The Effect of the Independence, Expertise and Activity of the Audit Committee On the Quality of the Financial Reporting Process

Abstract

This paper critically assesses the importance and impact of 3 main characteristics of audit committee independence, expertise and activity on the overall effectiveness of audit committees and the quality of the financial reporting process, based on corporate governance and regulatory debates and relevant research evidence, combined with statistics and analysis of data relating to these characteristics of audit committees of significant international companies. The results found that audit committee independence plays an important, but questionable, role in the monitoring of financial information, disclosure of internal controls and the company's financial reporting process. Secondly, the expertise of audit committee professionals can enhance the quality of financial reporting. Finally, a diligent audit committee can, to some extent, improve the level of oversight of the financial reporting process of the activity.