audit committee

(redirected from Audit Committees)

Audit Committee

A committee responsible for reviewing its own company's business activities to identify inefficiencies, reduce costs, and otherwise achieve organizational objectives. Audit committees may investigate potential theft or fraud and ensure compliance with applicable regulations and policies. They also assist in risk management. In a large company, especially a publicly traded one, the audit committee is independent from any management and is answerable only to the board of directors. See also: Internal audit.

audit committee

A subcommittee of a corporation's board of directors that selects the firm's external auditors. The audit committee is responsible for hiring the auditors, resolving disputes with the auditors, and evaluating and disclosing the auditors' reports.

Audit committee.

The corporate audit committee is the liaison between the company's management, the board of directors, internal and external auditors, and any other accounting experts advising the company on audit issues.

In particular, the audit committee is responsible for hiring and managing external auditors. Since 2002, when Congress passed the Sarbanes-Oxley Act, implementing stringent financial oversight regulations, the role of the audit committee has become increasingly important.

An audit committee is composed of a subgroups from the corporation's board of directors. Members of the audit committee must be independent, which means they have no ties to the company's management team.

In general, they cannot receive any compensation, such as consulting or advisory fees, except for a board of director's fee. They may not be able to own shares in the company or be affiliated in any other way with the company. Nor can they be affiliated with or have an interest in the external auditing company.

References in periodicals archive ?
The report summarizes the results of an IOSCO survey of its members regarding the existing legal, regulatory and other requirements related to the oversight by audit committees of the auditor and the audit process of domestic publicly-listed entities.
The corporate governance reform concerning audit committees in Korea is generally effective: the choice of audit committee members should improve shareholder wealth.
Recent SOX section 404 filings by smaller reporting companies ("nonaccelerated filers," or registrants with less than $75 million of public float), however, indicate that some small companies still are struggling to develop effective audit committees.
Over the last five years, the number of accountants sitting on audit committees has doubled from 6% to 12%.
The Sarbanes-Oxley Act mandated important changes in the structure and operation of private-sector audit committees.
He is or was the chair of five audit committees at separate public companies, and also served on a blue-ribbon national commission on board leadership, which issued its report in November 2004.
EARLIER THIS YEAR, Spencer Stuart's Financial Officer Practice explored the impact of the regulatory and legislative changes that have expanded the role and influence of public company audit committees.
Companies can find additional uses for Sarbanes-Oxley documentation as a tool for audit committees, a way to enhance employee decisions based on cross-function process information and a means of increasing efficiencies by eliminating duplicate controls.
So, how well are audit committees working and where do they need to improve?
org/audcommctr) aims to improve the effectiveness and efficiency of audit committees of public companies, private companies, not-for-profit organizations and government entities.
Section 204--Auditor Reports to Audit Committees: The SOA amends '34 Act Section 10A to require registered public accounting firms performing audits for an issuer to timely report to the audit committee the following:

Full browser ?