Towards an Effective Audit Committee Role in Corporate Governance in Libyan Banks: Composition Criteria and Membership Requirements

Abstract

This study examines the criteria for audit committee composition and its membership requirements within the context of effective corporate governance in Libyan banks. Members of audit committees at Libyan banks, directors of internal audit departments, and members of board of directors at these banks in addition to a number of external auditors and academicians from Libyan universities were targeted by a structured questionnaire. The participants emphasized the importance of a well written charter stating the committee's responsibilities as an essential starting point. Other criteria considered important include quarterly regular meetings, sufficient size, non-executive chairperson and the committee to report to the board of directors regarding its duties and responsibilities. The results indicate that independent audit committee members with financial literacy and accounting expertise as well as banking business knowledge are significant ingredients to ensure an effective audit committee performing corporate governance. The findings provide regulators and researchers with a foundation upon which a model of audit committees' formation and structure in Libyan banks can be formulated.

Keywords: audit committee composition, membership requirements, corporate governance, Libyan commercial banks.