Audit committee' s effect on financial reporting quality

Users of the knowledge of accounting utilize financial reports to get information of the corporations or make any decisions. Corporations, on the other hand, communicate with the users of the knowledge of accounting through financial reports. Conducting this mutual interaction is only developed by qualified financial reports. While the quality of financial reporting means a quite intrinsic structure hard to measure, financial reporting can be said to be the total result of qualified activities carried out by internal control, internal audit and independent audit. In the new Turkish Code of Commerce, the committees that the corporations should establish are included. The most outstanding one of these committees has been the Audit Committee because of its relationships with the units of internal control, internal audit and independent audit and because it has a task of a bridge between the units under discussion and users of the knowledge of accounting. Audit Committee is expected to make positive contribution to financial reporting quality with its duties and responsibilities. The main objective of our study is to examine the effects of audit committee practices on financial reporting quality. Whether the establishment of audit committee has effects on financial reporting quality and whether the f characteristic features of audit committee (independence, frequency of meetings, size) are effective on financial reporting quality were determined as the questions of research and research hypotheses were tested within the frame of two questions. Multivariate Regression Model was used to test the hypotheses. Our study is composed of four sections. The first three of which consist of theoretical explanations. The last section includes the research into studying the effect of audit committee practices of corporations operating in BIST on reporting quality within theoretical explanations According to the results of the research, establishing audit committee is determined to increase financial reporting quality. Of the characteristics features of audit committee' s, a statistically significant relationship was found between Independence and Frequency of Meetings, whereas no relationship was found between the size of audit committee and financial reporting quality Key Words: Audit Committee, Financial Reporting, Quality, Earnings Management, BİST.