The audit committee is a separately chartered committee of the board of directors.
The audit committee has a direct relationship with the board of directors, as it reports to the board on a quarterly or more frequent basis on such things as audit plans, audit findings and other items deemed to be significant.
Generally, the audit committee’s purpose is to assist the board in overseeing the:
- Reliability of the entity’s financial statements and disclosures
- Effectiveness of the entity’s internal control and risk management systems
- Compliance with the entity’s code of business conduct and legal and regulatory requirements
- Independence, qualifications and performance of the external auditors
- Performance of the internal audit activity
The role of the audit committee has significantly expanded in recent years. Realizing this, the board of directors has begun to shift some of the audit committee’s responsibilities to separately chartered committees to create a balance of duties and ensure they are effectively executed. These additional committees have often included a compensation committee, disclosure committee, and nominating and governance committee.
This is a sample self-assessment audit questionnaire for audit committees to use when evaluating the scope of their responsibilities. Topics in the questionnaire include:
- Risk management and internal controls
- Finance and accounting
- Audit resources and processes
- Audit committee performance and operating practices
This document can be used as a general guide to understand and review common audit committee responsibilities. Organizations should continuously update and monitor the responsibilities included in this document to ensure that it reflects business operations.