A Study On The Audit Committee Effectiveness

As an important institutional arrangement of Corporate governance, Audit Committee system has played a pivotal role in the practice of corporate governance of Anglo-American and other Western developed countries. Since 2002 the audit committee system has been introduced in China, the controversy surrounding its governance effects have never stopped. As a checks and balances system, the existence of the Audit Committee should be able to improve the quality of financial reporting, improve external audit independence, improve internal control and improve corporate governance in theory, but in the actual operation of the process, does the audit committee play its desired effects? In this article, I try to study the effectiveness of the Audit Committee in the external audit Angle.An effective audit committee should be able to effectively reduce the interference of external audit from management, and the Functioning of the Audit Committee is determined by its own characteristics. Firstly, we used theoretical study methods to comb the primitive nature of the audit committee, concluded an effective Audit Committee should have certain conditions and be able to achieve its functions, then based on the listed companies in the Shanghai and Shenzhen exchanges in 2009,we use the size of the Audit Committee, active, independent, professional, and professional background of convener as explanatory variables to prove the role of Audit Committee in the Certified Public Accountants changes, the audit fees and the type of audit opinions. The empirical results show that:(1) The Audit Committee's role in the Certified Public Accountants changes is very limited, but it can change the phenomenon that CPA change based on the previous year's audit opinion; in terms of audit fees, the more the number of meetings, the higher the audit fees; of the types of audit opinions, The audit Committee not only does not avoid the adverse audit opinion, on the contrary, it can conduce the external auditors to tell the truth.(2) The independence of the Audit Committee does not play its due role, which may be attributed to the China's current system of independent director has its own defect. In addition, the appropriate scale, a certain proportion of financial experts and diligent work is conducive to the functioning of the Audit Committee.