audit committee

Definition

A group of at least 3 individuals responsible for overseeing all internal and external audit functions of a company. In addition, at least one member must be a financial expert or have significant financial expertise. Audit committees are responsible for selecting and appraising independent and external CPA firms to provide audit functions. They also oversee the financial reporting process including (but not limited to) supervising internal auditors, monitoring internal controls, and ensuring adequate compliance with SEC and GAAP standards. Because staff on audit committees report to the board of directors of a company, they cannot have ties to the company's management team or be in a position where their independence can be questioned.

Use audit committee in a sentence

This week's agenda for the audit committee includes reviewing the results of recent internal audits and deciding on a new member.

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ABC Incorporated appointed 5 members of it's board of directors to perform the functions of an audit committee with John Smith, CPA at its head.

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We quickly brought in the audit committee after there were some discrepancies found in the original accounting report, much to the chagrin of upper management.

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