Audit Committees Oversight Responsibilities Post Sarbanes‐Oxley Act

Hassabelnaby, Hassan R.; Said, Amal A.; Wolfe, Glenn A.

doi:10.1108/19355181200700007

Cited by 11 publications

(6 citation statements)

References 19 publications

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“…According to BRC () and SEC (), audit committee financial literacy is defined as the ability to read and understand fundamental financial statements. HassabElnaby, Said, and Wolfe () considered that the financially literate members of the audit committee must have knowledge of generally accepted accounting principles, financial reporting complexity, internal control, and audit committee functions. Different rules and regulations promulgate the presence of financial expertise in audit committees to enhance corporate governance mechanisms (BRC, ; Sarbanes–Oxley Act, ).…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Effective association between audit committees and the internal audit function and its impact on financial reporting quality: Empirical evidence from Omani listed firms

et al. 2018

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The role of the audit committee in oversight of the internal control and internal audit function has grown in the last decades as corporate governance mechanisms after the dramatic scandals and failures. This paper examines the impact of the audit committee and the presence of internal audit function on a company's financial reporting quality. Moreover, this study focus on the association between the audit committee and internal audit function and company's financial reporting quality measured as accruals quality and absolute discretionary accruals. It is hypothesized that the financial reporting quality is related to the strength of internal corporate governance mechanisms, including audit committee and internal audit and its association. Different mechanisms are being examined: audit committee size and independence, frequency of meeting, financial literacy, existence of internal audit function and its meeting independently. To test our hypothesis, we employ panel data analysis for 71 nonfinancial firms through 139 observations listed on the Muscat Securities Market during the period of 2013 and 2014. The data used in the analysis were collected from the companies' annual reports published by the Muscat Securities Market. Ordinary least squares is used to regress financial reporting quality linear variables on audit committee and internal audit. The findings suggest that audit committee meetings frequency and the presence of internal audit function positively affect a company's financial reporting quality. Hence, an audit committee that meets more frequently provides effective monitoring of financial reporting and increases the likelihood of discussing and following up any problems and findings in the financial statements and audit reports. Thus, frequent audit committee meetings provide better oversight of the annual accounts. Likewise, the internal audit function is considered an important corporate governance mechanism to safeguard the quality of financial reporting by monitoring organizational risks, assessing internal controls and detecting possible manipulation because the internal auditor evaluates financial procedures. However, results suggest that the relationship between other corporate governance mechanisms and financial reporting quality is not significant.

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Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Effective association between audit committees and the internal audit function and its impact on financial reporting quality: Empirical evidence from Omani listed firms

et al. 2018

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“…Similarly, Cohen, Gaynor, Krishnamoorthy, and Wright (2007) state that the preservation of accruals quality is an important AC responsibility in the post‐SOX era, particularly when firms experience problems such as internal control deficiencies. Indeed, HassabElnaby, Said, and Wolfe (2007) show a significant post‐SOX increase in the focus of ACs in reviewing accounting policies and key management estimates, judgments, and valuations.…”

Section: The Role Of Accounting Experts In Preserving Financial Rementioning

confidence: 99%

The Association Between Accruals Quality and the Characteristics of Accounting Experts and Mix of Expertise on Audit Committees*

Dhaliwal¹,

Naiker²,

Navissi³

2010

Contemporary Accting Res

511

266

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“…It is argued that having a strong internal control system is one of the best ways to deter fraud (D'Aquila, 1998;Hemraj, 2004;Holtfreter, 2005;Bierstaker et al, 2006;IIA, 2009). Boards of directors have responsibility over internal control and must timeously communicate to stakeholders such as investors any breakdowns in internal control that could impact investors' decisions (HassabElnaby, Said & Wolfe, 2007;IoD, 2009;Barac & Plant, 2010). The board appoints the audit committee to oversee, among other things, internal financial control.…”

Section: Introductionmentioning

confidence: 99%

The impact of COSO control components on internal control effectiveness: An internal audit perspective

Fourie

Ackermann

2013

J. econ. financ. sci.

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Boards of directors have the ultimate responsibility for governance – including internal control – in their organisations. Management is tasked with the design, implementation and maintenance of internal control systems. Internal auditors play a key role in independently evaluating these controls, acting as agents on behalf of the board of directors in order to mitigate the possibility of management not acting in the best interest of the organization, leaving gaps in the internal control system, and, in some instances, doing so in order to enable unlawful personal gain. The Committee of Sponsoring Organisations’ Integrated Framework for Internal Control (hereafter referred to as the COSO framework) is used as a recognised framework, which, if implemented, could result in an effective internal control system and served as the basis for the design of the research instrument of the research. The questionnaire was distributed to internal audit practitioners. Responses were obtained from 31 participants from the Eastern Cape and Western Cape regions in South Africa. The majority of the participants provide internal audit services to the local government sphere of the South African government. This article identifies which characteristics should exist in an organization’s control system that, in the opinion of internal auditors, improve the effectiveness of the internal control system. This study concludes that internal auditors are of the opinion that control characteristics as outlined in the COSO framework for ‘risk assessment’, ‘information and communication’, ‘control activities’ and ‘monitoring’ components of internal control, do contribute to an effective internal control system.

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Audit Committees Oversight Responsibilities Post Sarbanes‐Oxley Act

Cited by 11 publications

References 19 publications

Effective association between audit committees and the internal audit function and its impact on financial reporting quality: Empirical evidence from Omani listed firms

Effective association between audit committees and the internal audit function and its impact on financial reporting quality: Empirical evidence from Omani listed firms

The Association Between Accruals Quality and the Characteristics of Accounting Experts and Mix of Expertise on Audit Committees*

The impact of COSO control components on internal control effectiveness: An internal audit perspective

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