Hospital audit committees: a comparative analysis of structural and functional characteristics

In an effort to counteract rising costs and financial problems, many hospitals have adopted certain management practices that are followed by commercial corporations. In particular, the boards of directors for many hospitals have created audit committees to enhance organizational governance in the areas of internal control, accounting, auditing, and financial reporting. The formative stages in which most hospital audit committees currently exist creates a need for shared information. Such information can serve as a potential source of guidance for the further development of existing hospital audit committees, as well as for boards that are near the point of establishing an audit committee for the first time. The purpose of this study is to present an analysis of the structure, responsibilities, and activities of hospital audit committees. Data for the analysis was obtained through a questionnaire survey of 400 hospitals. The analysis of structural and functional differences affords a basis for suggesting several specific ways in which hospitals can improve their organizational governance through a more effective audit committee.