Audit Committees ‘Need a Makeover’ to Help Fix Audit


Professor Martin Gelter‘s work was profiled in an article for Board Agenda, examining the need for audit committee improvements in order for audit reform to have any lasting impact.

The UK government may have placed audit reform on hold while it goes through the torture of a general election, but others continue to debate and call for improvements to audit committees.

Not least among them is a recent academic paper claiming that if reform is to have any lasting effect, audit committees equally need a makeover.

In an article aimed at resolving the long-standing issue of auditor independence, academics Martin Gelter and Aurelio Gurrea-Martínez honed in on the key problems underlying the functioning of audit.

They said audit committees require attention because of the risk they “hire less strict auditors”. And stakeholders need exacting standards in their audits.

“Unfortunately, audit committees often do not seem to be doing their job in an effective manner since empirical evidence suggests that the audit market penalises auditors for providing investors with value-relevant information that is critical of management,” they wrote.

Read the full article.


Comments are closed.