Globalization of audit committees as a common mechanism of corporate governance is one of the most significant developments during the last two decades in several countries. The recent saga of corporate failures and the dramatic collapse of Enron, Worldcom, Cendant and HIH on the international arena and National Bank of Fiji locally (Fiji Islands), provides continuing evidence of failures of corporate governance at all levels including senior management, boards of directors, the audit committee, external auditors, financial regulators and the accounting and auditing profession. Probably, at present, this is the hottest issue and it provides a watershed opportunity for this article to contribute to our understanding the value and potential of audit committees as a sustainable corporate governance mechanism by bringing together arguments associated with their appointment and reporting structure in the context of the agency theory approach.

This article is based on the theme ‘sustainable corporate governance – testing new mechanisms’ and in particular ‘the audit committee as a mechanism of sustainable corporate governance in private sector corporations namely the listed public companies in Fiji’. The advent of these independent audit committees in Fiji would facilitate the setting up of an international collaborative approach to the globalization of audit committees in sustainable corporate governance arena. This would be achieved in terms of new and improved auditing standards, and the mounting pressure from institutional investors and stakeholders would allow for greater compliance to prevent ethical and financial crisis in Fiji.

The term ‘governance’ is a very versatile one. It is used in a variety of fields in different contexts; for instance, it is used in connection with several contemporary social sciences, especially political/ science and economics. It originates from the need of political science with regards to the state governance and from the need of economics with regards to corporate governance. For example, the World Bank (1992:1) regarded governance as the manner in which power is exercised in the management of a country’s economic and social resources for development. Also, the Commission on Global Governance (UNDP, 1997:3) suggested that governance is concerned with accountability, transparency, equitability and predictability. ‘Governance’ corresponds to the post-modern form of economic and political organizations, for example, according to the political scientist Roderick Rhodes (1997), governance concept is currently used in contemporary social science with at least six different

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