The Audit And Compensation Committees Essay - 1366 Words

This paper contributes to the auditing literature by investigating empirically auditors’ responses to overlapping membership on audit and compensation committees (overlapping committees) and the equity holdings by overlapping audit committee members. Boards of directors are at the helm of corporate governance and work through sub-committees (Adams, Hermalin, Weisbach, 2010; Hermalin Weisbach, 1998; Hermalin Weisbach, 2003). Delegating different board functions to distinct committees represents a separation of tasks and functions, and has been strongly recommended as a suitable mechanism for improving corporate governance (Kesner, 1988; Spira Bender, 2004). Two important sub-committees found in modern organisations are the audit and compensation committees. The audit committee is a subcommittee of the board of directors with delegated authority to oversee the auditing and financial reporting-related matters of the firm. The compensation committee, on the other hand, is entr usted with responsibility for setting managerial pay, including an optimal amount of performance-based incentive pay. The question of whether overlapping membership, where at least one audit committee member is also on the compensation committee, is desirable from a governance perspective has received increasing attention from professionals and researchers (Chandar, Chang, Zheng, 2012; Habib Bhuiyan, 2014; KPMG, 2008; Liao Hsu, 2013). The rationale for overlapping membership is based on theShow MoreRelatedIn depth analysis of Financial Statements BP1143 Words   |  5 Pagesaccounting adjustments arising from their  audits, any disagreement or difficulties encountered in working with management, and any identified  fraud  or illegal acts 6.board of directors They delegate authority to certain executives to carry out certain activities – explicitly acquisition, disbursement, mgmt of org funds -must ensure that directors, staff, volunteers comply with the policies – through reports delivered by the executive, board committees and auditors or consultants ResponsibleRead MoreThe Sarbanes Oxley Act Summary And Introduction1714 Words   |  7 Pagesfinancial reporting, and audit functions. The SEC has worked with NYSE and NASDAQ to harmonize the new Corporate Governance Rules. Throughout the rest of this paper, the more detailed listing requirements of the NYSE and NASDAQ will be discussed. 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