Although audit committees typically are considered a crucial corporate governance mechanism, knowledge is scant about the practices carried out in audit committee meetings. This paper provides insights into practices that audit committee members carry out in meetings, including the part of the meetings where members meet privately with auditors. The investigation was conducted via a field study in three Canadian public corporations—whose respective audit committees complied to a large extent with regulatory guidelines of the Toronto Stock Exchange and the voluntary recommendations of the Blue Ribbon Committee on audit committee effectiveness. Further, the three audit committees that we investigated are generally perceived as effective by the individuals who attend meetings. Our results highlight key matters that audit committee members emphasize during meetings, such as: accuracy of financial statements; appropriateness of the wording used in financial reports; effectiveness of internal controls; and the quality of the work performed by auditors. We also elicit the evaluation criteria that members use to assess written and verbal information submitted by managers and auditors. In addition, we found that a key aspect of the work carried out by audit committee members consists of asking challenging questions and assessing responses provided by managers and auditors.
PurposeThe recent performance measurement literature suggests that organizations should put more emphasis on non‐financial measures in their performance measurement systems, that organizations must use new performance measurement approaches such as the balanced scorecard and that measures should be aligned with contextual factors such as strategy and organizational structure. The purpose of this paper is to assess the extent to which organizations are following these prescriptions.Design/methodology/approachA survey of a sample of Canadian manufacturing firms was conducted. In the questionnaire, organizations had to indicate the extent to which they use 73 performance measures. They also had to respond to questions about determinants such as strategy, organizational structure and environmental uncertainty. More than 100 organizations responded to the survey. The response rate was 50.5 percent.FindingsThe results show that manufacturing firms continue to use financial performance measures. Despite the recommendations from experts and academics, the proportion of firms that implement a balanced scorecard or integrated performance measurement systems is low. Furthermore, organizations that use these approaches are not employing more extensively non‐financial measures than those which are applying traditional performance measurement approaches. This research project also shows that there are some significant relationships between the types of measures and contextual factors like strategy, decentralization and environmental uncertainty. This research finally demonstrates clearly that there is a need to develop a theory that explains how firms can use their performance measurement system to enhance their performance.Originality/valueThis paper provides information on performance measures used by organizations and their association with organizational determinants.
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