Abstract

Over the last decade or so, the focus on information disclosed in financial statements, corporate governance andthe role of the audit committee to monitor and oversee financial reporting has increased. This is largelyattributed to the global business scandals caused mainly by fraudulent financial reporting. In response, the roleof audit committee was questioned in an attempt to maintain user’s confidence in corporate financial reportingand improve the effectiveness of an adequate internal control Not least because, an audit committee is anindependent body created by the board to oversee financial reporting and disclosures, monitor effectiveness ofinternal control, and external and internal audit functions.

At present, there is no conclusive evidence on the role and effectiveness of the audit committee. At one end ofthe spectrum there are audit committees that see their role as the validation of financial statements, while at theother end, are those who have broadened their role to include oversight of performance and critical high levelbusiness and operating tasks.

The purpose of this research is twofold: First: to investigate the state of the art of audit committees in Bahrainregarding composition, meetings, independence and role of audit committees. Second, since “Blue Ribbon”recommendations were issued in 1999, effectiveness of audit committee has become a cornerstone for corporategovernance. Therefore, an objective will be to assess effectiveness of audit committee.

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