| Description |
The increased number of audit committees being used by boards of directors to oversee the accounting and reporting duties of corporations has had a noticeable impact on the independent auditor and his relationship to management. In recent years the audit committee concept has received growing support from organizations both within and outside of the accounting profession. This paper is a look at the crucial role that the audit committee has played in relation to the independent auditor and the potential role it could play in the future. The audit committee has received substantial support from the Securities and Exchange Commission, New York Stock Exchange, Congress, American Institute of Certified Public Accountants and numerous other professional, regulatory and governmental groups. The more common responsibilities and duties of audit committees have been well documented through studies and surveys which are cited in this paper. These responsibilities are oriented towards insuring that the board of directors and the internal and external auditors perform their fiduciary responsibilities in a professional manner. For the reader to understand better the impact that the audit committee can have on the independent auditor, the responsibilities and standards of conduct for the auditor are reviewed. Special emphasis is given the standard of independence, for that is where the audit committee can have the greatest influence on the independent auditor's work. Finally, the relationships between the audit committee, management, internal auditor and independent auditor are reviewed to establish the potential for audit committee impact. The audit committee concept is compared with the alternatives of mandatory auditor rotation and government control of accounting standards. In light of the need for the accounting profession to take positive steps toward insuring the auditor's independence, in order to maintain private control, the audit committee concept is both an economical and powerful tool. Proper use of the audit committee is a far more desirable method of protecting the investing public than the other major proposals. |
