The Relationship between the Characteristics of a Risk Management Committee and the Issuance of a Modified Audit Opinion in the Jordanian Context

  • Saleh Nafeth Zaid Alkelani phd student
  • Wan Nordin Wan Hussin
  • Basariah Salim


Because of the failures that have occurred in the wake of the financial crises worldwide, many studies and researchers have recommended establishing separate risk committees at the level of the board of directors to manage the risks and supervise the risks faced by companies, as well as work to prevent excessive risks. This study investigated whether any differences exist in the companies that have risk committees from those in which do not have risk committees. The main research question of this study was whether the risk committees impact the quality of financial reports in Jordanian industrial and service companies, and another examined the relationship between characteristics including size, qualifications, meeting frequency, and independence and the issuance of a modified opinion. In this study, the quality of financial reports was measured through the issuance of a modified opinion by an external auditor. The sample of the study consisted of all companies (industrial and service) that were listed on the Amman Stock Exchange between 2015 and 2018. The results found a negative relationship between characteristics of the risk committees, including the existence of a committee, qualifications of members, and frequency of meetings and the issuance of a modified audit opinion. The results indicated that the independence of the risk committees had a significant and positive impact on the issuance of a modified opinion, which indicates that it did not reduce the likelihood that a Jordanian company would receive a modified audit opinion. This study did not find any significant effect of the size of a risk committee on the issuance of a modified opinion. The results of this empirical study provided substantial evidence of the importance of the existence of risk committees in companies and their characteristics to raise the quality and efficiency of financial reports. Because risk committees in industrial and service companies can reduce the likelihood that a company would receive a modified audit opinion for risk-related reasons, policymakers and regulators should note the importance of the existence and characteristics of separate risk committees industrial and service companies.


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How to Cite
ZAID ALKELANI, Saleh Nafeth; WAN HUSSIN, Wan Nordin; SALIM, Basariah. The Relationship between the Characteristics of a Risk Management Committee and the Issuance of a Modified Audit Opinion in the Jordanian Context. Asian Journal of Accounting and Finance, [S.l.], v. 2, n. 2, p. 52-73, july 2020. ISSN 2710-5857. Available at: <>. Date accessed: 11 aug. 2020.