for audit experts to devise methods that will enhance the performance of organizations through the auditing processes (Abbott et al., 2003; Carcello et al., 2002). The experts agree that the activities of auditing process have a notable effect on value addition on the organizational performance (Chan &Li, 2008; Broson et al., 2009). It is essential to recognize that the desire of firms in the corporate sector is to exhibit growth and improvement in terms of performance and accountability. Such achievements can be drawn from the processes meant to analyze the measure of effectiveness (Sharma et al., 2009). The frequency of audit process in multinational organizations such as AIG will create a positive impact on intentions of the companies to achieve set objectives as defined in the strategic plans (Raghunandan & Rama, 2007). The study has focused on the AIG Company because of the scope of operation and complexity of the audit process associated with the number of the transactions.
1.2 Objectives of the Study
The study will involve the analysis of how auditing committees influence the performance of organizations. The exposition will be limited to AIG as a case study organization. The study seeks to examine how the composition and characteristics of the auditing committees affect how business enterprises attain their financial and corporate goals. The research also aims to outline how the auditing process, as well as the frequency of the activity, creates a constant culture of quality improvements based on the report recommendations. The audit mechanisms are essential financial monitoring tools that evaluate how the monetary operations of the firm within a specified period were inclined to the set goals and objectives of the organization as well as the ethical and statutory structures. The following objectives will guide the exposition.
i. To examine how the audit committees influence AIG organizational performance
ii. To examine how the audit processes define AIG organizational performance
iii. To outline how auditing can improve AIG’s organizational quality and effectiveness
2.0 Literature Review
The process of auditing supports the culture of organization through building a sustainable responsibility phenomenon for the executives and workers towards achieving the set goals, objectives, and the desires of the owners and stakeholders (Eighme & Cashell, 2002). The services provided by the audit committees are neutral but reliable to assists the managers and the stakeholders to ascertain the existing growth trends and financial leadership (Ljubisavljevic & Jovanovi, 2011). The contributions of the auditing process activities are associated with the improved achievements of the firm as well as creating a favorable environment for strategic implementation of necessary changes. The committee is responsible for reinforcing the management through an external oversight of the organization activities (Hutchison & Zain, 2009). The administration’s internal monitoring tools may not be sufficient to support the operations of the company; therefore, the process of auditing enhances the process of accountability and constant evaluation for the achievement of the objectives and goals.
Moreover, studies have shown that the auditing committees are responsible for analyzing the financial performance of the organization and recommend measures that will ensure that the firm transforms to effectiveness in performance. Through a comparative approach to capital returns, net tax, and investments, governments have formulated mechanisms that examine how organizations carry out financial activities. Experts have desired to understand fully the factors that may enable firms to benefit from the concept of competitive advantage to increase their respective profit margins. The challenge faced by scholars when examining the existing relationship between auditing and performance is the dilemma in choosing the primary focus as the industry or the individual organizations (Houthoofd, 2006; DeZoort et al., 2002). Some studies have focused in outlining the performance of firms and the source of the interdependence advantages emanating from audit activities (Chang, 2000). Arthur Levitt, former Chair of Security, and Exchange Commission (SEC) in the USA ascertained that sufficient financial evaluations depend on the professional composition of the audit committees and level of independence and competence (Bronson et al., 2009).
Researches have been conducted to ascertain the effectiveness of the auditing processes in an organization’s growth and development strategy. The existing studies have been explaining the financial monitoring process considering the activities and agencies in the United States and the United Kingdom. The notion has not been fully exploited in the small and emerging market domains. The study by Hutchinson and Zain (2009) examined the process of auditing limited to the relationship existing between the internal auditing and the overall performance of organizations in Malaysia. The study found out that there is a close association between the verification activities and the effectiveness of firms involved in the research. The duo recommended that future studies should focus on the effect of financial monitoring processes on the corporate governance of the scope of the studies (Hutchinson & Zain, 2009). The existing literature depicts that there is need to conduct more research concerning the auditing committee characteristics and activities on the performance of business enterprises. The purpose of doing this exposition will be to examine how the audit committees influence the process of success for companies. The study will consider the AIG Company, which is a multinational service organization that specializing in insurance.
3.1 Research Questions and Hypotheses
The research questions will be based on the objectives of the study. The purpose of the exposition is to investigate the effect that emanates from the activities of the auditing committees of AIG Company that influence the performance of the organization. It is essential to note that the questions will assist in defining the types of the data to be collected. The questions will help in building the baseline for conclusions from the relevant discussion. The following questions and hypotheses will define the basis for the study.
Q1: What is the relationship between the characteristics of the audit committees and the organizational performance of the AIG?
H0.1: There is a significant relationship between the characteristics of the auditing committees and the organizational performance of the AIG.
H1.1: There is no significant relationship between the characteristics of the auditing committees and the organizational performance of the AIG.
