The audit committee chair's abilities: Beyond financial expertise

• Published date: 01 November 2019
• Author: Hanen Khemakhem,Richard Fontaine
• Date: 01 November 2019
• DOI: http://doi.org/10.1111/ijau.12173

ORIGINAL ARTICLE

The audit committee chair's abilities: Beyond financial

expertise

Hanen Khemakhem | Richard Fontaine

Accounting Department, University of Québec

in Montréal, Montreal, Quebec, Canada

Correspondence

Hanen Khemakhem, Professor, Accounting

Department, ESG–UQAM, C.P. 8888,

succursale Centre-Ville, Montréal (Québec).

Canada, H3C 3P8, +15149873000# 5058

Email:khemakhem.hanen@uqam.ca

Funding information

Chartered Professional Accountants (CPA)

Québec Foundation; Autorité des Marchés

Financiers (AMF)

The audit committee chair can play a key role in the success of audit committee

outcomes. The role of the chair is different than that of the other audit committee

members. However, most of the research on audit committees does not distinguish

the role of the chair from that of the other committee members. Moreover, research

does not give any insight into the necessary abilities to fulfill this role. Our study

investigates the audit committee chair's abilities. Based on 27 interviews, we find that

the chair manages multiple relationships and possesses well-developed leadership

abilities that go beyond financial expertise, such as various types of communication

skills. Our research sheds light on the unique role of the audit committee chair. It also

provides useful insights to corporate boards and policy-makers to help them identify

the audit committee chair with the right abilities.

KEYWORDS

audit committee chair abilities, audit committee chair's role, audit committee members, audit

committee's role, auditor, communication skills, financial expertise, leadership, management,

trust

1|INTRODUCTION

The audit committee's role and characteristics are well documented

in the academic literature. The role and characteristics of the audit

committee have also received a great deal of attention in the business

community. In Canada, the business community recognizes the impor-

tance of the audit committee role in enhancing audit quality

1

by using

direct communication with external auditors and management (CPAB,

2013).

2

This communication should be between the lead audit partner

and the audit committee chair by having “unfettered access to each

other to communicate important matters in a timely manner.”(CPAB,

2019, p. 2).

Even though the business community has stressed the importance

of the audit committee chair's role, most of the academic studies have

not distinguished this role from the role of the other audit committee

members (Badolato, Donelson, & Ege, 2014; Ghafran & O'Sullivan,

2013; He & Yang, 2014; Sultana, Singh, & Mitchell Van der Zahn,

2015; Wu, Hsu, & Haslam, 2016). Research is, however, starting to

recognize the influence of the audit committee chair's role and charac-

teristics on the overall audit committee's role (Ghafran & Yasmin,

2018).

The distinctive role of the chair is important, since the chair is con-

sidered to be the leader of the committee (Ghafran & Yasmin, 2018)

mostly due to the chair's role in managing multiple relationships out-

side of the formal audit committee meetings (Bédard & Gendron,

2010; Fontaine, Khemakhem, & Herda, 2016). Despite the importance

of the chair's role, prior research did not investigate the necessary

abilities to fulfill this role (Bédard & Gendron, 2010; Fontaine et al.,

1

The audit committee plays an important role in enhancing audit quality. This important role

was highlighted by three working groups of business executives who participated in a project

on how to improve audit quality, entitled Enhancing Audit Quality. This initiative was

spearheaded in collaboration with the Chartered Professional Accountants of Canada and the

Canadian Public Accountability Board (CPAB, 2013). The business community also

encouraged audit committees to establish rapport with the company's management as well

with the other members of the audit team (CPAB, 2013). The business executives'working

groups recommended that audit committees should playa more important role in enhancing

audit quality by improving informal communication between audit committees and auditors,

specifically between the audit committee chairs and the audit firm's lead partner (CPAB,

2013). A more recent survey of audit committee chairs, auditors and business executives

stressed the importance of improving the communication between audit committee chairs

and auditors in order to improve audit quality (CPAB, 2019).

2

CPAB is similar to the Public Company Accounting Oversight Board in the USA, overseeing

the audits of publicly listed companies in Canada.

Received: 25 May 2018 Revised: 26 August 2019 Accepted: 28 August 2019

DOI: 10.1111/ijau.12173

Int J Audit. 2019;23:457–471.

wileyonlinelibrary.com/journal/ijau

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