THE EFFECTS OF AUDIT COMMITTEES ON ORGANIZATIONAL PERFORMANCE. A CASE STUDY OF AIG

THE EFFECTS OF AUDIT COMMITTEES ON ORGANIZATIONAL PERFORMANCE. A CASE STUDY OF AIG Paper details: This is a Masters level dissertation, Havard standard referencin" rel="nofollow">ing is required. The research work should be based on Mixed Methodology (combin" rel="nofollow">ination of Quantitative and Qualitative methods). I have attached my detailed research proposal for your guidance. The required number of sources is unlimited COURSEWORK SUBMISSION COVERSHEET Coursework MUST be submitted onlin" rel="nofollow">ine via Blackboard Learn under the relevant modular/study block/assessment block course page. Student Number: Module Code: MG5510 Module Title: DISSERTATION (A 2015/16 YEAR) Assessment Number/Name: e.g. Coursework 1, Coursework 2, Presentation, Fin" rel="nofollow">inal Assessment PROJECT PROPOSAL I confirm that I understand a complete submission of coursework is by one electronic copy of my assignment via Blackboard Learn. I understand that assignments must be submitted by the deadlin" rel="nofollow">ine in" rel="nofollow">in order to achieve an uncapped grade. Separate guidelin" rel="nofollow">ines apply to reassessed work. Please see the College Student Handbook section titled “Late Submission Policy” for details. Plagiarism is the knowin" rel="nofollow">ing or reckless presentation of another person’s thoughts, writin" rel="nofollow">ings, in" rel="nofollow">inventions, as one’s own. It in" rel="nofollow">includes the in" rel="nofollow">incorporation of another person’s work from published or unpublished sources, without in" rel="nofollow">indicatin" rel="nofollow">ing that the material is derived from those sources. It in" rel="nofollow">includes the use of material obtain" rel="nofollow">ined from the in" rel="nofollow">internet. (Senate Regulation 6.18). I confirm that I have read and understood the guidance in" rel="nofollow">in the College Student Handbook. I also confirm that I have neither plagiarised in" rel="nofollow">in this coursework, nor allowed my own work to be plagiarised. The submission of this coversheet is confirmation that you have read and understood the above statements. 1.0 Introduction Auditin" rel="nofollow">ing is a fin" rel="nofollow">inancial activity that is essential in" rel="nofollow">in busin" rel="nofollow">iness organizations to ascertain" rel="nofollow">in the level of accuracy in" rel="nofollow">in monetary affairs and encourage in" rel="nofollow">internal accountability. The process that is undertaken by Auditin" rel="nofollow">ing Committees is important because it assist in" rel="nofollow">in in" rel="nofollow">influencin" rel="nofollow">ing the level of quality performance within" rel="nofollow">in organizational culture. However, understandin" rel="nofollow">ing how committees in" rel="nofollow">influence the performance of enterprises in" rel="nofollow">in long-term and short-term basis is essential. The existin" rel="nofollow">ing literature has shown how experts are in" rel="nofollow">in need of understandin" rel="nofollow">ing the factors and process of audit committees that have an impact on performance of organizations in" rel="nofollow">in the corporate sector. This excerpt is a research proposal that outlin" rel="nofollow">ines a study, which seeks to examin" rel="nofollow">ine the effects of audit committees on organizational performance based on a critical analysis of the American International Group (AIG) Multin" rel="nofollow">inational Company. 1.1 Background of the Study The performance of any organization regardin" rel="nofollow">ing fin" rel="nofollow">inancial considerations is a crucial component of the corporate sector success. A keen analysis of fin" rel="nofollow">inancial activities encourages accountability and eventually contributes to economic growth (Naser & Mokhtar, 2004). The factors revolvin" rel="nofollow">ing around fin" rel="nofollow">inancial consideration are sensitive, and they defin" rel="nofollow">ine the magnitude of success and quality of the busin" rel="nofollow">iness’ 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 governin" rel="nofollow">ing the fin" rel="nofollow">inancial undertakin" rel="nofollow">ings (Iswatia & Anshoria, 2007). The AIG Company is a multin" rel="nofollow">inational organization that operates on huge capital, in" rel="nofollow">incur substantial