Q2: What is the relationship between the activities of the auditing committees and the AIG organizational effectiveness and success?
H0.2: There is a significant relationship between the activities of the auditing committees and the AIG organizational effectiveness and success.
H1.2: There is no significant relationship between the activities of the auditing committees and the AIG organizational effectiveness and success.
3.2 Research Approach and Method
The objective of the exposition is to investigate the effects of auditing committees on the organizational performance based on the AIG Company. The study will employ a mixed approach to ensure that the desired objectives are based on facts. The research seeks to bring into attention how the performance of business enterprises can be improved through frequent audit activities and strategically developed procedures that will encourage quality services. The mixed approach will allow the researcher to analyze the secondary sources related to the topic of the study and affirm the preliminary findings with primary data analysis to build a succinct correlation. A qualitative approach will provide perceptions and reasons regarding the subject from the participants (Maxwell, 2012). On the other hand, a quantitative technique to the study topic will assist in establishing the basis for conclusion formation. The research depends on statistical data to table an argument, make conclusions, and outline necessary recommendations regarding the topic of the study. Moreover, the inductive research paradigm will be utilized in the survey. The exposition will involve data collection and analysis based on the facts reflecting the notion being investigated. The information emanating from the population sample of the AIG Company will be used to interpret the research questions in line with the research objectives. Inductive research involves data collection to establish a relationship that will be used to build a theory, which is the intention of the study. Besides, the study entails the investigation of the available literature concerning the topic of the study; hence, the study also will incorporate a deductive paradigm that will be confirmed through induction. Therefore, the research design is essential to enable the results to be valid and reliable.
3.3 Research Data and Analysis
The research will utilize the information available in secondary sources regarding the topic of the study. The research will consult the archived literature to understand the concept of auditing in organizations. The secondary sources will also include the AIG annual performance reports to investigate whether the group made any sensible economic changes after implementing audit recommendation. Utilizing the secondary information will save on time and cost of data collection. The research will assume that the reports represent accurate accounts of the AIG financial performance within the period being investigated in the study. Besides, the exposition will also collect data through interviews with stakeholders in the selected AIG representative offices whereby 15 administrators and 5 audit specialists will be interviewed. The primary data will be essential for the process of analyzing the views and perception of participants to be included in the deductive information collected from secondary sources. The diversity of the data sources is essential for the study because there is need to develop a concrete relationship between the variables of research questions based on evidence from the sample population. The collection procedure will adhere to the ethical research consideration such as the information consent and privacy. The data will be grouped according to the sources as well as in line with the research questions answered. The process of data collection, preparation, and analysis will follow the guidelines of the plan (Silverman, 2015). All the data considerations will be bound by the research timeline and scope. Through descriptive statistics, the quantitative data will be analyzed using the relevant analysis tools such as SPSS. Using computerized analysis will enhance the diversity of the inferential and descriptive statistics as part of the intended results (Boeije, 2009; Gibson & Brown, 2009). The correlation coefficient at 95% confidential level will depict whether the researcher will reject the null or accept the substantive hypothesis for each question.
3.4 Contribution to Knowledge
Auditing is the foundation of the accounting of the business because it involves the process of evaluating all transactions of the enterprise and provides a vivid description on whether the legal jurisdictions were exceeded, whether the operations remained within the scope of the objectives, and the extent to which the ethical considerations were followed. The results of this exposition will enable stakeholders to understand how the auditing committees are essential aspects of the success of the organizations. The recommendations of the study will assist in building cohesive performance and quality sustainability measures in AIG and other corporate organizations through auditing processes. Understanding the credibility of financial reporting is essential for accountability (Public Oversight Board, 1994). The results will show the existing correlation between the auditing committee features, characteristics and undertakings; and the efficient performance of the AIG. Since the research will employ a qualitative and quantitative approach, the results will depict the required validity and reliability to be extended to other firms in the corporate sector. It is worth to understand that the advantages of the auditing committees to the performance of the organization have not been fully exploited.
In conclusion, the process that is undertaken by the Auditing Committees is important because it assist in influencing the level of quality performance within the organizational culture. However, there is need to understand how the committees influence the performance of the enterprises both in the long-term as well as the short-term bases. The study will involve the analysis of how the auditing committees influence the performance of organizations. The exposition will be limited to AIG as a case study organization. Besides, the study seeks to examine how the composition and characteristics of the auditing committees affect how the business enterprises attain their financial and corporate goals. The study will employ a mixed approach to ensure that the desired objectives are based on facts. Using a mixed approach will allow the researcher to analyze the secondary sources related to the topic of the study and affirm the preliminary findings with primary data analysis to build a succinct correlation. Moreover, the results of this exposition will enable stakeholders to understand how the auditing committees are essential aspects of the success of the organizations. Nevertheless, the recommendations of the study will assist in building cohesive performance and quality sustainability measures in AIG and other corporate organizations through auditing processes.
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