AuditNet - Audit Committees
History of Audit Committees
Since 1940, the SEC has recognized that an audit committee could serve an important, and ultimately necessary, function in ensuring that a publicly traded company’s financial reporting is accurate. In the 1970s, the New York Stock Exchange (NYSE) required boards of directors of listed companies to appoint an audit committee; in the 1980s, the National Association of Securities Dealers (Nasdaq) and American Stock Exchange (AMEX) subsequently followed suit. In February 1999, audit committees received attention when a committee composed of individuals from the NYSE, Nasdaq, public companies, and CPA firms issued the Report and Recommendations of the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees (available at www.nyse.com or www.nasd.com). The report recognized that the audit committee has a crucial role in ensuring high-quality financial reporting. Shortly after the report was issued, the SEC and the stock exchanges issued rules and regulations imposing certain requirements of, and responsibilities on, audit committee members. Today, a myriad of practices and regulations dictate the composition, roles, and responsibilities of audit committees.
The
Audit Committee Handbook
Audit Committees: Regulation and Practice