Download This PaperManagement Participation during University Audit Committee Meetings and Internal Control Disclosures: Evidence from Audit Committee Minutes
51 Pages Posted: 24 Jul 2024
Date Written: July 23, 2024
Abstract
Management is often present at audit committee meetings, which could impact auditors’ disclosures of material weaknesses in internal controls. Using a unique sample of university audit committee minutes, I first measure the relative participation levels of management, auditors, and audit committee members during audit committee meetings. I then examine the association between their participation and the revelation of a material weakness in internal controls. Results suggest that management participation is positively associated with material weaknesses. However, management participation is associated with less timely remediation, while external auditor participation is associated with more timely improvements in internal control. Collectively, these results suggest that management increases participation primarily to re-establish legitimacy in front of the audit committee. However, this increased participation may delay remediation efforts. This study provides evidence of the tradeoffs of increased management participation, which can motivate audit committees and management to reassess management and auditor participation during meetings.
Keywords: audit committee, minutes, university, internal controls JEL Classifications: M41, M42
JEL Classification: M41, M42
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