Audit committee effectiveness - from the perspective of audit committee members in New Zealand listed companies

Abstract

This study examines audit committee effectiveness from the perspective of audit committee members of New Zealand listed companies. Using a responsive interviewing technique, data were obtained from 21 semi-structured, questionnaire-based interviews with current audit committee members. The data were analysed using a qualitative approach, namely, reflective analysis. The research results revealed that performing audit committee duties is an intended process, comprising at least two distinctive intentional orientations, in terms of which audit committee members tend to justify the effectiveness of their respective audit committees. Therefore, investigating audit committee members’ intentional sense-making processes behind their audit committee activities can be argued to be of value in understanding the effectiveness of an audit committee. The research reveals that the audit committee acts as an instrument for the board of directors and the findings challenge several public expectations of audit committees, most noticeably the notion of ‘independence’. The study illustrates the potential value for corporate governance stakeholders in considering the individuality of audit committee members, within the context of their specific organisations, in promoting corporate governance best practice.