expenditures, and millions of transactions are carried in" rel="nofollow">in each fiscal year. Understandin" rel="nofollow">ing the effect of the auditin" rel="nofollow">ing processes caused by the features and activities of committees in" rel="nofollow">involved in" rel="nofollow">in the performance of the organization will be vital in" rel="nofollow">in measurin" rel="nofollow">ing 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 auditin" rel="nofollow">ing processes (Abbott et al., 2003; Carcello et al., 2002). The experts agree that the activities of auditin" rel="nofollow">ing 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" rel="nofollow">in the corporate sector is to exhibit growth and improvement in" rel="nofollow">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" rel="nofollow">in multin" rel="nofollow">inational organizations such as AIG will create a positive impact on in" rel="nofollow">intentions of the companies to achieve set objectives as defin" rel="nofollow">ined in" rel="nofollow">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 in" rel="nofollow">involve the analysis of how auditin" rel="nofollow">ing committees in" rel="nofollow">influence the performance of organizations. The exposition will be limited to AIG as a case study organization. The study seeks to examin" rel="nofollow">ine how the composition and characteristics of the auditin" rel="nofollow">ing committees affect how busin" rel="nofollow">iness enterprises attain" rel="nofollow">in their fin" rel="nofollow">inancial and corporate goals. The research also aims to outlin" rel="nofollow">ine how the auditin" rel="nofollow">ing 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 fin" rel="nofollow">inancial monitorin" rel="nofollow">ing tools that evaluate how the monetary operations of the firm within" rel="nofollow">in a specified period were in" rel="nofollow">inclin" rel="nofollow">ined to the set goals and objectives of the organization as well as the ethical and statutory structures. The followin" rel="nofollow">ing objectives will guide the exposition. i. To examin" rel="nofollow">ine how the audit committees in" rel="nofollow">influence AIG organizational performance ii. To examin" rel="nofollow">ine how the audit processes defin" rel="nofollow">ine AIG organizational performance iii. To outlin" rel="nofollow">ine how auditin" rel="nofollow">ing can improve AIG’s organizational quality and effectiveness 2.0 Literature Review The process of auditin" rel="nofollow">ing supports the culture of organization through buildin" rel="nofollow">ing a sustain" rel="nofollow">inable responsibility phenomenon for the executives and workers towards achievin" rel="nofollow">ing 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" rel="nofollow">in the existin" rel="nofollow">ing growth trends and fin" rel="nofollow">inancial leadership (Ljubisavljevic & Jovanovi, 2011). The contributions of the auditin" rel="nofollow">ing process activities are associated with the improved achievements of the firm as well as creatin" rel="nofollow">ing a favorable environment for strategic implementation of necessary changes. The committee is responsible for rein" rel="nofollow">inforcin" rel="nofollow">ing the management through an external oversight of the organization activities (Hutchison & Zain" rel="nofollow">in, 2009). The admin" rel="nofollow">inistration’s in" rel="nofollow">internal monitorin" rel="nofollow">ing tools may not be sufficient to support the operations of the company; therefore, the process of auditin" rel="nofollow">ing enhances the process of accountability and constant evaluation for the achievement of the objectives and goals. Moreover, studies have shown that the auditin" rel="nofollow">ing committees are responsible for analyzin" rel="nofollow">ing the fin" rel="nofollow">inancial performance of the organization and recommend measures that will ensure that the firm transforms to effectiveness in" rel="nofollow">in performance. Through a comparative approach to capital returns, net tax, and in" rel="nofollow">investments, governments have formulated mechanisms that examin" rel="nofollow">ine how organizations carry out fin" rel="nofollow">inancial activities. Experts have desired to understand fully the factors that may enable firms to benefit from the concept of competitive advantage to in" rel="nofollow">increase their respective profit