A Study On The Audit Committee In The Listed Companies

The audit committee has become an important part of corporate governance for a long time in the west. From the practices in the west, the building and development of audit committee can improve the management of corporate governance. The audit committee has been an important part of company specialized boards. At 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 setup strategy, audit, nomination, salary and examine committees according to the decision of the shareholder meeting. The board of the listed company entitles the audit committee to supervise company financing and internal control, play a significant role in releasing finance information, especially avoiding and detecting fraud in financial report. Audit committee which is away of reducing fake financial information can be used widely when fake financial information is common in China's securities business now. In addition, audit committee can lead to positive effects in improving corporate governance and internal control. Because audit committee has been invented just few years before, practitioners are relatively obscure to understand it and scholar's study which are concentrated on introducing and discussing its some parts and lack of deep and systematic research. This article studies audit committee and its application in our country widely and deeply, referring to foreign article and considering our country's status, providing some suggests for using it effectively in our country.The article is divided into two parts, introduction and text. Introduction illuminates motives, significance and framework of the article. The text includes five parts. Part 2 describes the definition of the audit committee, history of the audit committee and the duty of the audit committee. In part 3, we research the agency theory, point that audit committee is a necessary aspect of corporate governance, and discuss the relationship with the other subjects of the corporate governance. Part 4 describes situation of the audit committee in China's listed companies from the industry, location, characteristics and the ability of earnings etc. Part 5 describes the bottlenecks of the audit committee in making constitution, quality of the stuff and other three aspects. Referring to the above bottlenecks, part 6 recommends to improve the efficiency of the audit committee.