The series of accounting scandals have intensified pressure from stakeholders and regulators on the audit committees to do the jobs for which they are hired. Though most companies have audit committees, their role has been limited due to the lack of expertise and time. An active audit committee is important because it indicate the commitment to the issues of interest because of the reports it release about the activities undertaken during the financial year and the efforts made to ensure adequate internal control. Audit committees must be given the role to approve and review audit fees, thus neutralizing the bias of management influence on the negotiations with the auditors. Of equal importance, auditor independence can be safeguarded if audit committees were composed of a majority of independent and non-executive directors and this might indicate that their independent status would contribute to auditor independence through bridging communication networks and neutralizing any conflict between the management and the auditor. Audit committee can go a long way in enhancing the credibility of the financial disclosures of a company and promoting transparency. Thus, it is essential for the Indian companies to accept and continue with the reforms that are demarcated by the challenges of the new millennium.
ISSN 0116-7111 (Print)
Philippine E-Journals
