L e a r n I n g o b j e c t I v e s

New roles for audit committees

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Accounting Information Systems 13th Chapter 7

New roles for audit committees. Audit committee members must be on the company’s board of directors and be independent of the company. One member of the audit committee must be a financial expert. The audit committee hires, compensates, and oversees the auditors, who report directly to them
New rules for management. SOX requires the CEO and CFO to certify that (1) financial statements and disclosures are fairly presented, were reviewed by management, and are not misleading and that (2) the auditors were told about all material internal control weaknesses and fraud. If management knowingly violates these rules, they can be prosecuted and fined. Companies must disclose, in plain English, material changes to their financial condition on a timely basis

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