ABSTRACT
This chapter examines the relationship between Audit Committee activity, auditor independence and between audit and non-audit fees. It makes an important contribution to the debate on whether or not auditors use auditing as a loss leader and whether or not knowledge spill over from one service to the other does or doesn't occur. The author has found that non-audit services directly affect auditing and not the other way round. The chapter presents several main hypotheses, which are used to examine the determinants of the activity of the Audit Committee in the UK's largest companies in the reporting period 2005-2006. It provides an overview of the functions of Audit Committees, followed by a brief account of the sources of data, the definition of variables and explanations of the research approach. The chapter summarizes the proposed functions of the Audit Committee and measures that have been suggested to enhance the activity or functioning of the committee.
