An analysis of audit committee responsibilities and disclosure practices at large listed companies in South Africa

Abstract

Audit committees traditionally focused on oversight of the financial reporting process with the aim of ensuring that accurate, credible and reliable financial reporting is provided to the shareholders. The role and responsibilities of the audit committee have evolved, however, and today’s audit committees are required to deal with diverse emerging issues, such as integrated sustainability reporting and fostering an ethical culture in doing business.

The main objective of the paper is to investigate the responsibilities performed and disclosure practices of audit committees at large listed companies in South Africa. The data was collected through inspection of annual reports and questionnaires sent to the audit committee chairs in the population. The main findings of the study are that the audit committees at these companies are performing their traditional responsibilities of overseeing external audit, internal audit, financial reporting, internal control and risk management reasonably well, while to a lesser extent dealing with emerging issues such as sustainability reporting and ethics compliance. It was also found that the reporting in the annual report on the responsibilities performed by audit committees was of a poor standard and does not reflect the true state of affairs.

Key Words:

• Audit committee
• audit committee responsibilities
• audit committee disclosure
• corporate governance
• King III