Abstract:
Having a mandatory Audit Committee (AC) in place, is no longer a relevant issue as it has been strongly answered in affirmative. What is now an issue all over the world, among academicians, investors and regulatory bodies, is the effectiveness of audit committees in performing their functions. The purpose of the study was to investigate the influence of AC characteristics on AC effectiveness in MFIs in Uganda. Results indicate that number of financial experts on the audit committee, frequency of AC meetings and AC independence are respectively significant predictors of AC effectiveness. The key recommendations of this study are, that the definition of financial expertise should focus on either accounting expertise, financial management or any other knowledge area, rather than the broad definition of sufficient knowledge in accounting and financial management because each of these knowledge areas may have different results as they are conceptualized differently. Regulatory practioners and policy makers should consider the appointment of members on the audit committee who have particular skills for example, in business, MFI industry, the legal or other technical fields to help strengthen the committees. frequency and length of AC meetings should be included in the regulatory guidelines of microfinance institutions (SACCOs).
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