audit committee

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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 ?
Islamabad -- In the first survey of its kind on audit quality conducted by the Audit Oversight Board (AOB) in February-March this year, 89 percent of audit partners said that audit staff comprising managers and trainees is the most important factor for audit quality, followed by 73 per cent who chose audit committees and 60 per cent who selected audit fee.
ISLAMABAD -- Audit Oversight Board (AOB) has organized first survey on audit quality in which 89 percent of audit partners have said audit staff comprising managers and trainees is the most important factor for audit quality, followed by 73 per cent chose audit committees and 60 per cent selected audit fee.
ISLAMABAD: Audit Oversight Board (AOB) has organized first survey on audit quality in which 89 percent of audit partners have said audit staff comprising managers and trainees is the most important factor for audit quality, followed by 73 per cent chose audit committees and 60 per cent selected audit fee.
For its article Audit committees advised: be cautious if PCAOB calls, Compliance Week quoted Akin Gump partner Claudius Modesti on announced plans by the Public Company Accounting Oversight Board to have more interaction and dialogue with audit committee members in its inspections process.
A report on research into the effect of audit committees in the March 2018 CPA Journal (April Klein, "Questioning the Effectiveness of Independent Audit Committees: Does the Current Regulatory Regime Improve Reporting Quality?" http://bit.1y/2LFI6mg) describes measuring various market and other effects of the audit committee and finding none:
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.
Leading audit committees are recognizing that efficiency and effectiveness inside the boardroom increasingly hinges on spending time outside of the boardroom--visiting company facilities, interacting with employees and customers, and hearing outside perspectives--to understand the tone, culture, and rhythm of the organization.
The Securities and Exchange Commission (SEC) is trying to gather information from the public about the work of audit committees at public companies.
Summary: The Securities and Exchange Commission (SEC) is trying to gather information from the public about the work of audit committees at public companies.
Commenting on the important role that audit committees play, H.E Hamad Buamim said: EeAoIt is a great pleasure to launch the KPMG-Hawkamah Audit Committee Institute, which has been set up to serve the lower Gulf region.
Municipal audit committees carry out specific responsibilities assigned to them by the city council--typically oversight of financial reporting, risk management, internal controls, ethics, and audit activities.
The corporate governance reform concerning audit committees in Korea is generally effective: the choice of audit committee members should improve shareholder wealth.

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