Overlapping Status of the Supervisory Functions Implementing Audit Committee and Supervisory Board Simultaneously in China

Abstract

Imposing the mechanism of a single Audit Committee (AC) on the dual supervisory mechanism of a Board of Directors alongside a Supervisory Board (SB) has raised questions regarding the overlapping status in implementing effective monitoring functions. A functionality checklist of these different governance mechanisms is documented in this article by interviewing five listed companies in China. Both comparisons of regulation and the issues raised in the interview point out the redundancies and gaps in implementing effective supervision through these distinct governance mechanisms. The evidence presented provides useful guidelines of how key operational items of effectiveness and co-ordination can be improved to make supervisory functions in China more effective.