Audit Committee

The Audit Committee
The Audit Committee has become increasingly substantial in the audit procedure of public companies. Especially with approximately of the much recent unified scandals, the audit committee is at present a requirement for public companies rather than an option. The encouragement for the wasting disease of an audit committee is not new to the world of corporate governance. This has been a recommendation of financial law makers since the late 1930s. stick up for the mapping of audit committees continued to grow in the 1970s, and more than public companies considered the audit committees to be an asset to their companies and their investors. Even though there was growing support for the audit committees, nothing kinda brought about the need for official standards for the audit committee want recent corporate failures (e.g. Tyco, WorldCom, Enron, etc.). These failures damaged reputations and the economy and it also jeopardized the investments of stakeholders. The Sarbanes Oxley comport of 2002 was the governments attempt to stimulate the economy and reclaim the confidence of stakeholders. Public companies were now required to take more responsibility for their actions and one of the ways to this would be to employ the use of an audit committee.




The Sarbanes Oxley Act §205 explicitly defines and audit committee as a committee established by and amongst the board of directors of an issuer for the endeavor of overseeing the accounting and financial reporting processes of the issuer and audits of financial statements of the issuer. Overseeing financial statements and fair assessing them requires a great deal of independence on the fictitious character of the audit committee. If there is financial or personal engross this will affect its objectivity. §10A of the Exchange Act serves as a reference to public companies as to what that true independence means. unmatchable of the criterions of independence, according to the act, is the absence of compensation. Compensation increases the directors busy in the...If you want to get a full essay, secernate it on our website: Orderessay



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