A third of AIM-listed companies need to add extra members to their audit committee in order to meet best practice in corporate governance, according to by executive search firm Edward Drummond.

The firm says its analysis shows that 34% of the FTSE AIM 100 companies have fewer than three non-executive directors on their audit committee; 10 years after the Higgs Review recommended that all listed companies have an audit committee of at least three independent non-executive directors (NEDs).

The research indicates that 5% of FTSE AIM 100 companies have one NED on the audit committee, while 29% have two, the minimum requirement in the UK Corporate Governance Code. Half (49%) have three NEDs, 15% had four on the committee and 2% have five or more.

Neill Fry, director at Edward Drummond, said: 'at a time when the demands and expectations on audit committees are escalating, it's difficult to see how just one or two directors have the tools to meet all of these functions.'

Fry reports that active recruitment of NEDs for audit committee appointments is increasing, with financial expertise viewed as a key requirement in the role.

'AIM companies can have a really competent finance director but institutions will want to see that financial expertise mirrored amongst the non-executives, as well the credit crunch has thrown into the spotlight the integrity and credibility of the financial reporting and performance of many companies - which is why a strong independent audit committee is seen as a cornerstone of a robust business,' Fry said.