Significance of Audit Committees in Corporate Governance

Abstract

Corporate governance is considered the backbone of corporations. Audit committee is one of the factors that plays a pivotal role to guide and monitor business-related matters of firms while following the national and international audit standards. The chapter covers the involvement of the audit committee with respect to corporate governance. It ranges from audit committee formations to its importance, composition, significance, and the role in quality financial reporting according to international standards. The chapter generally focuses on the audit committee and not any particular country or firms. The importance of the audit committee has always been recognized, but due to some examples of bad corporate governance practices, it became an important variable of corporate governance.