Proceedings

AUDIT COMMITTEES AS INCREASING VECTORS
OF FINANCIAL INFORMATION QUALITY
Neluta MITEA 1
Andrei Şaguna University in Constanţa, Romania
ABSTRACT
Capital markets feel a current need to dispose of high quality information. As a response to
this need, this paper proposes the intervention of audit committees whose main objective
consists in monitoring the financial activity. The present study offers interesting insights by
examining the relevant ideas developed previously in the literature with the scope of
understanding, reinterpreting and rediscovering from interesting points of view the audit
committee’s major role in increasing the quality of financial information. Audit committee
represents one of the mechanisms controlling managers’ opportunistic behavior, under the
circumstances of agency theory and information asymmetry. By conducting this study I
wanted to reinforce the role of specialized literature and of empirical researches in
determining new solutions and hypothesis regarding audit committee effectiveness.
KEYWORDS: audit committee, audit committee effectiveness, agency theory, information
asymmetry, financial information
INTRODUCTION
In the last years we have been witnessing a significant increase of general interest in
corporate governance. The reason for this interest lies on the economic environment’s
concern regarding the multitude and the deep consequences of the financial scandals
that started, in general, from the accounting and financial frauds. Notable
bankruptcies are also a consequence of the lack of integrity characterizing the
accounting professionals and companies’ management. It is well known that, under
managers or shareholders’ pressures, they used to practice a creative accounting and
also fraudulent financial reporting. Their purpose was to manipulate stock prices for
listed companies. Therefore, at present, we could all notice a strong concern in the
economic environment for the way by witch managers are controlled and supervised
in their actions and decisions taken. In this respect, the audit committees’ role
becomes essential for the right functioning of financial reporting process. Although
the responsibility for annual financial statements comes to the management of the
organization, a major role in securing the financial information users of statements’
reality comes to auditors.
Financial scandals generated a number of deep debates at national and international
levels, on themes like: the importance of corporate governance, the structure of
supervising committees, the relations between audit committees and the participants
to financial reporting process. However, the financial information crisis tends to
1
Correspondence address: Neluţa MITEA, “Andrei Şaguna” University in Constanţa, Romania; email:
nelutamitea@yahoo.com
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