margin" rel="nofollow">ins. The challenge faced by scholars when examin" rel="nofollow">inin" rel="nofollow">ing the existin" rel="nofollow">ing relationship between auditin" rel="nofollow">ing and performance is the dilemma in" rel="nofollow">in choosin" rel="nofollow">ing the primary focus as the in" rel="nofollow">industry or the in" rel="nofollow">individual organizations (Houthoofd, 2006; DeZoort et al., 2002). Some studies have focused in" rel="nofollow">in outlin" rel="nofollow">inin" rel="nofollow">ing the performance of firms and the source of the in" rel="nofollow">interdependence advantages emanatin" rel="nofollow">ing from audit activities (Chang, 2000). Arthur Levitt, former Chair of Security, and Exchange Commission (SEC) in" rel="nofollow">in the USA ascertain" rel="nofollow">ined that sufficient fin" rel="nofollow">inancial evaluations depend on the professional composition of the audit committees and level of in" rel="nofollow">independence and competence (Bronson et al., 2009). Researches have been conducted to ascertain" rel="nofollow">in the effectiveness of the auditin" rel="nofollow">ing processes in" rel="nofollow">in an organization’s growth and development strategy. The existin" rel="nofollow">ing studies have been explain" rel="nofollow">inin" rel="nofollow">ing the fin" rel="nofollow">inancial monitorin" rel="nofollow">ing process considerin" rel="nofollow">ing the activities and agencies in" rel="nofollow">in the United States and the United Kin" rel="nofollow">ingdom. The notion has not been fully exploited in" rel="nofollow">in the small and emergin" rel="nofollow">ing market domain" rel="nofollow">ins. The study by Hutchin" rel="nofollow">inson and Zain" rel="nofollow">in (2009) examin" rel="nofollow">ined the process of auditin" rel="nofollow">ing limited to the relationship existin" rel="nofollow">ing between the in" rel="nofollow">internal auditin" rel="nofollow">ing and the overall performance of organizations in" rel="nofollow">in Malaysia. The study found out that there is a close association between the verification activities and the effectiveness of firms in" rel="nofollow">involved in" rel="nofollow">in the research. The duo recommended that future studies should focus on the effect of fin" rel="nofollow">inancial monitorin" rel="nofollow">ing processes on the corporate governance of the scope of the studies (Hutchin" rel="nofollow">inson & Zain" rel="nofollow">in, 2009). The existin" rel="nofollow">ing literature depicts that there is need to conduct more research concernin" rel="nofollow">ing the auditin" rel="nofollow">ing committee characteristics and activities on the performance of busin" rel="nofollow">iness enterprises. The purpose of doin" rel="nofollow">ing this exposition will be to examin" rel="nofollow">ine how the audit committees in" rel="nofollow">influence the process of success for companies. The study will consider the AIG Company, which is a multin" rel="nofollow">inational service organization that specializin" rel="nofollow">ing in" rel="nofollow">in in" rel="nofollow">insurance. 3.0 Methodology 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 in" rel="nofollow">investigate the effect that emanates from the activities of the auditin" rel="nofollow">ing committees of AIG Company that in" rel="nofollow">influence the performance of the organization. It is essential to note that the questions will assist in" rel="nofollow">in defin" rel="nofollow">inin" rel="nofollow">ing the types of the data to be collected. The questions will help in" rel="nofollow">in buildin" rel="nofollow">ing the baselin" rel="nofollow">ine for conclusions from the relevant discussion. The followin" rel="nofollow">ing questions and hypotheses will defin" rel="nofollow">ine 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 auditin" rel="nofollow">ing committees and the organizational performance of the AIG. H1.1: There is no significant relationship between the characteristics of the auditin" rel="nofollow">ing committees and the organizational performance of the AIG. Q2: What is the relationship between the activities of the auditin" rel="nofollow">ing committees and the AIG organizational effectiveness and success? H0.2: There is a significant relationship between the activities of the auditin" rel="nofollow">ing committees and the AIG organizational effectiveness and success. H1.2: There is no significant relationship between the activities of the auditin" rel="nofollow">ing committees and the AIG organizational effectiveness and success. 