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Audit Committees: begging the question?

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  • Laura F. Spira

Abstract

Audit committees have become a standard feature of corporate governance in UK listed companies since the publication of the Cadbury Committee's report in 1992. Despite some initial sceptical comment, their widespread adoption has apparently been uncontroversial. However, a decade later, remarkably little is known about how they operate and whether they are effective in providing the benefits anticipated by Cadbury. In the aftermath of Enron, expectations of the audit committee role in supporting auditor independence are likely to intensify. A key feature of audit committee activity – indeed, of the role of the non‐executive director – appears to be the asking of questions, but the practical link between the questioning process and the achievement of the benefits outlined by the proponents of audit committees remains obscure. This paper argues that both the content and context of the questioning process deserve further examination if audit committee activity is to be seen as anything more than a ceremonial performance.

Suggested Citation

  • Laura F. Spira, 2003. "Audit Committees: begging the question?," Corporate Governance: An International Review, Wiley Blackwell, vol. 11(3), pages 180-188, July.
    • Handle: RePEc:bla:corgov:v:11:y:2003:i:3:p:180-188
    DOI: 10.1111/1467-8683.00317
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    1. Stiles, Philip & Taylor, Bernard, 2001. "Boards at Work: How Directors View their Roles and Responsibilities," OUP Catalogue, Oxford University Press, number 9780198288763.
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    1. G. Sarens & I. De Beelde, 2006. "Internal audit: the expert in providing comfort to the audit committee. The case of risk management and internal control," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 06/428, Ghent University, Faculty of Economics and Business Administration.
    2. Marlene Davies, 2009. "Effective working relationships between audit committees and internal audit—the cornerstone of corporate governance in local authorities, a Welsh perspective," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 13(1), pages 41-73, May.
    3. Ismail Adelopo & Kumba Jallow & Peter Scott, 2012. "Multiple large ownership structure, audit committee activity and audit fees," Journal of Applied Accounting Research, Emerald Group Publishing Limited, vol. 13(2), pages 100-121, September.
    4. Dominic S.B. Soh & Nonna Martinov-Bennie, 2011. "The internal audit function: Perceptions of internal audit roles, effectiveness and evaluation," Managerial Auditing Journal, Emerald Group Publishing, vol. 26(7), pages 605-622, July.
    5. Sarens, Gerrit & De Beelde, Ignace & Everaert, Patricia, 2009. "Internal audit: A comfort provider to the audit committee," The British Accounting Review, Elsevier, vol. 41(2), pages 90-106.
    6. Ionica Oncioiu & Anca-Gabriela Petrescu & Florentina-Raluca Bîlcan & Marius Petrescu & Melinda Timea Fülöp & Dan Ioan Topor, 2020. "The Influence of Corporate Governance Systems on a Company’s Market Value," Sustainability, MDPI, vol. 12(8), pages 1-15, April.
    7. Miglani, Seema & Ahmed, Kamran & Henry, Darren, 2015. "Voluntary corporate governance structure and financial distress: Evidence from Australia," Journal of Contemporary Accounting and Economics, Elsevier, vol. 11(1), pages 18-30.
    8. Julia Yonghua Wu & Ronán Feehily & Beverley Rae Lord, 2022. "The Corporate Governance Role of Audit Committees: Through the Lenses of New Zealand Institutional Investors," Australian Accounting Review, CPA Australia, vol. 32(1), pages 63-76, March.
    9. Angus Duff, 2009. "Measuring audit quality in an era of change: An empirical investigation of UK audit market stakeholders in 2002 and 2005," Managerial Auditing Journal, Emerald Group Publishing, vol. 24(5), pages 400-422, May.
    10. Sumaira Ashraf & Elisabete G. S. Félix & Zélia Serrasqueiro, 2022. "Does board committee independence affect financial distress likelihood? A comparison of China with the UK," Asia Pacific Journal of Management, Springer, vol. 39(2), pages 723-761, June.
    11. Bouaziz, Zied & Triki, Mohamed, 2012. "L’impact de la présence des comités d’audit sur la performance financière des entreprises tunisiennes [The impact of the presence of audit committees on the financial performance of Tunisian compan," MPRA Paper 42175, University Library of Munich, Germany.
    12. C. Piot & L. Kermiche, 2009. "A quoi servent les comités d'audit ? Un regard sur la recherche empirique," Post-Print halshs-00537952, HAL.
    13. Muqaddas Khalid & Qaisar Abbas & Fizzah Malik & Shahid Ali, 2020. "Impact of audit committee attributes on financial distress: Evidence from Pakistan," International Journal of Financial Engineering (IJFE), World Scientific Publishing Co. Pte. Ltd., vol. 7(01), pages 1-19, March.
    14. Li, Jing & Mangena, Musa & Pike, Richard, 2012. "The effect of audit committee characteristics on intellectual capital disclosure," The British Accounting Review, Elsevier, vol. 44(2), pages 98-110.
    15. Annie Ng Cheng San & M. Krishna Moorthy & Choe Kum Lung, 2012. "Perceived Social Power and Audit Committee Effectiveness in Malaysia: The Conceptual Model," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 2(1), pages 162-175, January.
    16. Jonas Oliveira & Lúcia Lima Rodrigues & Russell Craig, 2011. "Risk-related disclosures by non-finance companies: Portuguese practices and disclosure characteristics," Managerial Auditing Journal, Emerald Group Publishing, vol. 26(9), pages 817-839, October.

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