Definition of 'Audit Committee'

An operating committee of a company's board of directors that is in charge of overseeing financial reporting and disclosure. All U.S. publicly-traded companies must maintain a qualified audit committee in order to be listed on a stock exchange. Committee members must be made up of independent outside directors including a minimum of one person !ho qualifies as a financial expert.

Investopedia explains 'Audit Committee'

Audit committees maintain communication !ith the company's chief financial officer "C#$% and controller. Audit committees typically have the authority to initiate special investigations in cases !here they determine accounting practices are problematic or suspect or !here problems exist !ith personnel. &he audit committee's role includes the oversight of financial reporting the monitoring of accounting policies the oversight of any external auditors regulatory compliance and the discussion of risk management policies !ith management.

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audit committee
An audit committee is a selected number of members of a company's board of directors !hose responsibilities include helping auditors remain independent of management. (ost audit committees are made up of three to five or sometimes as many as seven directors !ho are not a part of company management. &he audit committee plays a critical role in providing oversight and serving as a check and balance on a company's financial reporting system. &he committee provides independent revie! and oversight of a company's financial reporting processes internal controls and independent auditors. )t provides a forum separate from management in !hich auditors and other interested parties can candidly discuss concerns. *y effectively carrying out its functions and responsibilities the audit committee helps to ensure that management properly develops and adheres to a sound system of internal controls that procedures are in place to ob+ectively assess management's practices and internal controls and that the outside auditors through their o!n revie! ob+ectively assess the company's financial reporting practices. Example

&he Sarbanes-$xley Act in the US ",--,% requires that all members of the audit committee be independent. Companies must disclose !hether or not the audit committee includes at least one financial expert. .hile in the U/ Corporate 0overnance Code ",-1-% it is required that the 2board should establish an audit committee of at least three or in the case of smaller companies t!o independent non-executive directors. )n smaller companies the company chairman may be a member of but not chair the committee in addition to the independent non-executive directors provided he or she !as considered independent on appointment as chairman. &he board should satisfy itself that at least one member of the audit committee has recent and relevant financial experience.2 314

Definition
A group of at least 3 individuals responsible for overseeing all internal and external audit functions of a company. n addition! at least one member must be a financial expert or have significant financial expertise. Audit committees are responsible for selecting and appraising independent and external C"A firms to provide audit functions. #hey also oversee the financial reporting process including $but not limited to% supervising internal auditors! monitoring internal controls! and ensuring ade&uate compliance 'ith S(C and )AA" standards. *ecause staff on audit committees report to the board of directors of a company! they cannot have ties to the company+s management team or be in a position 'here their independence can be &uestioned. Read more, http,--'''.investor'ords.com-./.0-audit1committee.html2ix3345"RL6WgA