The Effect of Disclosure in the Report of the Audit Committee on the Level of Accounting Conservation in the Financial Statements - An Empirical Study on Companies Listed in the Egyptian Stock Exchange

The study aimed to examine and test the effect of the degree of disclosure in Audit Committee's report on the level of accounting Conservatism in finan cial statements, the Conservatism expressed as a model of Market to Book (MTB). To achieve the objective of the study, the researcher make an applied study to test the research hypothesis on community includes restricted companies of the Egyptian Stock Exchange, then withdrawn  judgmental sample (30 companies) of these companies to make Content Analysis of the audit committees reports, and measuring the degree of actual disclosure in the audit committee report. and to find a relationship between the degree of the actual disclosure of the Audit Committee report and the level of accounting Conservatism. The study reached to set of results the most important; the degree of disclosure in the audit committee report affect positively on the level of accounting Conservatism, that enable to say the possibility of accepting the research hypothesis. This is due to the increased level of voluntary disclosure in the Committee report as a result of the effectiveness of the audit committee and the enjoyment of its members of required technical characteristics which leads to improving the transparency of financial reporting and increase the company's value represented by the increase in market value compared to their book value and thus achieve the adequacy of the level of accounting conservatism   in the financial statements. The study made a series of recommendations, the most important; the Audit Committee must issue an annual report on the tasks accomplished during the year and is published annually to stakeholders in the company, and should be review the Egyptian accounting standards so as to allow to put mandatory border to a business’s companies to applying the conservative accounting practices, as well as the need to auditing standards include that auditor disclosure in his report on the extent of conservation of entity's financial statements, and not to abandon the application of conservative accounting policies with the budget in the application, just as the application makes accounting information more suitable for decision-making  and increases the firm value, the  exaggerated  application   may harm the company because the stockholder belief that he invests his money in less successful company, which make him sell his shares less than its value. That mean a decision is not in his utility.