The effect of audit committee composition and structure on the performance of audit committees

Abstract

This article attempts to examine audit committee composition and structure affecting and leading to enhanced audit committee performance, with due regard for the principles of good governance and international best practices. The article recommends the ideal composition and structure of the audit committee to assist committees to meet their requirements, to ensure optimal performance and to improve the effectiveness of their oversight of financial reporting and corporate governance. The framework developed could also be used as a guideline in the selection and recruitment process for audit committees. The requirements are based on the regulatory requirements of the King II Report on Corporate Governance in South Africa (2002), the Companies Amendment Act 20 of 2004, the Corporate Laws Amendment Bill (2006), the Public Finance Management Act (PFMA), the JSE Limited requirements, the Blue Ribbon Committee Report (1999) and the Sarbanes‐ Oxley Act of 2002 in the USA.