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.

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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.

IOSCO issues survey report on audit committee oversight of auditors

The corporate governance reform concerning audit committees in Korea is generally effective: the choice of audit committee members should improve shareholder wealth.

Audit committees as a governance device

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.

Audit committee material weaknesses in smaller reporting companies

Over the last five years, the number of accountants sitting on audit committees has doubled from 6% to 12%.

More accountants are audit committee chairs

The Sarbanes-Oxley Act mandated important changes in the structure and operation of private-sector audit committees.

A new vision for public 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.

Inaugural inductee into FEI's Hall of Fame

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.

The audit committee under examination: a spotlight on the audit committee's ever-growing challenges, evolving composition, and emerging best practices

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.

The value proposition: there's more to Sarbanes-Oxley compliance than meets the eye

So, how well are audit committees working and where do they need to improve?

Status check: three years after SOX, effectiveness of audit committees is a mixed bag

org/audcommctr) aims to improve the effectiveness and efficiency of audit committees of public companies, private companies, not-for-profit organizations and government entities.

Financially literate audit committees boost stock price, study says

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:

Effects of the SOA on the accounting profession

The remoteness of audit committees in the past likely contributed to at least some of the corporate dysfunction we've seen in recent years.

CFOs and the audit committee: partners for progress; A healthy dialogue between these two functions should create healthier organizations. The challenge now is to keep that dialogue going. The new Audit Committee Toolkit may be the answer