Audit committee composition and interaction with internal auditing: Canadian evidence Article

Scarbrough, DP, Rama, DV, Raghunandan, K. (1998). Audit committee composition and interaction with internal auditing: Canadian evidence . ACCOUNTING HORIZONS, 12(1), 51-62.

cited authors

  • Scarbrough, DP; Rama, DV; Raghunandan, K

authors

abstract

  • Private sector commissions in many countries have emphasized the importance of having solely outside members on audit committees. Such blue-ribbon commissions also have emphasized the importance of strong working relationships between audit committees and internal auditing in preventing financial reporting problems. This paper examines the association between audit committee composition and the committee's interaction with internal auditing, as measured by (1) involvement of the audit committee in decisions to dismiss the chief internal auditor, (2) meetings between the audit committee and the chief internal auditor, and (3) audit committee review of the internal auditing program and results of internal auditing. We present results from a survey of chief internal auditors of Canadian manufacturing companies with sales greater than $50 million. The results indicate that, while there were no significant differences with respect to involvement in decisions to dismiss the chief internal auditor, audit committees consisting of solely non-employee directors were more likely, than audit committees with one or more insiders, to (1) have frequent meetings with the chief internal auditor, and (2) review the internal auditing program and results of internal auditing. © 1998 American Accounting Association.

publication date

  • March 1, 1998

published in

start page

  • 51

end page

  • 62

volume

  • 12

issue

  • 1