Central European Business Review 2024, 13(5):23-50 | DOI: 10.18267/j.cebr.370

Competence of Audit Committee Members concerning the External Audit Ethics

Darko Dachevski ORCID...1, Barry Ackers ORCID...2
1 University of South Africa, College of Accounting Sciences, Department of Auditing, Pretoria, South Africa. Email: darko_dc@yahoo.com (corresponding author)
2 University of South Africa, College of Accounting Sciences, Department of Auditing, Pretoria, South Africa. Email: ackerb@unisa.ac.za

This study investigates the impact of audit committee members’ competence on the ethical aspects of external audits and its influence on the audit quality of public interest entities (PIEs). Using a mixed-method approach, including surveys with respondents at audit firms and PIEs in Europe and semi-structured interviews with participants at PIEs in Europe, the findings highlight the importance of pre-appointment training for audit committee members concerning external audit ethics. This pre-appointment training would enable audit committee members of PIEs to evaluate whether external auditors and audit firms should implement appropriate safeguards and mitigations to ensure the ethical audit practices of PIEs. The study recommends stringent global regulatory provisions mandating specific guidelines for PIE audit committees for assessing external auditor independence and minimizing potential conflicts of interest to preserve the PIE audit quality.
Implications for Central European audience: For the Central European audience, the study advocates for mandatory pre-appointment training of prospective audit committee members and restrictive regulatory mechanisms to enhance audit committee members’ competence concerning the evaluation of external auditors’ independence and minimizing potential conflicts of interest for ensuring ethical audit practices and preserving PIE audit quality.

Keywords: audit committee; external auditor‘s independence; conflicts of interest; PIEs; threats to the external auditor’s independence
JEL classification: M42, M48

Received: November 13, 2023; Revised: February 18, 2024; Accepted: March 17, 2024; Prepublished online: May 3, 2024; Published: December 31, 2024  Show citation

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Dachevski, D., & Ackers, B. (2024). Competence of Audit Committee Members concerning the External Audit Ethics. Central European Business Review, 13(5), 23-50. doi: 10.18267/j.cebr.370
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