The effectiveness of audit committee: a literature review

Abstract

This dissertation reviews the literature on the effectiveness of the audit committee and how its characteristics contribute to oversight of financial and non-financial disclosures in order to reassure shareholders about their investment. Audit committee forms an important pillar to reinforce corporate governance in the organisation, and this review shows that audit committee characteristics (i.e. composition, authority, resources and diligence) are vital to address, particularly to reinforce timeliness, intellectual capital disclosures and the quality of financial disclosures. However, the studies also show mixed results in terms of audit committees’ contribution to overseeing risk management and corporate social responsibility. Therefore, future studies on the current topic are recommended. This thesis increases awareness of audit committee role inside the institution for stakeholders, such as regulators, shareholders, creditors, debtors, etc., and assists academic literature and professional bodies by shedding light on the features of the audit committee and how these contribute to vetting the organisation’s performance in order to protect shareholders’ interest.