Public and regulatory attention is focused on the adequacy of public company corporate governance procedures and best practice.
Audit committees play a pivotal role, and have become an essential component of modern corporate best practices.
As a result, it is critical that the duties of the audit committee be well defined and understood, and how well the audit committee is satisfying its responsibilities.
In its oversight capacity, the audit committee is neither intended nor equipped to guarantee with certainty to the full Board and shareholders the accuracy and quality of a company’s financial statements and accounting practices. Proper financial reporting, accounting, and audit functions are collaborative efforts conducted by full- time professionals dedicated to these purposes. The audit committee, as the first among equals, oversees the work of the other actors in the financial reporting process – management, including the internal auditor, and the outside auditors – to endorse the processes and safeguards employed by each. In particular, the audit committee should encourage best practices that promote accountability, ensuring that management properly develops and adheres to a sound system of internal control, that the internal auditor objectively assesses management’s accounting practices and internal controls, and that the outside auditors, through their own review, assess management and the internal auditor’s practices.
In this section we will discuss: