Audit Committee
A board subcommittee overseeing financial reporting, internal controls, and external audits.
What is Audit Committee?
An audit committee is a subcommittee of a company's board of directors responsible for overseeing the integrity of financial reporting, the effectiveness of internal controls, and the independence of the external auditor. Under the Sarbanes-Oxley Act of 2002 and SEC rules, listed companies must maintain an audit committee composed entirely of independent directors, at least one of whom must be a financial expert. The committee reviews annual and quarterly financial statements, oversees the external audit engagement, and serves as the primary liaison between management, the internal audit function, and the independent auditor.
Example
Apple Inc.'s audit committee, composed of independent directors, oversees the company's financial reporting process, reviews its internal control system, and approves the selection and compensation of PricewaterhouseCoopers as its independent auditor, as disclosed in Apple's 2024 proxy statement.