The State of the Audit Committee: What We Have Learned in the SOX Era
Mentor 1
Colleen Boland
Location
Union Wisconsin Room
Start Date
5-4-2019 1:30 PM
End Date
5-4-2019 3:30 PM
Description
In 2002, the Sarbanes-Oxley Act (SOX) created the Public Company Accounting Oversight Board to protect investors and further the public interest in the preparation of informative, accurate, and independent audit reports, which led to improved accounting practices and financial quality regulation. The ideas presented by SOX and the Securities and Exchange Commission, encouraged stock exchanges, including the New York Stock Exchange and National Association of Securities Dealers Automated Quotations, to make rules requiring publicly traded companies to have audit committees. Audit committees, a committee of a company’s Board of Directors, are independent of management and serves as a liaison between external auditors and management and the company’s Board of Directors. They are also a safeguard for a company’s financial reporting quality. We provide a review of the literature since the passage of SOX. We start by identifying the evolution of audit committee responsibilities in the SOX era. Next, we identify research in four determinants of audit committee effectiveness: composition, authority, diligence, and resources (Dezort et al. 2002). We identify gaps in the literature, including the effects of technology upon an audit committee’s purpose and responsibilities. Our project should be of interest to researchers, companies and regulators in describing the current understanding of audit committee’s responsibilities and authority.
The State of the Audit Committee: What We Have Learned in the SOX Era
Union Wisconsin Room
In 2002, the Sarbanes-Oxley Act (SOX) created the Public Company Accounting Oversight Board to protect investors and further the public interest in the preparation of informative, accurate, and independent audit reports, which led to improved accounting practices and financial quality regulation. The ideas presented by SOX and the Securities and Exchange Commission, encouraged stock exchanges, including the New York Stock Exchange and National Association of Securities Dealers Automated Quotations, to make rules requiring publicly traded companies to have audit committees. Audit committees, a committee of a company’s Board of Directors, are independent of management and serves as a liaison between external auditors and management and the company’s Board of Directors. They are also a safeguard for a company’s financial reporting quality. We provide a review of the literature since the passage of SOX. We start by identifying the evolution of audit committee responsibilities in the SOX era. Next, we identify research in four determinants of audit committee effectiveness: composition, authority, diligence, and resources (Dezort et al. 2002). We identify gaps in the literature, including the effects of technology upon an audit committee’s purpose and responsibilities. Our project should be of interest to researchers, companies and regulators in describing the current understanding of audit committee’s responsibilities and authority.
