What are the primary functions of the audit committee?

According to Corporate Finance Institute.com a company's audit committee is a sub-group of the

board of directors in charge of overseeing the financial reporting and disclosure process. The
audit committee must be aware of the organization's procedures and internal controls in order to
be effective.

The audit committee evaluates management's review of key problems and financial report
decisions. The audit committee also considers the impact of accounting and regulatory initiatives
on the financial statements. They are entrusted with the responsibility to ensure that policies and
procedures are in place to deter and detect fraud, such as asset misappropriation. It is imperative
that the audit committee should be aware of management's obligations under anti-corruption laws
and decide if adequate policies and controls are in place to identify and mitigate corruption-
related risks. They should be aware of anti-corruption laws, such as the Foreign Corrupt
Practices Act of the United States (FCPA).

To discuss the company's quarterly and audited annual financial statements, the audit committee
meets with management and the independent auditor. They should review earnings
announcements, as well as financial details and suggestions made to external rating agencies and
analysts. The management team evaluates and handles the risk that an organization faces. The
audit committee should make recommendations to the board of directors. Their insight into a
company's financials, internal controls, and risk analysis provide trust in the quality and
completeness of the financial details in an M&A transaction. Furthermore, businesses should
pursue an effective integration of financial reporting controls and disclosure controls after a
merger, according to SEC rules under the Sarbanes-Oxley Act.

The audit committee may be required by some national securities exchanges to supervise internal
auditors, review their results, and include any performance-related issues in the board's report.
Internal auditors must attend separate meetings with the audit committee. Additionally, the audit
committee is in charge of ensuring that laws and regulations are followed. They collaborate with
management to make sure that everything runs smoothly. Finally, the audit committee is
expected to consider the risks and obligations, as well as the impact on financial statements, the
audit committee must collaborate with other committees. It must comprehend and discuss the
effect of non-GAAP compensation metrics on risk management.

References

Corporate Finance Institute. (2020, May 20). Audit committee - Overview, regulations,
responsibilities.
the audit committee should be familiar with the processes and controls placed in place by
management and be able to determine if such processes and controls are well-designed and
functioning. To obtain the expertise required to provide effective oversight in this sector, the
audit committee should collaborate with management, internal auditors, and the independent
auditor.

The audit committee is also in charge of monitoring the financial reporting process as a whole.
To do so efficiently, it must be familiar with management's processes and controls and decide if
they are well-designed.

The audit committee's position is that of oversight and supervision, and in carrying out this duty,
the committee may rely on management, the independent auditor, and any other advisers it may
hire, as long as their reliance is fair.

Management should classify and review any important accounting practices, forecasts, and
decisions with the audit committee.

Management should customize the analysis to highlight developments and include new or unique
objects in order to plan for these discussions. Since Rule 2-07 of Regulation S-X allows the
independent auditor to discuss the findings of the investigation,