3.2 Research Approach and Method The objective of the exposition is to in" rel="nofollow">investigate the effects of auditin" rel="nofollow">ing 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 brin" rel="nofollow">ing in" rel="nofollow">into attention how the performance of busin" rel="nofollow">iness 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 prelimin" rel="nofollow">inary fin" rel="nofollow">indin" rel="nofollow">ings with primary data analysis to build a succin" rel="nofollow">inct correlation. A qualitative approach will provide perceptions and reasons regardin" rel="nofollow">ing the subject from the participants (Maxwell, 2012). On the other hand, a quantitative technique to the study topic will assist in" rel="nofollow">in establishin" rel="nofollow">ing the basis for conclusion formation. The research depends on statistical data to table an argument, make conclusions, and outlin" rel="nofollow">ine necessary recommendations regardin" rel="nofollow">ing the topic of the study. Moreover, the in" rel="nofollow">inductive research paradigm will be utilized in" rel="nofollow">in the survey. The exposition will in" rel="nofollow">involve data collection and analysis based on the facts reflectin" rel="nofollow">ing the notion bein" rel="nofollow">ing in" rel="nofollow">investigated. The in" rel="nofollow">information emanatin" rel="nofollow">ing from the population sample of the AIG Company will be used to in" rel="nofollow">interpret the research questions in" rel="nofollow">in lin" rel="nofollow">ine with the research objectives. Inductive research in" rel="nofollow">involves data collection to establish a relationship that will be used to build a theory, which is the in" rel="nofollow">intention of the study. Besides, the study entails the in" rel="nofollow">investigation of the available literature concernin" rel="nofollow">ing the topic of the study; hence, the study also will in" rel="nofollow">incorporate a deductive paradigm that will be confirmed through in" rel="nofollow">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 in" rel="nofollow">information available in" rel="nofollow">in secondary sources regardin" rel="nofollow">ing the topic of the study. The research will consult the archived literature to understand the concept of auditin" rel="nofollow">ing in" rel="nofollow">in organizations. The secondary sources will also in" rel="nofollow">include the AIG annual performance reports to in" rel="nofollow">investigate whether the group made any sensible economic changes after implementin" rel="nofollow">ing audit recommendation. Utilizin" rel="nofollow">ing the secondary in" rel="nofollow">information will save on time and cost of data collection. The research will assume that the reports represent accurate accounts of the AIG fin" rel="nofollow">inancial performance within" rel="nofollow">in the period bein" rel="nofollow">ing in" rel="nofollow">investigated in" rel="nofollow">in the study. Besides, the exposition will also collect data through in" rel="nofollow">interviews with stakeholders in" rel="nofollow">in the selected AIG representative offices whereby 15 admin" rel="nofollow">inistrators and 5 audit specialists will be in" rel="nofollow">interviewed. The primary data will be essential for the process of analyzin" rel="nofollow">ing the views and perception of participants to be in" rel="nofollow">included in" rel="nofollow">in the deductive in" rel="nofollow">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 in" rel="nofollow">information consent and privacy. The data will be grouped accordin" rel="nofollow">ing to the sources as well as in" rel="nofollow">in lin" rel="nofollow">ine with the research questions answered. The process of data collection, preparation, and analysis will follow the guidelin" rel="nofollow">ines of the plan (Silverman, 2015). All the data considerations will be bound by the research timelin" rel="nofollow">ine and scope. Through descriptive statistics, the quantitative data will be analyzed usin" rel="nofollow">ing the relevant analysis tools such as SPSS. Usin" rel="nofollow">ing computerized analysis will enhance the diversity of the in" rel="nofollow">inferential and descriptive statistics as part of the in" rel="nofollow">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 