How Audit Committee Chairs Address Information-Processing Barriers

Clinton Free, Andrew J. Trotman, Ken T. TrotmanAccounting审计UTD24

The Accounting Review2020-02-27University of Sydney; Universidad del Noreste; UNSW SydneyDOI

Citations83

ABTRACT This study investigates the way that experienced audit committee Chairs address barriers to effective performance. We conceptualize audit committees as groups of individuals gathering, elaborating, and sharing information, and identify key group barriers to effective audit committee oversight. Drawing on 24 interviews with audit committee Chairs from leading Australian-listed companies, we provide new evidence of the approaches used in practice to address information-processing barriers faced by audit committees. Specifically, we identify six key mechanisms: (1) audit committee composition; (2) pre-meetings; (3) handling of disagreements between management and auditors; (4) formal audit committee meeting facilitation; (5) promoting audit committee skepticism; and (6) external auditor selection. Our findings provide insights for audit committee members, audit partners, and policy-makers as they aim to improve financial reporting and audit quality. These findings also have important implications for research designs of future experimental research.

Audit committeeAuditChief audit executiveJoint auditAudit evidenceInformation technology auditAudit planInternal auditAccountingBusinessQuality auditPublic relations