Audit Committees: begging the question?

Laura F. Spira

Corporate Governance: An International Review, 2003, vol. 11, issue 3, 180-188

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.

Date: 2003
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