The drivers and impact of audit committee involvement on audit quality

The audit committee is an important component of current corporate governance. Despite increasingly strict regulations regarding independence and expertise, it remains unclear why some audit committees underperform and how this affects the effectiveness of the external audit. We argue that, in addition to having the right skills, the audit committee’s engagement in the audit process is crucial for audit effectiveness. Communication, trust, support, power, and leadership are key characteristics that can influence how the audit committee handles disagreements between management and the auditor, and to what extent the committee will critically challenge both parties. These “soft” dimensions have not yet been sufficiently studied. More insight is needed for practitioners, academics, and regulators on how audit committee engagement can be encouraged and how this engagement impacts the audit process. We aim to demonstrate that an active and engaged audit committee can create synergy with the external auditor, where both parties trust and support each other. This synergy can elevate the audit process and audit quality to a higher level.