paragraph "Composition" below) audit committee is required for a U.S. publicly traded company to be listed on a stock exchange.
Audit committees are typically empowered to acquire the consulting resources and expertise deemed necessary to perform their responsibilities.
Terms of reference and requirements for an audit committee vary by country, but may be influenced by economic and political unions capable of passing legislation.
[7]× Audit committees typically review financial statements quarterly and annually in public companies.
Should significant problems with accounting practices or personnel be identified or alleged, a special investigation may be directed by the audit committee, using outside consulting resources as deemed necessary.
External auditors are also required to report to the committee on a variety of matters, such as their views on management's selection of accounting principles, accounting adjustments arising from their audits, any disagreement or difficulties encountered in working with management, and any identified fraud or illegal acts.
The policies and practices used by the entity to identify, prioritize, and respond to the risks (or opportunities) are typically discussed with the audit committee.
Dr. Ram Charan has argued for risk management early warning systems at the corporate board level.
Many audit committee chairpersons conduct interim calls with key members of management between quarterly meetings.
These are formally scheduled private meetings between the audit committee and key members of management or the external auditor.
[12] Various consulting and public accounting firms perform research on audit committees, to provide benchmarking data.