Proceedings

address audit committee independence. Uzun et al. (2004) discuss about frauds, while
other authors are preoccupied with the measure of correcting the results (Agrawal &
Chadha, 2005). However, no less important are the contributions of entirely
independent audit committees regarded as a factor of fraud prevention (Abbott et al.,
2000). They show that companies getting audit committees composed of independent
directors are less sanctioned for fraudulent reporting. Audit committee’s
independence affects both companies’ management earnings and investors’
perceptions. A good audit committee would affect shareholders’ perception
concerning auditors, especially in those circumstances in which shareholders might
experience a greater threat to auditors’ independence (Raghunandan & Rama, 2003).
Audit committees are held to select auditors. If the reputation of audit committee’s
members depended on the quality of audit mission results, surely audit committees
would be interested in selecting the best auditors. An auditor could be appreciated
according to his capacity to detect and to report errors and omissions in financial
statements (Chersan, 2009). There are other research studies demonstrating that audit
committee’s discipline is strongly linked to the organization of internal governance.
An entirely independent audit committee will allow the prevention of accounting
irregularities, unless the CEO is not involved in selecting board members (Carcello &
Nagy, 2004). Further studies present less extreme consequences. The presence of a
financial expert in audit committee might reduce the likelihood of correcting the
accounting results (Abbott et al., 2004; Agrawal & Chadha, 2005). Herdman (2002),
chief accountant of SEC (Securities and Exchange Commission) highlighted the
importance of audit committees in post-SOX era sustaining that the role of audit
committee is one essential for enduring the integrity of published financial statements
on which investors are based. At a different level, Sheela Thiruvadi (2008) examined
the impact of gender differences on audit committee’s characteristics. The authors
have shown that those committees managed by women, act differently from
committees managed by men. The composition of audit committees evolves according
to company’s nature (size, growth etc) and to the environment in which it operates
(Deli & Gillan, 2000). The likelihood that there is an entirely independent audit
committee is associated in a negative way to company’s growth opportunities and in a
positive way to company’s size (Deli & Gillan, 2000). Some researches results might
help the policy-makers, the investors and companies’ management to focus on audit
committee’s characteristics which could be crucial for the ethical behavior of the
entire body (Persons, 2009).
Without going too far with frauds cases or that regarding the violation of accounting
principles, some authors have studied only the practices of the opportunistic
management. If an audit committee was equipped with a rigorous capacity to follow
the accounting policies, it should provide constraints on opportunistic and
discretionary behavior. From the analysis I conducted, I arrived to conclude that
accounting practices are less discretionary when the audit committee’s level of
financial experience is higher (Bedard et al., 2004). An accounting manipulation with
an opportunistic purpose could represent, in extremis, a case of financial fraud.
Examples on this subject are the situations in which the management of the results
permits to companies’ managers to increase financial information relevance by
highlighting false future returns. In order to reduce risks, audit committee’s members
are supposed to communicate in time to managers, to internal and external auditors
the accounting problems and shortcomings. However, other studies go further, taking
into account different competence forms of audit committee, such as governance
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