The role and responsibility of audit committee towards credible financial reporting is still much the same, but the issue of selecting appropriate people with the right mind is often challenged. The usual tripartite, namely independence, diligence and knowledge of audit committee is further refined in the recently revised Malaysian Code of Corporate Governance 2007. The study examines the determinants of discretionary accruals in MESDAQ companies. The central issues are the key aspects of audit

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... committee, namely independence, expertise and diligent including the issue of former senior auditor and audit alumni on audit committee and its effect on discretionary accruals. Based on OLS regression on cross-sectional data of 2007, the results suggest that audit committee with higher proportion of financial expertise (former senior auditor or former CFO) and more diligent audit committee are significant for the said purpose. As such, it is argued that audit committee with higher proportion of financial experts would lead to credible financial reporting. However, audit committee with former senior auditor and audit alumni are associated with larger discretionary accruals. In addition, total independent audit committee is positively associated with larger discretionary accruals which lead to possible limited access to pertinent financial information compared to audit committee with an insider.