Interaction with the Audit Committee, Management and the External Auditor
Audit Committee Training
SOX 404 Matters
The Current Environment
What They Were Saying in 1926
“ … There can be no hope for the independent audit unless and until it be tied in with the positive creation of some body independent of management to which the auditor shall be accountable.”
– William Ripley, “Main Street and Wall Street” - 1926
Many of the Corporate Governance Reforms Are Far Reaching
Resulting in redefined roles, responsibilities and accountabilities of:
Boards of Directors (including the Audit Committee)
Other Participants in the Capital Markets
In some cases, these reforms are the most dramatic, rapidly-enacted and far reaching changes to ever affect corporate accountability and financial reporting oversight.
Audit Committee Definition – Redefined?
A committee (or equivalent body) established by and amongst the board of directors of an issuer for the purpose of overseeing:
The accounting and financial reporting processes of the issuer, and
audits of the financial statements [“financial reporting process”] of the issuer.
“ Under the PCAOB’s proposed standard, the audit of a public company is now an audit of the company’s financial reporting process.”
Douglas R. Carmichael, Chief Auditor PCAOB
Speech to the American Accounting Association January 2004
Reporting Relationships and Interaction with the Audit Committee, Management and the External Auditor
The Three Legged Stool
“ The board, including the Audit Committee, management (which includes Internal Audit), and outside auditors form a "three-legged stool" of responsible disclosure and active oversight, laying the foundation for financial integrity and greater accountability.”