Sarbanes-Oxley Ongoing Compliance Guide: Key Processes and Summary Checklists

The Evolving Role of the Audit Committee

The role of the audit committee has expanded and changed at an unprecedented rate as a result of the passing of the Sarbanes-Oxley Act and an increased focus on corporate governance. Today’s audit committee members are empowered and more influential, but they also have increased responsibilities and greater accountability. Rules outlining the composition of the audit committee and its independence have emerged; however, rules alone will not provide the foundation needed to build the relationships and leadership that will ensure the committee’s effectiveness and the integrity of a company’s financial information.

In today’s environment, boards of directors and audit committee members are asking significantly more questions of management in order to more thoroughly understand a company’s business, risks, and control environment. An increased need for information, driven by the need to make informed decisions, requires audit committees to spend more time preparing and interacting with management, external auditors, and internal auditors in order to fully understand a company’s strategy and approach to compliance.

Many audit committees have not adopted best practices, despite the regulatory microscope under which committee members currently operate. The percentage of committees implementing best practices is surprisingly low for a group that plays such an important role in the welfare and integrity of a company. Audit committees can implement ...