Exploring the identity of audit committee members of New Zealand listed companies

Abstract

We focus on the attributes of audit committee members at an individual level through investigating their role‐based identity; this approach represents a departure from the traditional approach of measuring their independence and financial expertise. The data revealed that there is a wide range of backgrounds and attributes identified by New Zealand audit committee members as being helpful in performing their responsibilities. Members’ motivation and justification for serving on the audit committees played a significant role in verifying their identity salience in terms of being an audit committee member. Regulators and other corporate governance stakeholders may benefit from a further understanding of the reciprocal relationship between an audit committee mechanism and its members’ identity salience.

Measures of Audit Committee Effectiveness in Nigeria

“…Prior research brought evidence of the influence of board composition for bringing strategic resources for innovation, as well as evidence of positive outcomes of board diversity. 6 Being appointed as a director to the board of a company is a mark of a top management career. A company director is a person duly appointed by the company to direct and manage the business of the company.…”

“…It also provides that at least one member of the committee should be a financial expert, have current knowledge in accounting and financial management, and be able to interpret financial statements. 6 The NCCG 2018 Code which is all encompassing, applies to companies of various sizes and types, stipulates that for private companies, members of the board audit committee should be Non-Executive Directors and a majority of them should be Independent Non-Executive Directors where possible. This provision is similar to that of CBN Code 2014 which states that board audit committee should be structured in such a way that it consists only of Non-Executive Directors; chaired by an independent Director; and has at least three members.…”

“…5 However, there is an overlapping function as audit committees perform the function of enterprise risk management, especially in adequately depicting and reporting financial valuations, estimates and other accounting inputs of businesses. 6 Other duties include integrated reporting of sustainability information to ensure harmony with other relevant internal data. 7 It is however important to note that the SEC Code 2011, CBN Code 2014 and Code of Corporate Governance for Micro Finance Banks and other Financial Institutions 2018 have similar provisions on the responsibilities of audit committees.…”

“…In 2002, the Sarbanes-Oxley Act of the United States upheld and legislated the proposed SEC audit committee size into Law in Section 301 of the Act. 6 In studying the effectiveness of audit committees, Alqatamin compared audit committee characteristics with return on asset (ROA), return on equity (ROE), and net interest margin (NIM) of Turkish and United Kingdom banks. The following audit committee characteristics were evaluated -audit committee size, members independence, frequency of meetings, financial expertise, level of education, age, experience, and gender.…”

“…5 However in the absence of a well-regulated financial reporting environment, the outcome of a firm's financial position may be under-reported, giving exaggerated assumptions of firm value and efficiency, with severe consequences to the user of the information. 6 Regulators and investors do not only care about the information produced but also how the information is made available and the audit committee plays a vital role in this regard. The form of the information can be deceptive, especially if a financial statement bears a footnote projected as earnings of the company rather than additional information to justify the earnings.…”