The Development of Audit Committees - A Review of the Literature on Theoretical and Global Perspective

Lubna Javed Rizvi, Randa Alyafi, Syeda Taj Unissa


The audit committee performs a pivotal role in making the right environment for quality auditing. It is the audit committee's obligation to breed an environment that encompasses an open dialogue in a culture of honesty, regard and transparency amongst management and auditors. The prime purpose of an audit committee is to provide oversight of the financial reporting process, the audit process, the system of internal controls and compliance with laws and regulations. Audit committees will consider internal controls and review their effectiveness. Since 1940, the SEC has acknowledged that an audit committee can serve a significant, and eventually essential, role in guaranteeing that a publically listed corporation financial reporting is correct. In the 1970s, the New York Stock Exchange (NYSE) obligated boards of directors of these listed firms to employ an audit committee. Then in the late 1980s, (Nasdaq) the National Association of Securities Dealers and (AMEX) American Stock Exchange afterward employed the audit committees. Today, innumerable practices and rules command the composition, roles, and duties of audit committees. After the Enron’s collapse, audit committee affiliates duties are enhanced and Securities Exchange Commission are investigating the board of directors and management more and more. This article provides a brief overview of audit committee’s emergence in UK and Saudi Arabia, Moreover theoretical foundations of the audit committees are also discussed.

Full Text:



To make sure that you can receive messages from us, please add the '' domain to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', check your 'bulk mail' or 'junk mail' folders.

Copyright © Macrothink Institute ISSN 1941-899X

'Macrothink Institute' is a trademark of Macrothink Institute, Inc.