To reduce their growing exposure to liability suits, many directors are attempting to take a more active role in the evaluation of their firms and to simultaneously have formally recorded the performance of their responsibility. To meet both of these objectives, directors must have access to complete and reliable corporate information and be able to conduct independent inquiry into the quality of information they receive. The board of directors' audit committee has the potential to fulfill these needs. The researchers queried CEOs and outside directors of nearly two hundred forms and applied these data to evaluation of the audit committee concept, analysis of the perceived and actual role of audit committees, and identification of actions that can improve audit committee performance and thus reduce the directors' potential liability exposure.
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