Audit committee responsibilities

• Be directly responsible for the appointment, compensation, retention and oversight of the independent audit firm, including resolution of disagreements between management and the auditor regarding financial reporting.
• Independent auditors report directly to the audit committee.
• Establish procedures for: (i) the receipt, retention and treatment of complaints received by the company regarding accounting, internal accounting controls or auditing matters; and (ii) the confidential, anonymous submission by company employees of concerns regarding questionable accounting or auditing matters.

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The SEC defines an “audit committee financial expert” as a person who has the following attributes:

• An understanding of generally accepted accounting principles (GAAP) and financial statements.
• The ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves.
• Experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the company’s financial statements, or experience actively supervising one or more persons engaged in such activities.
• An understanding of internal controls and procedures for financial reporting.
• An understanding of audit committee functions.