Accountants on Audit Committees? A No-Brainer? Maybe Not

A sample of 670 audit committee members on 164 public companies found that only 12% of audit committee members (23% of chairs, 22% of "financial experts) were professional accountants--about one professional accountant per TWO audit committees. To buttress this, 40% of audit committees had at least one accounting professional in 2006--and that was almost double the 21% who had an accounting professional in 2002. Even including the more prevalent finance professionals, only two-thirds of audit committees had a person with a strong accounting OR finance background as their "financial expert." The report, published by Huron Consulting, did note that backgrounds of audit committee members lacked full disclosure in some cases and that SEC rules did not require a financial expert to be an accounting or finance professional.

It would seem obvious that publicly-traded corporations would want at least part of their audit committee membership to be accountants to help interpret the financials, notes, audit reports and tax returns and other members to be financial professionals with their statistical and financial forecasting skills. The only conceivable shortcomings--impact on the independence of present or potential auditors and inability to compensate accounting and finance professional members for the opportunity cost of serving on the audit committee.