The Board of the International Organization of Securities Commissions (IOSCO) today published the Survey Report on Audit Committee
Oversight of Auditors, which seeks to help identify audit committee
practices that could improve audit quality at publicly listed entities.
The mainstay of the paper is formed by an analysis of the determinants and consequences of audit committee
effectiveness, the contribution of ACs to improvements in the quality of accounting information, and ACs as part of corporate governance.
The Sarbanes-Oxley Act of 2002 (SOX) defines an audit committee
as "a committee (or equivalent body) established by and amongst the board of directors of an issuer for the purpose of overseeing the accounting and financial reporting processes of the issuer and audits of the financial statements of the issuer.
The chair of the audit committee
has the important role of providing leadership for the audit committee
and of exercising powers on behalf of the committee previously reserved to management.
Also, 23% of audit committee
chairs are accountants, up from less than 10% in 2002.
This article will examine the new vision of the public-sector audit committee
incorporated in the new recommended practice.
Boards: Currently a member of the board and chairman of the audit committee
of Fannie Mae, Kimberly-Clark Corp.
The external auditor's section 404 responsibility is to critically evaluate the design and effectiveness of management's internal controls over financial reporting, test as necessary, form an opinion and communicate significant deficiencies and material weaknesses to management and the audit committee
The independent audit committee
provides oversight of the financial reporting process while the independent auditor provides an outside opinion on the fairness of the financial statements.
members with knowledge of accounting issues and their related business ramifications translates into a higher stock price, according to a recent study by a University of Chicago researcher.
However, a registered public accounting firm may engage in nonaudit services other than those listed above (including tax services), for an audit client, provided such activity is first approved by the issuer's audit committee