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An exploration of the effectiveness of audit committees in Saudi Arabia Abstract With the growing acknowledgement of the importance of corporate governance, the ideas and procedures that were once the preserve of very large ‘Western’ corporations, are now being adopted globally (for example, audit committees). However, very little attention has been paid to the appropriateness of such developments – it has almost been taken for granted that such developments are beneficial. In this study, six audit committee members, six internal auditors and six external auditors of Saudi corporations were interviewed, with the objective of gaining an insight into their perceptions about the effectiveness of audit committees, as well as the problems that are being faced. There was a consensus between the interviewees that audit committees have had limited success. Whilst most interviewees saw little or no benefit of having audit committees, the following problems have been identified: the audit committees tend to have few meetings; there was usually no charter or working agenda for the audit committees; and the committees usually consisted of the chief executive directors and other directors from the Board as their members, whilst the other members were often chosen on the basis of friendship. In view of the importance placed on audit committees, these findings are worrying, and reinforce the concerns about a global adoption of this idea. This paper was published in The Icfai University Journal of Audit Practice, ICFAI (Institute of Chartered Financial Analysts of India) University Press, Hyderabad, India, Vol.4, No.1, January 2007, pp.28-48.
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