Premium
The association between audit committee effectiveness and audit risk
Author(s) -
Contessotto Christine,
Moroney Robyn
Publication year - 2014
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12010
Subject(s) - audit , accounting , audit evidence , business , conformity , financial statement , joint audit , audit risk , chief audit executive , audit plan , audit committee , information technology audit , auditor independence , internal audit , actuarial science , psychology , social psychology
Audit committees ( AC s) are expected to play a key role in improving financial statement integrity and as a consequence reduce audit risk. Companies reporting conformity with regulations can have an AC that appears effective but is not actually effective in substance. We surveyed audit partners and managers to identify their indicators of actual AC effectiveness (auditor‐chosen list). We hypothesize a negative association between AC effectiveness and audit risk, only when an auditor‐chosen list, rather than extent of conformity with regulations, is used to measure effectiveness. Results support our expectations.