The determinants of audit committees: evidence from the charity sector

Abstract

Drawing on the theoretical perspectives of agency theory, institutional theory and resource dependency theory, this study finds that board attributes (consisting of the number of trustees and board structure), charity size, the nature of charitable activities, and external influences (namely proportion of restricted funds, presence of government funding and auditor quality) are all significantly positively associated with the annual report disclosure of audit committee existence. No relationship was found with either organizational legal form or donor dependence.

Keywords:

• Audit committees
• charities
• governance
• monitoring
• resource dependency theory

Acknowledgements

We thank Mrs Gillian MacIver for her help in researching material for the study. We would also like to thank Professor Noel Hyndman and gratefully acknowledge the helpful comments of PMM's two anonymous referees.

Additional information

Notes on contributors

Juliana Jetty

Juliana Jetty is a lecturer in accounting and finance at the University of Glasgow, UK.

Vivien Beattie

Vivien Beattie is a professor of accounting at the University of Glasgow, UK.