A MODEL OF AUDIT COMMITTEE PERFORMANCE EVALUATION IN IRAN CAPITAL MARKET

Document Type : Original Article

Authors
majid maroufkhani 1
Yadollah Nourifard 2
Fatemeh Sarraf 2
1 PhD. student, Faculty of Accounting, Islamic Azad University,South Tehran Unit, Iran.
2 Assistant Professor, Faculty of Accounting, Islamic Azad University, South Tehran Unit, Iran.
Abstract
In recent years, the audit committee has played a key role in establishing and monitoring the corporate governance policies of publicly held corporation. Performance evaluating of the audit committee is an effective process for developing and improving the effectiveness of that committee. The committee should evaluate the effectiveness of itself performance and itself monitoring role.
In this research, using the indicators and checklists used in evaluating the performance of audit committees in other countries and also according to the documents and conditions of the country, preparing and compiling indicators in the form of a questionnaire has been done and then in the first step, variables has been tested with using the viewpoints of professional and academic journalists, and in the next step, with using the viewpoints of the members of the audit committees of the companies accepted on the Tehran Stock Exchange and OTC, variables examination has been done.
The results showed that in order to evaluate the performance of the audit committee in the Iranian capital market, the performance of the committee can be from eight main aspect including composition of committee members, committee powers, committee charter, committee meetings, business knowledge, monitoring, ethical principles and regulations and committee reporting, as well as their sixty-three sub-indicators, evaluated.
Therefore, the self-assessment model was selected to evaluate the performance of the audit committee in the Iranian capital market, the preparation of a self-assessment questionnaire with the aspects and indicators resulting from this research as a proposed model was presented.
Keywords
Audit Committee
Performance Evaluation
Self-Assessment
Audit Committee Performance Evaluation
  • سازمان بورس و اوراق بهادار، دستورالعمل کنترلهای داخلی برای ناشران پذیرفته شده در بورس اوراق بهادار تهران یا فرابورس ایران، مصوب 16/2/1391 هیأت مدیره سازمان بورس و اوراق بهادار.
  • سازمان بورس و اوراق بهادار، منشور کمیته حسابرسی، مصوب 23/11/1391 هیأت مدیره سازمان بورس و اوراق بهادار.
  • Abernathy, J.L., Beyer, B.,Masli, A.,Stefaniak, C. (2014). The association between characteristics of audit committee accounting experts, audit committee chairs, and financial reporting timeliness. Advances in Accounting, 30(2), 283-297.
  • Abdulaziz Alzeban. (2015). Influence of Audit Committee Industry Expertise on Internal Audit. International Journal of Business and Management.
  • Allegrini, M. & Greco, G. (2011). Corporate boards, audit committees and voluntary disclosure: evidence from Italian Listed Companies. Journal of Management and Governance, 15(3), 1- 30.
  • Al-Shaer., H aly., S. and Steven, T. (2017) . Audit committee and financial reporting quality: evidence from UK environmental ccounting disclosures, Journal of Applied Accounting Research, 18, 2-21.
  • , A. (2015) "Influence of Audit Committee Industry Expertise on Internal Audit" , International Journal of Business and Management, 10: 4, 26-34.
  • American Institute of Certified Public Accountants (AICPA) (2017);The AICPA Audit Committee Toolkit
  • 2006. Audit committee performance self-assessment surveys. Available: http://www.auditnet.org/doc/IIANOVA?AC-Assess.pdf (accessed on 29 March 2006).
  • Bedard, J. & Gendron, Y. (2010). Strengthening the financial reporting system: Can audit committees deliver? International Journal of auditing, 14 (2), 174-210.
  • , Chen, Songsheng & Komal, Bushra. (2018). Audit committee financial expertise and earning quality: Ameta-analysis. Journal of Business Research: 84, 253-270.
  • Cassidy, S. (2006). Learning style and student self-assessment skill, Education Training, 4(2,3), 170 – 177.
  • Choi, Y.K. Han, S.H., Lee, H. (2014). Audit committees, corporate governance, and shareholder wealth: Evidence from Korea. Journal of Accounting Public Policy, 33, 470-489.
  • R., Hoitash.U., Krishnamoorthy.G. and Wright. A. (2013). The Effect of Audit Committee Industry Expertise on Monitoring the Financial Reporting Process, Accounting Review, 89:1,243-273.
  • Cohen,A. & Sayag,G. G. (2010). The effectiveness of internal auditing: an empirical examination.
  • Crisan, A and Fulop, M. (2014). The role of the audit committee in corporate governance case study for a sample of companies listed on BSE and the London Stock Exchange FTSE 100, Procedia Economics and Finance, 15, 1033-1041.
  • (2017) Audit committee performance evaluation: self assessment checklist, Deloitte Development LLC
