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smartyEscape("The role of audit committee is of much interest to regulators & the public in corporate governance. This study examines the relationship between audit committee characteristics (the number of audit committee meetings, the number of audit committee members and the number of audit committee financial experts) and fraud, a proxy for potential fraudulent financial reporting. Using a final sample of 218 firms from S&P SmallCap600 with a December 31, 2003 fiscal year-end and audit committee characteristics data collected from the SEC database. We find that the (1) Meeting frequency of the audit committee is not associated with fraud prevention; (2) Number of audit committee members does not significantly affect fraud prevention and (3) Financial expert is significantly associated with fraud prevention; (4) Audit committees that have at least one female director function differently from all male audit committees; (5) Big 4’s clients are more likely to have audit committee financial experts than Non-Big 4’s clients. This study provides direct support to SEC’s assertion about the importance of audit committee financial expertise for effective corporate governance practice and financial reporting. In addition, few studies have examined the impact of gender differences on audit committee characteristics. We also provide empirical evidence to show that audit committees that have a female director function differently than all male audit committees.")
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