A Study On Audit Committee In The Listed Companies Of China

Audit committee, as an important system arrangement of the structure of company governance, aims to found an independent finance governance power in the board to enhance the independence of CPA and strengthen the reliability and credibility of finance reports. According to the international experience, audit committee plays an important role in promoting the financial report system of listed company perfecting, and guiding the bond market to the healthy development. In the beginning of 2002, "The Regulation Rule of China Listed Companies" had been announced, which pointed that the board of the listed company ought to set up audit committee according to the decision of the share holder meeting, which has been deemed to be a beneficial trial to improve the corporate governance. However, the pattern that audit committee and board of supervisors coexist in the corporate governance mechanism is a long range choose or just a transition? What is the historical development of audit committee in the foreign countries? What empirical evidences does the foreign research find out? Whether and how does the audit committee system play its roles in the corporate governance mechanism of China's listed companies? This paper attempts to explore the above questions, with anticipation to offer some constructive suggestions and advices to the management of China's listed companies.According to a review of the study on audit committee, this paper compares different corporate governance mechanisms in the main western countries to get empirical evidence, hoping to use for reference in our audit committee system construction. Then, based on Agency Theory, the author probes into research on the theoretical foundation of the audit committee. Lastly, this paper discusses the basic framework of the audit committee in our country and derives the conclusion that we ought cancel the board of supervisors system and build audit committee in China's listed companies. The last but not the least, the author emphasizes that the contents of the system ought mainly include the function, membership admittance, working procedures , performance evaluation, salary and disclosure, etc.