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.

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