The audit committee is an operating committee of the board of directors charged with oversight of financial reporting and disclosure. Committee members are drawn from members of the company’s board of directors, with a Chairperson selected from among the committee members. Audit committee means a group of at least 3 individuals responsible for overseeing all internal and external audit functions of a company.
Institute of Internal Auditors definition- “The Audit committee refers to the governance body that is charged with oversight of the organization’s audit and control functions. Although these fiduciary duties are often delegated to an audit committee of the board of directors, the Practice Advisory is also intended to apply to other oversight groups with equivalent authority and responsibility, such as trustees, legislative bodies, and owner of an owner-managed entity, internal control committees, or full boards of directors”.
An audit committee is a subcommittee of the board of directors that is responsible for the financial reporting and disclosure process.
(a) Members typically must be independent of management, meaning they do not receive any compensatory fee, other than for service on the audit committee.
(b) The audit committee is directly responsible for the appointment, compensation, and oversight of the work of any registered public accounting firm employed by the company.
(c) The audit committee must be preapproved all audit and non-audit services provided by its auditor.
Finally, the audit committee is a committee of the board of directors responsible for oversight of the financial reporting process, selection of the independent auditor, and receipt of audit results both internal and external. The committee assists the board of directors to fulfill its corporate governance and overseeing responsibilities in relation to an entity’s financial reporting, internal control system, risk management system and internal and external audit functions.