Abstract
In this article, we study the impact of audit committee expertise on the length of a restatement period. The four types of expertise we examine are accounting expertise, nonaccounting financial expertise, supervisory expertise, and industry expertise. The audit committee, working together with the auditor, plays a critical role in overseeing the financial reporting process. As the firm's internal overseer of its financial reporting and a key component of its corporate governance, the audit committee's members must have the requisite knowledge to effectively oversee the financial reporting process. Higher expertise on the audit committee could reduce the length of time to detect and correct misstatements in prior financial statements. Prior research has shown that the possession of financial expertise by audit committee members can improve the quality of a firm's accounting numbers and reduce the prevalence of financial statement misstatements (Bedard, Chtourou, and Courteau, 2004; Agrawal and Chadha, 2005). However, there is uncertainty regarding the level of financial expertise needed by audit committee members. An individual with accounting expertise should have more ability to understand the complexities of financial statement information, which could enhance the audit committee‟s ability to uncover a financial statement misstatement and thus reduce the length of the restatement period