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In a U.S. publicly-traded company, an audit committee is an operating committee of the Board of Directors charged with oversight of financial reporting and disclosure. Committee members are drawn from members of the company's board of directors, with a Chairperson selected from among the committee members. A qualifying audit committee is required for a U.S. publicly-traded company to be listed on a stock exchange. To qualify, the committee must be composed of independent outside directors with at least one qualifying as a financial expert. Audit committees are typically empowered to acquire the consulting resources and expertise deemed necessary to perform their responsibilities. The role of audit committees continues to evolve as a result of the passage of the Sarbanes-Oxley Act of 2002. Many audit committees also have oversight of regulatory compliance and risk management activities. Not for profit entities may also have an audit committee.
|Contents | |[hide] | |1 Responsibilities | |1.1 Role in oversight of financial reporting and accounting | |1.2 Role in oversight of the external auditor | |1.3 Role in oversight of regulatory compliance | |1.4 Role in monitoring the internal control process | |1.5 Role in oversight of risk management | |2 Impact of the Sarbanes-Oxley Act of 2002 | |3 History | |4 Best practices | |4.1 Managing the audit committee's agenda | |4.2 Frequency of interaction with management | |4.3 Executive sessions | |4.4 Evaluation | |5 Survey results | |6 References | |7 External links | |8 See also |
Boards of Directors and their committees rely on management to run the daily operations of the business. The Board's role is better described as oversight or monitoring, rather than execution. Responsibilities of the audit committee typically include: • Overseeing the financial reporting and disclosure process. • Monitoring choice of accounting policies and principles. • Overseeing hiring, performance and independence of the external auditors. • Oversight of regulatory compliance, ethics, and whistleblower hotlines. • Monitoring the internal control process.
• Overseeing the performance of the internal audit function. • Discussing risk management policies and practices with management. The duties of an audit committee are typically described in a...