Before we get into the “WHOs” of the Audit Committee in particular, it is important to ensure that your organization recognizes the key participants within the marketplace, as they all bring unique experiences and perspectives to the governance of financial reporting.
The best audit committees are those that set the appropriate tone at the top where the focus is on ensuring the organization acts in accordance with the best interests of its stakeholders.
The inclusion of at least one audit committee member with financial expertise is a highly recommended best practice. This guidance was mandated for public companies by the Sarbanes-Oxley Act and should be a consideration for all organizations to adopt.
The AICPA's Audit Committee toolkit contains teh following decision tree that may assist Audit Committees in evaluating a candidate for consideration as their financial expert.
The audit committee should be responsible for making a formal recommendation to the board that the audited financial statements be approved.
This role requires a strong, independent and competent communicator who is willing to ask tough questions of management and others in order to truly understand and ensure that the audit committee is focused on risk management and financial oversight of the organization and tha...
To obtain a balanced perspective, in addition to the financial expert, we recommend two to five additional members with diverse backgrounds and experience.