Which of the following is not one of the audit committees responsibilities?
The strength of our public company financial reporting system relies on many stakeholders playing different but interconnected roles in a process designed to provide investors and our markets with high-quality, reliable financial information. Audit committees play a vital role in the financial reporting system through their oversight of financial reporting, including the internal control over financial reporting (ICFR) and the external, independent audit process. Show
In 2002, the Sarbanes-Oxley Act introduced a number of requirements to increase and strengthen the role of audit committees in financial reporting, including the independent audit committee requirement. We believe the measures related to audit committees have proven to be some of the most effective financial reporting enhancements included in the Sarbanes-Oxley Act. Effective oversight by strong, active, knowledgeable and independent audit committees significantly furthers the collective goal of providing high-quality, reliable financial information to investors and our markets. As the 2019 calendar year-end financial reporting season approaches, we are providing observations and reminders on a number of potential areas of focus for audit committees. Issuers and independent auditors also should be mindful of these considerations with an eye toward ensuring that audit committees have the resources and support they need to fulfill their obligations. To be sure, the scope of an audit committee’s work is broad and includes a variety of important responsibilities, and the observations and reminders noted below are not intended to reflect a comprehensive list of these responsibilities. It is our intention that these observations and reminders will assist audit committees carrying out their year-end work, including promoting efficient and constructive dialogue among audit committees, management and independent auditors in these and other areas. Observations Regarding Financial Reporting and AuditingGeneral Observations
More Specific Observations
ConclusionThe strength of our capital markets, and the confidence of investors in our markets, is driven by the continued quality and reliability of financial reporting. Independent audit committees perform a vital role in financial reporting and have a significant oversight responsibility in connection with the preparation and review of the financial information our investors and markets expect. We support and thank audit committee members for their continued efforts to ensure this information is accurate and reliable. This statement represents the views of the Chairman, Chief Accountant and Director of the Division of Corporation Finance of the U.S. Securities and Exchange Commission (“SEC” or “Commission”). It is not a rule, regulation, or statement of the SEC. The Commission has neither approved nor disapproved its content. This statement does not alter or amend applicable law and has no legal force or effect. This statement creates no new or additional obligations for any person. See, e.g., SEC Chairman Jay Clayton, Statement on SEC Approval of the PCAOB’s New Auditor’s Reporting Standard (October 23, 2017), available at https://www.sec.gov/news/public-statement/clayton-statement-pcaob-new-auditor-reporting-standard, and also SEC Chief Accountant Sagar Teotia, Statement in Connection with the 2019 AICPA Conference on Current SEC and PCAOB Developments (December 9, 2019), available at https://www.sec.gov/news/speech/teotia-speech-2019-aicpa-conference. Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204, 116 Stat. 745 (2002). See, e.g., SEC Chairman Jay Clayton, Statement at Open Meeting on Proposed Amendments to Sarbanes Oxley 404(b) Accelerated Filer Definition (May 9, 2019), available at https://www.sec.gov/news/public-statement/statement-clayton-050919, SEC Chairman Jay Clayton, Statement on SEC Approval of the PCAOB’s New Auditor’s Reporting Standard (October 23, 2017), available at https://www.sec.gov/news/public-statement/clayton-statement-pcaob-new-auditor-reporting-standard and also SEC Chief Accountant Sagar Teotia, Statement in Connection with the 2019 AICPA Conference on Current SEC and PCAOB Developments (December 9, 2019), available at https://www.sec.gov/news/speech/teotia-speech-2019-aicpa-conference. Section 10A(m) of the Securities Exchange Act of 1934 [15 USC 78j-1(m)]. See FASB Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (May 2014), which is codified in Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers. See FASB ASU No. 2016-02, Leases (February 2016), which is codified in ASC Topic 842, Leases. See Paragraph .12 of PCAOB AS 1301. Formerly an acronym for London Interbank Offered Rate, LIBOR is common parlance for its current official name ICE LIBOR. It is expected that a number of private-sector banks currently reporting information used to set LIBOR will stop doing so after 2021 when their current reporting commitment ends, which could either cause LIBOR to stop publication immediately or cause LIBOR’s regulator to determine that its quality has degraded to the degree that it is no longer representative of its underlying market. For further information, see Division of Corporation Finance, Division of Investment Management, Division of Trading and Markets and Office of the Chief Accountant, Staff Statement on LIBOR Transition, (July 12, 2019), available at: https://www.sec.gov/news/public-statement/libor-transition. See, e.g., FASB, Reference Rate Reform (November 2019), available at https://www.fasb.org/referenceratereform. See Chairman Jay Clayton, Remarks to the SEC Fixed Income Market Structure Advisory Committee (November 4, 2019), available at https://www.sec.gov/news/public-statement/statement-clayton-fimsac-110419. See PCAOB AS 3101, The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion. What are the responsibilities of an audit committee?Overview. The primary purpose of a company's audit committee is to provide oversight of the financial reporting process, the audit process, the company's system of internal controls and compliance with laws and regulations.
Which one of the following is an appropriate responsibility of an audit committee?Responsibilities relating to the Independent Auditor – The audit committee should be directly responsible for the appointment, compensation, retention and oversight of the work of auditors who provide audit services to the organization (whether the services are provided by the principal auditor or another firm).
What is an audit committee and what are its responsibilities quizlet?Audit committee. A committee consisting of members of the board of directors, charged with overseeing the entity's system of internal control over financial reporting, internal and external auditors, and the financial reporting process. Member typically must be independent of management. Board of directors.
Which three of the following are likely roles of the audit committee?Roles of the audit committee. The key roles of the audit committee are 'oversight', 'assessment' and 'review' of other functions and systems in the company.
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