Audit Committee Duties

The audit committee is a sub-group of a company’s board of directors responsible for overseeing the financial reporting process, internal controls, and audit activities. Its key duties include ensuring the accuracy and reliability of financial statements, reviewing internal control systems, and monitoring the external and internal auditors^[2].

• Oversee financial reporting: The audit committee ensures that financial statements are accurate and reliable, monitoring the processes involved in financial reporting and ensuring adequate disclosure controls are in place^[1].
• Review internal controls: The committee assesses the adequacy and effectiveness of internal controls, including internal control over financial reporting, and monitors management’s implementation of corrective actions in response to audit findings^[2].
• Supervise auditors: The audit committee is responsible for recommending the appointment or removal of independent external auditors, overseeing their performance and independence, and reviewing the scope and results of audits^[4].
• Monitor compliance: The committee ensures compliance with applicable laws, regulations, and company policies, including reviewing significant related-party transactions and conflicts of interest^[4].
• Facilitate communication: The audit committee provides a forum for open and objective discussion about financial concerns and audit findings between management, auditors, and the board^[3].
• Oversight of risk management: The committee discusses policies regarding risk assessment and management, including emerging areas like cybersecurity and sustainability reporting^[1].
• Review ethical standards: The audit committee monitors the organization’s code of ethics, whistleblower procedures, and other compliance programs to ensure proper conduct and address stakeholder concerns without fear of retaliation^[7].
• Annual self-assessment: Many audit committees assess their own performance on an annual basis to ensure effectiveness and compliance with their charter and best practices^[4].

References

• [1] Audit committee oversight responsibilities – Deloitte
• [2] What is an audit committee?
• [3] The audit committee: What is it and what is its role? – Diligent
• [4] Audit Committee Resource Guide
• [7] Audit Committee Role and Responsibilities Toolkit | Practical Law