AN EMPIRICAL ANALYSIS OF EXPERIENCE EFFECTS ON AUDIT COMMITTEE MEMBERS' JUDGMENTS

This study examined audit committee member expertise on matters related to their oversight responsibilities. A two-stage project was used to evaluate audit committee members' expertise. First, a survey described audit committee members' abilities to recognize their assigned and performed objectives and explored the key tasks and issues currently addressed by audit committees. Second, a supplemented lens model approach was used to evaluate a separate sample of audit committee members' expertise on internal control evaluation tasks derived from the survey. Expertise was evaluated along judgment parameters related to consensus, self-insight, cue utilization, and additional factors identified. Auditing and internal control evaluation experience were used as surrogates for expertise. A group of external auditors provided an environmental criterion proxy that served as a benchmark for judging the relative expertise of audit committee members' judgments.; The results indicated that experience makes a difference in audit committee member performance. In particular, the findings revealed significant differences between audit committee members with experience and audit committee members without experience across all four judgment parameters and across experience measures. In addition, the results indicated that audit committee members with experience performed more consistently with the external auditors than did the audit committee members without experience.; These results have a number of potential implications for policymakers and other groups interested in improving audit committee effectiveness. The primary contribution is that audit committee member expertise in critical oversight areas, such as internal control evaluation, appears to be related to individual work experience. Such findings can be used in considerations of audit committee formation and composition.