**3.5. Audit committee independence and environmental reporting**

The main purpose of board committees is to monitor the audit process, the auditor's independence, the internal control and accounting system, the nomination and remuneration of the board directors, thus ensuring a continuous communication between the external auditor and the company's board [68]. Agency theory advocates the audit committee as an instrument of mitigating agency costs.

According to Ref. [69], the existence of an audit committee offers an ancillary internal control mechanism, likely to enhance the performance of a firm. More appreciably, audit committee with independent members empowers the committee to discharge its responsibilities impartially and thus substantially contribute to the committee's effectiveness [9]. According to the 2013 Corporate Governance Code issued by the SECP, all listed companies in Pakistan are required to have an independent director as the chairman of board audit committee. There is dearth of empirical support regarding the relationship between environmental reporting practices of firms and independence of audit committee.

Aburaya [70] found a positive relationship association between audit committee independence and the reporting quality of certain environmental specific categories such as policies concerning environment, adherence with environmental legislations and other environmental information. Nevertheless, in the context of voluntary disclosure [9, 12, 55, 71–73] documented the presence of a positive link between audit committee and the incurring independence and the extent of voluntary reporting exhibited by the companies. They argued that board committees determine good corporate disclosure of information. In conclusion, the existence and independence of audit committee improves the transparency of corporate boards and is expected to guarantee that a company fulfills its social commitment including the environmental commitment. Hence, it is hypothesized that the relationship between the presence and independence of audit committee and environmental disclosure will be positive:

**H5** :*The level of environmental reporting is positively related to the existence and independence of audit committee.*
