This paper develops analysis of the association between the industry expertise of the audit committee members and the quality of financial reporting based on the data of Chinese listed firms over the period 2007 to 2010, and there are 2366 firm-year observations and 7984 audit-firm-year-members observations in the sample. In this paper, I use two measures which are proxy for financial reporting quality, one is the discretionary accruals, and the other is the financial restatements. As a result, I have found that the combination of the industry expertise and financial expertise in the audit committee is positively associated with the financial reporting quality in the discretionary accruals models and restatement models respectively. And also, the hypotheses which predict that the positive association between the combination of the industry expertise and financial expertise and the higher financial reporting quality is stronger than the financial expertise alone have been proved. And these two models pass a series of robustness tests. Key Words: audit committee, industry expertise, financial reporting quality, and financial expertise.