Audit committee regulation in Australia: How far have we come?

This paper presents a synopsis of the major developments in corporate governance regulations and recommendations for Australian audit committees categorised into three distinct periods of regulation from 1976-2004. Prior Australian empirical research conducted on audit committee formation, audit committee member composition and audit committee diligence is summarised and compared. The research is then extended by presenting the results of an empirical study of 188 of the top 300 ASX listed companies with a financial year end of 30th June 2004, which is the first year of the third period of regulation. The results indicate that compliance with corporate governance regulations and recommendations has improved substantially with respect to: audit committee formation; the number of audit committee members, non-executive directors on the audit committee; financial expertise of audit committee members and the frequency of audit committee meetings. However, the number of independent directors on audit committees was well below ASX CGC best practice guidelines