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The Audtit Committee Impact on Swiss Companies
Type
applied research project
Start Date
01 May 2005
End Date
31 October 2005
Status
completed
Keywords
Corporate Governance
Corporate Boards
Audit Committees
Financial Reporting
Description
Adjusting corporate governance to new rules and regulations doubtlessly poses a major
challenge. Well-established bodies and procedures, which provided the foundation for
success over many years, may be questioned. Drawing and implementing new frameworks
will tie up resources in terms of board and management attention as well as in
terms of costs.
New guidelines or legislation in both the U.S. and the EU have, however, set the tone:
financial communities worldwide expect corporate governance to match with current
best practices - often even if a company is not formally or legally subject to the respective
rules. One of the key features of such governance is the establishment of an audit committee
that has the power, the skills and the focus to secure the quality of financial reporting.
Several surveys have suggested the number of existing audit committees is increasing.
This raises the question whether audit committees do actually enhance the quality of
companies' financial reporting and whether and how companies themselves and the
wider financial community benefit from the establishment of audit committees.
The present survey gives a first set of answers with respect to characteristics, behavior and
effects of audit committees of Swiss listed companies. Findings include that these bodies
are becoming ever more professional, and that their work definitely has a positive impact
on financial reporting. A well-functioning audit committee will increase a given company's
chance of getting a clean audit opinion and mitigate the risk of reprimands from oversight
bodies. We trust that learning in more detail about the extent of improvements achieved
and about the potential for further progress will make the reading of this study valuable.
challenge. Well-established bodies and procedures, which provided the foundation for
success over many years, may be questioned. Drawing and implementing new frameworks
will tie up resources in terms of board and management attention as well as in
terms of costs.
New guidelines or legislation in both the U.S. and the EU have, however, set the tone:
financial communities worldwide expect corporate governance to match with current
best practices - often even if a company is not formally or legally subject to the respective
rules. One of the key features of such governance is the establishment of an audit committee
that has the power, the skills and the focus to secure the quality of financial reporting.
Several surveys have suggested the number of existing audit committees is increasing.
This raises the question whether audit committees do actually enhance the quality of
companies' financial reporting and whether and how companies themselves and the
wider financial community benefit from the establishment of audit committees.
The present survey gives a first set of answers with respect to characteristics, behavior and
effects of audit committees of Swiss listed companies. Findings include that these bodies
are becoming ever more professional, and that their work definitely has a positive impact
on financial reporting. A well-functioning audit committee will increase a given company's
chance of getting a clean audit opinion and mitigate the risk of reprimands from oversight
bodies. We trust that learning in more detail about the extent of improvements achieved
and about the potential for further progress will make the reading of this study valuable.
Member contributor(s)
Sikavica, Katarina
Funder(s)
Range
Institute/School
Range (De)
Institut/School
Principal
Ernst&Young, Schweiz
Eprints ID
34931