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 ?
The CFO taking on the role of a coach: While the audit committee should be comprised of individuals with significant experience in accounting matters, the CFO must sometimes take the role of coach, helping audit committee members understand how an accounting standard applies in that industry or that company.
Companies committing financial statement fraud were small in size (median assets, $16 million), had senior executives involved in the fraud, and had a board of directors and audit committee that were not functioning properly.
The American Institute of Certified Public Accountants (AICPA) has published a "how-to" guide for audit committees--the AICPA Audit Committee Toolkit--to help audit committees meet the responsibilities mandated by the Sarbanes-Oxley Act of 2002.
The MTC Audit Committee is composed of representatives from the states in the MTC Audit Program.
Recent actions by the SEC and the recommendations of the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees (BRC) have highlighted the need for the audit committee to oversee and review all economic relationships between the external auditors and management.
For publicly traded corporations, these participants normally include the board of directors, the audit committee of the board, senior management, the internal auditor, and the outside independent auditor.
Regarding audit committees, 84 percent of respondents agreed that a report by audit committees should be included in the company's annual report, 53 percent said that audit committees lacked sufficient accounting knowledge, and 98 percent favoured a structured training course for audit committee members.
Regarding audit committees, 84 percent of respondents agreed that a report by audit committees should be included in the company's annual report, 53 per cent said that audit committees lacked sufficient accounting knowledge, and 98 per cent favoured a structured training course for audit committee members.
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 Audit Committee of the Company's Board of Directors has commenced an internal investigation in connection with concerns raised by a former employee.
M2 EQUITYBITES-January 30, 2018-Robit's board names members of audit committee

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