The perceptions of audit committees’ role in an emerging market: the case of Egypt

Hany Kamel and Sobhy Elkhatib

Journal of Economic and Administrative Sciences, 2013, vol. 29, issue 2, 85-98

Abstract: Purpose - – The purpose of this paper is to discuss the respondents’ perceptions of the role of audit committees in Egypt and their likely impact on the quality of financial reporting. Design/methodology/approach - – In all, 217 usable questionnaires were collected from three groups of respondents, namely, accounting academics, external auditors and financial managers or senior accountants. For test-retest reliability purposes, seven respondents completed the questionnaire twice. Findings - – The results indicate that the most important function for an effective audit committee to perform is to “review significant changes in accounting policies and practices”. The results also demonstrate that respondents have consistently ranked the different aspects of internal control evaluation as the second most important area to oversee. Moreover, the overwhelming majority of respondents have rated the independence of audit committee members and their experience in accounting or other related subjects as the most important attributes that should be considered when selecting the members of an audit committee. Finally, the vast majority of respondents have perceived the existence of a well-functioning and well-structured audit committee as an effective mechanism in constraining the incidence of financial statement fraud in Egypt. Practical implications - – The findings could be of assistance to businesses and professional associations while they develop their own framework in which audit committees play an important role against corporate abuse and misleading financial statements. Originality/value - – The development of audit committees in Egypt is in its early stage compared with the USA and other advanced economies where audit committees have more than 70 years of history. Therefore, assessing the current perceptions of the role of audit committees in a country such as Egypt could be of general interest to several other developing countries.

Keywords: Corporate governance; Financial reporting quality; Egypt; Audit committee (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:jeaspp:v:29:y:2013:i:2:p:85-98

DOI: 10.1108/JEAS-09-2013-0028

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