Examining Audit Committees in the Corporate Governance of Public Bodies

Abstract

Public bodies have adopted corporate governance regimes from the private sector assuming that accountability and performance will be improved. This paper analyses audit committees in a local public body context, NHS foundation trusts (FTs). Audit committees play a key role in enhancing governance. FTs follow the recommendations made by Monitor, their independent regulator. FTs, however, appear to adapt the role of the audit committee to meet the accountability needs of the wider stakeholders of public hospitals. Audit committees assure (vertical) financial accountability, and also provide assurance along horizontal lines of accountability to local communities, professional bodies and other stakeholders.

Key words:

• Corporate governance
• audit committees
• local public bodies
• NHS foundation trust
• stakeholder theory
• audit fees
• legal fees
• consultancy costs

DISCLOSURE STATEMENT

No potential conflict of interest was reported by the authors.

Notes

1 Monitor website. http://www.monitor-nhsft.gov.uk/home/about-nhs-foundation-trusts/what-are-nhs-foundation-trusts. Accessed July 2013.

2 In the NHS context, in the period under study, Ernst and Young did not conduct external audits. Therefore, BIG4 firms refer to Deloitte, KPMG and PwC. However, we have followed the conventional way of referring to big audit firms.