Audit Committees, Boards of Directors, and Remediation of Material Weaknesses in Internal Control

41 Pages Posted: 16 Jun 2008 Last revised: 9 Apr 2013

See all articles by Beng Wee Goh

Beng Wee Goh

Singapore Management University - School of Accountancy

Abstract

This study examines whether the effectiveness of the audit committee and the board of directors is associated with firms' timeliness in the remediation of material weaknesses (MWs) in internal control. The sample comprises accelerated filers that disclosed at least one MW from July 2003 to December 2004 under Section 302 of the Sarbanes-Oxley Act (SOX). Using logistic regression analyses, I find that firms with larger audit committees, audit committees with greater nonaccounting financial expertise, and more independent boards are more likely to remediate MWs in a timely manner. These results suggest that the audit committee and the board play an important role in monitoring the remediation of MWs. Overall, the study contributes to our understanding of the effectiveness of the audit committee and the board under the SOX regime. The study also identifies important determinants of firms' timeliness in the remediation of MWs, which is key to improving financial reporting quality and restoring investor confidence.

Keywords: Sarbanes-Oxley Act, internal control, material weakness, remediation, audit committee, board of directors

JEL Classification: G34, G38, M49

Suggested Citation

Goh, Beng Wee, Audit Committees, Boards of Directors, and Remediation of Material Weaknesses in Internal Control. Contemporary Accounting Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1145024

Beng Wee Goh (Contact Author)

Singapore Management University - School of Accountancy ( email )

60 Stamford Road
Singapore 178900
Singapore

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