Audit Committee Formation in the Aftermath of 2007-2009 Global Financial Crisis, Volume I

CHAPTER 1

Role, Foundation, Regulation, and Structure of the Audit Committee

Executive Summary

This chapter provides an introduction to the relevance and status of corporate governance and the audit committee in the financial markets. The audit committee as an integral component of corporate governance assumes oversight responsibilities on all aspects of corporate governance from financial reporting, to internal controls and audit activities. One of the key provisions of the Sarbanes–Oxley Act (SOX) of 2002, which seeks to restore investor confidence in public financial information, is that a properly constituted and effective functioning audit committee can improve the quality of financial reporting by acting as an effective arbitrator in management ...