How effective is your audit committee?

Description

Abstract: In the eight years since the Sarbanes-Oxley Act came into being, the audit committee has become directly responsible for appointing, compensating and overseeing external auditors and preapproving auditors’ audit and nonaudit services. Given this critical role, the audit committee should be evaluated periodically. One way is for the committee to perform annual self-evaluations. This article discusses the benefits and risks, along with ways to reduce the downside. A sidebar looks at common approaches to self-evaluation.