The composition of New Zealand public sector audit committees

Abstract

This study investigates the association between the source of funding of New Zealand public sector entities (PSEs) and the composition of their audit committees. Fifty PSEs in the health, local government and tertiary sectors were examined and the results show that only 28 PSEs (56 percent) disclosed the existence of an audit committee in their annual reports. The size of the audit committees that exist are on average larger than that recommended by best practice guidelines; however most of the PSEs, with the exception of some of the education providers, do comply with guidelines recommended for audit committee independence and financial expertise. The study also finds that PSEs that have higher levels of debt are more likely to have independent audit committees; however PSEs that rely on high levels of government funding are not more likely than other PSEs to have an audit committee with a majority of independent members and a financial expert.