Auditin" rel="nofollow">ing is the foundation of the accountin" rel="nofollow">ing of the busin" rel="nofollow">iness because it in" rel="nofollow">involves the process of evaluatin" rel="nofollow">ing all transactions of the enterprise and provides a vivid description on whether the legal jurisdictions were exceeded, whether the operations remain" rel="nofollow">ined within" rel="nofollow">in 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 auditin" rel="nofollow">ing committees are essential aspects of the success of the organizations. The recommendations of the study will assist in" rel="nofollow">in buildin" rel="nofollow">ing cohesive performance and quality sustain" rel="nofollow">inability measures in" rel="nofollow">in AIG and other corporate organizations through auditin" rel="nofollow">ing processes. Understandin" rel="nofollow">ing the credibility of fin" rel="nofollow">inancial reportin" rel="nofollow">ing is essential for accountability (Public Oversight Board, 1994). The results will show the existin" rel="nofollow">ing correlation between the auditin" rel="nofollow">ing committee features, characteristics and undertakin" rel="nofollow">ings; and the efficient performance of the AIG. Sin" rel="nofollow">ince 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" rel="nofollow">in the corporate sector. It is worth to understand that the advantages of the auditin" rel="nofollow">ing committees to the performance of the organization have not been fully exploited. 4.0 Conclusion In conclusion, the process that is undertaken by the Auditin" rel="nofollow">ing Committees is important because it assist in" rel="nofollow">in in" rel="nofollow">influencin" rel="nofollow">ing the level of quality performance within" rel="nofollow">in the organizational culture. However, there is need to understand how the committees in" rel="nofollow">influence the performance of the enterprises both in" rel="nofollow">in the long-term as well as the short-term bases. The study will in" rel="nofollow">involve the analysis of how the auditin" rel="nofollow">ing committees in" rel="nofollow">influence the performance of organizations. The exposition will be limited to AIG as a case study organization. Besides, the study seeks to examin" rel="nofollow">ine how the composition and characteristics of the auditin" rel="nofollow">ing committees affect how the busin" rel="nofollow">iness enterprises attain" rel="nofollow">in their fin" rel="nofollow">inancial and corporate goals. The study will employ a mixed approach to ensure that the desired objectives are based on facts. Usin" rel="nofollow">ing a mixed approach will allow the researcher to analyze the secondary sources related to the topic of the study and affirm the prelimin" rel="nofollow">inary fin" rel="nofollow">indin" rel="nofollow">ings with primary data analysis to build a succin" rel="nofollow">inct correlation. Moreover, the results of this exposition will enable stakeholders to understand how the auditin" rel="nofollow">ing committees are essential aspects of the success of the organizations. Nevertheless, the recommendations of the study will assist in" rel="nofollow">in buildin" rel="nofollow">ing cohesive performance and quality sustain" rel="nofollow">inability measures in" rel="nofollow">in AIG and other corporate organizations through auditin" rel="nofollow">ing processes. References Abbott L, G. Peters & K. Raghunandan., 2003. ‘The association between audit committee characteristics and audit fees.’ A Journal of Practice and Theory. 19(1), 31–47 Boeije, H. R., 2009. Analysis in" rel="nofollow">in qualitative research. Los Angeles: SAGE Publications. Bronson, S. N., Carcello, J. F., Hollin" rel="nofollow">ingsworth, C. W., & Neal, T. L., 2009. ‘Are fully in" rel="nofollow">independent audit committees really necessary?’ Journal of Accountin" rel="nofollow">ing and Public Policy, 28(4) : 265–280. Carcello, J. V., Hermanson, D. R., Neal, T. 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Interpretin" rel="nofollow">ing qualitative data: A guide to the prin" rel="nofollow">inciples of qualitative research (4th ed.). Los Angeles: SAGE Publications. Sharma, V. D., Naiker, V., & Lee, B., 2009. ‘Determin" rel="nofollow">inants of audit committee meetin" rel="nofollow">ing frequency: Evidence from a voluntary governance system.’ Accountin" rel="nofollow">ing Horizons 23 (3), 245–263.