Audit Committees with Accounting Experts Boost Corporate Governance, Prevent Financial Scandals
Audit committees play a crucial role in overseeing financial reporting and corporate governance. A survey of 123 large public manufacturing companies found that having independent audit committees with at least one member knowledgeable in accounting or finance can lead to more effective oversight. These committees are likely to meet more frequently, for longer periods, and be proactive in reviewing internal controls. The study suggests that enhancing audit committee independence and director qualifications can improve their ability to fulfill corporate governance responsibilities.