Private sector committees in many countries have emphasized the importance of audit committees and internal auditors in preventing financial reporting problems. To be effective, audit committees must be knowledgeable. Good working relationships with internal auditing can enhance the effectiveness of audit committees. In this paper, we present empirical evidence about the perceived knowledge level of audit committees based on a survey of 72 chief internal auditors of Canadian manufacturing companies. Results indicate that audit committees which granted private access to the chief internal auditor and reviewed both the program and results of internal auditing were more likely to be perceived as knowledgeable about account-ing and auditing issues.
