The role of audit committees in Barbados

Abstract

PurposeThe purpose of this paper is to examine the role and function of audit committees in public companies in Barbados since the corporate scandals of Enron and WorldCom in the USA.Design/methodology/approachThe study used a mixed‐methods approach of self‐administered questionnaires, interviews with directors, audit committee members and auditors, and a content analysis of the published annual reports.FindingsThere was no full‐scale adoption of audit committees. Membership in audit committees tended to vary between three and four, and audit committees met on average four times a year. There were mixed views on audit committees having broader roles such as business strategy, assessment and management of risks. There were also excellent working relationships among audit committees, internal and external auditors. The independence of audit committees was questionable.Research limitations/implicationsThe concept of audit committee is relatively new in Barbados. Further, there are Boards dominated by directors with major shareholdings. This study also relied heavily on US‐centric literature and the perceptions of audit committee members. These factors are likely to limit its usefulness to other non‐US countries. Future research can measure stakeholders' perceptions of the role of audit committees.Practical implicationsThis study is important to academics and practitioners in understanding the role and function of audit committees in a small country.Originality/valueThis study sets out a best practice model for the adoption of audit committees in small countries like Barbados.