The Role and Function of the Public Company Audit Committee

Abstract

In recent years we have been inundated with news of corporations under investigation because of questionable accounting practices. In the worst case scenarios, companies have gone bankrupt and ceased to exist because of lack of oversight and controls. Greedy high-level executives have lived a lavish life-style at the expense of millions of shareholders. Thousands of employees have lost their life savings and livelihood. This paper covers the different legislation and controls that have been signed into law and how the Audit Committee has put their foot down and stomped creative accounting practices in an effort to prevent any more Enron and WorldCom fiascos.

Keywords: Audit Committee, Accounting, Overseeing, monitoring, Oversight, Governing Board, Noncompliance, Regulations, Fraud, Illegal Acts, SEC, Securities and Exchange Commission, Sarbanes-Oxley Act, SOX, Enron, WorldCom, AIG, Tyco International, Financial Statements, PCAOB

JEL Classification: M40, M41