Abstract

http://ssrn.com/abstract=826625
 


 



The Audit Committee's Ethical and Legal Responsibilites: The State Law Perspective


Lyman Johnson


Washington and Lee University - School of Law; University of St. Thomas, St. Paul/Minneapolis, MN - School of Law


South Texas Law Review, Vol. 47, No. 1, Fall 2005
Washington & Lee Legal Studies Paper No. 2005-16

Abstract:     
This paper provides a state law perspective on the post-scandal, post-reform audit committee. Federal law, along with NYSE and Nasdaq (together, "SRO") rules, recently have made sweeping changes in corporate governance, including numerous provisions that bear on audit committees. These changes are unprecedented and dramatic, and rightly have received wide attention and careful study. Certain basic principles underlying the governance functions and duties of audit committees, however, originate in, and are still determined by, state law. Moreover, state law applies to all corporations; federal law and SRO rules on audit committees apply only to those companies coming under federal law or SRO coverage. This article describes how audit committees fit in to the governance arrangement ordained by state corporate statutes; how longstanding state fiduciary duties will affect post-reform audit committees; and how, on a variety of issues, federal law and SRO rules will interact with the pre-existing state law system to alter what audit committees do and how their conduct is assessed. It closes with some brief observations on how audit committee reforms dovetail with other reform efforts - such as the new SEC "reporting up" rule - to reflect a reconsideration of the lawyer's ethical/legal role in corporate governance.

Number of Pages in PDF File: 26

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Date posted: October 21, 2005  

Suggested Citation

Johnson, Lyman, The Audit Committee's Ethical and Legal Responsibilites: The State Law Perspective. South Texas Law Review, Vol. 47, No. 1, Fall 2005; Washington & Lee Legal Studies Paper No. 2005-16. Available at SSRN: http://ssrn.com/abstract=826625

Contact Information

Lyman P. Q. Johnson (Contact Author)
Washington and Lee University - School of Law ( email )
Lexington, VA 24450
United States
540-458-8515 (Phone)
540-458-8488 (Fax)
University of St. Thomas, St. Paul/Minneapolis, MN - School of Law
MSL 400, 1000 La Salle Avenue
Minneapolis, MN Minnesota 55403-2005
United States

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