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What can Audit Committee do to ensure auditor independence

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4. What should the Audit Committee of the Board of Director do to ensure auditor independence?

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The role of the audit committee was enhanced following Sarbanes-Oxley to provide a separate and independent source for compliance.

The audit committee should consist of outside directors, not members of management.

The job of the ...

Solution Summary

The solution explains six points of what an audit committee can do to help ensure the independence of external auditors. It is their job. The general duties of audit committees were enhanced as a result of Sarbanes-Oxley.

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Do you feel that it is naive to believe that all CPAs can maintain independence in both appearance and fact? Over time, CPAs will develop relationships with their clients and certainly the CPAs are dependent on the fees derived from the clients. In 2002, Sarbanes-Oxley made the audit committee directly responsible for the hiring of the audit firm. The SEC and the stock exchanges have issued recent rules and requirements for audit committees to improve independence and financial reporting. What do you feel the audit committee's role is in maintaining independence? Do you feel this role is effective?

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