  • Dhaliwal, D. Naiker, V. & Navissi, F. (2010). The Association Between Accruals Quality and the Characreristics of Accounting Experts and Mix of Expertise on Audit Committees. Contemporary Accounting Research, 27(3), 787-827.
  • Ernest & Young. 2004. Board performanc – non-executive directors and their contribution to business performance. Non-executive director research.
  • Ernst&Young,(2018) Audit committee member toolkit, Ernst&Young LLP
  • Epstein, MJ, Jones, JH & Roy, MR. 2002. Measuring and improving the performance of corporate boards. Strategic Management Accounting Practices (CMA Canada).
  • (2013). "Global Observations on the Role of the Audit Committee" , Center for Audit Quality, ICAA. May, Brussels, Belgium.
  • Financial Reporting Council (FRC). (2012a). Guidance on Audit Committees. London: FRC.Retrived from: frc.org.uk
  • Ghosh, A., Marra, A. and Moon, D. (2010). Corpotare boards, audit committees, and earnings management: pre and post-SOX evidence. Journal of Business Finance & Accounting, 37, 1145-1176.
  • Harvey, L. 2004. Analytical quality glossary. Quality Research International. Available:http://www.qualityresearchinternational.com/glossary/benchmarking.htm (accessd on 18 january 2007).
  • Institute of Internal Auditors. 2005. Meeting new audit committee challenges. Tone at the Top, September: 1-4.
  • International journal of Disclosure and Governance, 6(4), 284-297.
  • Joglar, N., Diego M. J., Manuel C., Ivan Martinez, J. and Ignacio H. (2010). iTest: Online assessment and self-assessment in mathematics, Interactive Technology and Smart Education, 7(3), 154-167.
  • Jose, T. J. (2010). Self-assessment processes: The importance of follow-up for success, Quality Assurance in Education, 18(1), 19- 33.
  • Keune,M, and Johnstone, K.(2015). "Audit Committee Incentives and the Resolution of Detected Misstatements", Auditing a Journal of Practice & Theory, 34: 4, 109-137.
  • KPMG,(2018) Audit Committee Questions, Audit Committee Institute part of KPMG Board Leadership Centre, www.kpmg.com/globalaci
  • KPMG's Audit Committee Institute (KPMG). 2003 a. An approach to effective audit committee self-evaluation.
  • KPMG's Audit Committee Institute (KPMG). 2006 a. A practical guide – shaping the UK audit committee agenda.
  • Krishnan, G. V., Visvanathan, G. (2008). Does the SOX definition of an accounting expert matter? The accociation between audit committee directors' accounting expertise and accounting conservatism. Contemporary Accounting Research, 25(3), 827 –
  • Leblanc Diagnostics. 2005. Board effectiveness benchmarking. Available: http://leblancdiagnostics.com/Products/ACED/?content+Benefits (accessed on 12 january 2007).
  • Li, J. Mangena, M. & Pike, R. (2012). The effect of audit committee characteristics on intellectual capital disclosure. The British Accounting Review, 44(2), 98-110.
  • Mahdava, M. 2005. Board evaluations: a complex initiative. Business Perspectives, September/October:8.
  • Malik, M(2014). Audit Committee Compositional and Effectiveness: A Review of Post-SOX Literature. Journal of Manage Control, 25, 81-117.
  • Matari, Y, Saif Mohammed, S, Al-Matari, E. (2017)" Audit Committee Activities and the Internal Control System of Commercial Banks Operating in Yemen" , International Review of Management and Marketing, 7: 1, 191-
  • T.H., Lee-Lee, C., Hishamuddin, I. (2012). Is the risk management committee only a procedural compliance? An insight into managing risk taking among insurance companies in Malaysia. The Journal of Risk Finance, 14(1), 71- 86.
  • Persons, O. S. (2009). Audit committee characteristics and earlier voluntary ethics disclosure among fraud and no-fraud firms.
  • PWC,(2018) Self-assessment of the performance of the audit committee,  pwc.en/boardroom
  • Sultana, N (2015) "Audit Committee Characteristics and Accounting Conservatism", Internationall Journal of Auditing. 19, 88-102.
  • Sun,Jerry & Lan, George & Liu, Guoping (2014), Independent audit committee characteristics and real earnings management, emeraldinsight.com.
  • Teed,D.(2010). The Changing Role and Responsibilities of Audit Committees in the United States. University of North Texas, Elecronic copy available at: https://Digital.library. Unt.Edu/Ark: /67531/Metade30519/M2/1/High_Res_D /Dissertation.pdf.
  • Treadway Commission (1987) "Report of the National Commission on Fraudulent Financial Reporting" , Electronic copy available at: https://www.coso.org/Documents/NCFFR.pdf
  • Vincenti, D. 2005. The effective and essential relationship between the international audit group and the audit committee.[Presentation.] institute of Internal Auditors.
  • , M., Lee, M. and Chuang, J. (2015) " Relations among audit committee astablishment, information transparency and earnings quality: evidence from simultaneous equation models" , Quality and Quantity, 50:6, 2417 – 2431.

Zgarni. Inaam, Halioui. Khamoussi. (2016). Audit committee effectiveness, audit quality and earnings management: a meta-analysis, intenational journal of