Whistleblowing regulations and the role of audit committees: insight from interviews

Corporate governance guidelines recommend, and regulations in Canada and the US require that audit committees be actively involved in the whistleblowing process. Recognizing the lack of research based on direct evidence on the role of audit committees in the whistleblowing process and responding to calls for research on audit committees using different methods, we provide evidence on the audit committee’s actual role based on interviews with both audit committee members and auditors. We find audit committees provide limited oversight and do not play an active role in the whistleblowing process. We find audit committees tend to rely on management and internal audit. This contrasts with assumptions in prior research and the legal requirement in Canada. Our findings highlight the importance of an ethical organizational culture for the whistleblowing process to be effective. The findings also emphasize that regulators and practitioners need to recognize the potential gap between what is expected of audit committees and what they do in practice. Rather than assuming audit committees play an active role in the whistleblowing process, research needs to focus on the black box of the audit committee process and contributions to governance.