Insights into the Evolving Responsibilities of the Audit Committee
54 Pages Posted: 28 Nov 2022 Last revised: 19 Aug 2023
Date Written: August 19, 2023
The oversight responsibilities for many audit committees (ACs) are evolving to include some of the hottest topics in the boardroom: enterprise risk management; cybersecurity; and environmental, social, and governance reporting. However, certain ACs have pushed back on their boards and actively avoided oversight of these evolving areas, forcing boards to assign oversight elsewhere. To better understand why some ACs accept these evolving oversight responsibilities while others do not, we interview a diverse set of 29 ACs from U.S. publicly traded companies. We analyze our data through the theoretical lens of organizational citizenship behavior to identify reasons for the significant variation across companies. In subsequent analysis, we examine strategies that ACs adopt to manage their increased workload and whether they vary based on ACs’ accepted responsibilities. Our findings should be of interest to boards, investors tasked with evaluating AC performance, and regulators involved in rulemaking related to board committee workloads.
Keywords: audit committee, corporate governance, evolving responsibilities, organizational citizenship behavior (OCB), proactive and reactive helping
JEL Classification: G34, M14, M41, M42
Suggested Citation: Suggested Citation