Audit Committees Empowered to Enhance Financial Reporting Reliability
The study looked at how audit committees can make financial reporting more reliable by working closely with internal audit functions. They found that firms with a strong relationship between the audit committee and the internal audit function saw better financial reporting when a new internal audit function was introduced under a New York Stock Exchange mandate. The key interactions that improved financial reporting reliability included private meetings to review the internal audit function's work. It was also important for the audit committee to promote open communication, independence, and provide monitoring assistance.