This is a committee created by a company’s board of directors that has responsibility for (1) hiring independent counsel; (2) approving audit and tax services; (3) engaging and supervising independent auditors; and (4) creating procedures for processing complaints about the company’s accounting methods. All publicly traded companies are required to have an audit committee whose members satisfy certain minimum standards prescribed by law. If not, you can’t be listed on the stock exchange. So it’s kind of a big deal.
Audit committees keep in contact with your CFO and controller. As a committee, they have the role of overseeing external auditors working with the company, overseeing all the financial reporting coming out of the company, keeping a close eye on accounting policies, making sure regulatory compliance is in place, and discussing risk management policies. They can even form special investigations if there is a reason to suspect something unseemingly is happening within the company or in relation to its employees.
Obviously the audit committee’s job is a very serious one. Failure to do their job well could lead to the collapse of a huge organization.
The audit committee is here today and that means it’s time to put on our serious faces and hope nothing is amuck.