What are the Basic Responsibilities of an Audit Committee?

Independence

In addition to helping define WHO an audit committee member should be, independence is considered a basic continuing responsibility of an audit committee member, and each member of the audit committee must be independent and remain so under specified narrow criteria. See prior discussion on independence.

Responsibilities relating to the Independent Auditor

The audit committee should be directly responsible for the appointment, compensation, retention and oversight of the work of auditors who provide audit services to the organization (whether the services are provided by the principal auditor or another firm).

Procedures for handling complaints

The audit committee must establish procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters, including procedures for the confidential anonymous submission by employees (whistleblowers) of concerns regarding questionable accounting or auditing matters.

Authority to engage advisors

The audit committee must have the authority to engage independent counsel and other advisors as it deems necessary to carry out its duties.

Funding

The organization must provide appropriate funding for the audit committee to compensate the outside auditors and any independent counsel and advisors it employs and to fund ordinary administrative expenses of the audit committee that are necessary in carrying out its duties.

The following discussion is organized around these basic responsibilities and is somewhat expanded to encompass the fuller scope of actual audit committee responsibilities in keeping with the broader concept of oversight.

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