Background to the Study

The audit committee plays a crucial role in ensuring transparency and accountability in financial reporting. In commercial banks, this role is even more important due to the nature of banking activities, which involve handling public funds and financial transactions. Audit committees are responsible for overseeing the financial reporting process, monitoring internal controls, and ensuring that external auditors carry out their duties effectively. Their characteristics, such as independence, expertise, size, and frequency of meetings, can influence the quality of external audits (Beasley et al., 2009).

External audit quality is critical for maintaining trust in financial institutions. High-quality audits help detect fraud, ensure compliance with regulatory standards, and provide reliable financial information to stakeholders. In commercial banks, poor audit quality can lead to financial misstatements, loss of investor confidence, and even bank failures (DeFond & Zhang, 2014). The effectiveness of an audit committee in improving external audit quality depends on its ability to exercise oversight functions without interference from management.

The banking sector in Cameroon operates under the regulatory framework set by the Central African Banking Commission (COBAC) and the Bank of Central African States (BEAC). These institutions establish rules to ensure financial stability and protect depositors. Despite these regulations, cases of financial mismanagement and banking fraud have been reported in Cameroon, raising concerns about the effectiveness of audit committees in overseeing external audits (Nguema & Mafangha, 2020).

Several factors influence audit committee effectiveness in commercial banks. Independence is one of the key factors, as an independent audit committee is more likely to challenge management decisions and ensure unbiased financial reporting (Klein, 2002). Expertise is another important characteristic, as members with financial and accounting knowledge can better understand audit reports and regulatory requirements (Abbott et al., 2004). The size of the audit committee also matters, with larger committees often having diverse skills and experiences that contribute to better oversight (Bedard & Gendron, 2010). Furthermore, frequent meetings allow audit committees to address issues promptly and engage more actively with external auditors (Vafeas, 2005).

In Cameroon, many commercial banks struggle with governance issues that affect their audit processes. Weak internal controls, lack of independence in audit committees, and limited financial expertise among committee members are some of the challenges faced (Tanyi & Smith, 2015). As a result, external audits may not always reflect the true financial position of banks, leading to potential risks for investors and depositors.

Previous studies have examined the relationship between audit committee characteristics and audit quality in different countries. For example, studies conducted in Nigeria and South Africa have shown that banks with stronger audit committees tend to have higher-quality external audits (Adegbie & Fakile, 2012; Barac & Van Staden, 2009). However, limited research has been conducted in the Cameroonian banking sector, creating a gap that this study seeks to address.

Given the importance of external audit quality in financial institutions, it is necessary to explore how audit committee characteristics influence audit quality in commercial banks in Cameroon. Understanding these relationships can help regulators and policymakers strengthen governance structures in the banking sector, leading to improved financial reporting and increased investor confidence.

This study aims to assess the impact of audit committee characteristics on external audit quality in commercial banks in Cameroon. It will examine the relationship between audit committee independence, expertise, size, and meeting frequency with audit quality. By doing so, the research will contribute to the existing body of knowledge and provide recommendations for improving financial oversight in the banking sector.