The impact of expertise on the mediating role of the audit committee

Purpose - The purpose of this paper is to examine external auditors' perceptions of the impact of audit committee financial expertise and industry expertise on the mediating role played by the committee in resolving auditor-client disagreements. Design/methodology/approach - The study is a 2 x 2 between subjects experimental design, using 61 Malaysian auditors as participants. The authors manipulate audit committee financial expertise and industry expertise at high and low levels. Findings - It is found that external auditors perceive that audit committees play a greater mediating role and use mediating techniques to a greater extent when committee members' financial and industry expertise is high compared to when expertise is lower. Originality/value - This is the first paper to examine the importance of audit committee expertise on the mediating role of the audit committee. The major contribution of the paper is the finding that auditors believe the audit committee's role as a mediator is strengthened not only by the committee members' accounting and auditing expertise but also by their industry expertise. The paper's findings have implications for practitioners and regulators who are concerned with the role of the audit committee in enhancing the integrity of the financial reporting and audit process.