How does the Act affect the function of the audit committee and external auditor-audit committee relationship?
• The SEC has been directed to adopt regulations by April 26, 2003 requiring audit committees to establish procedures for addressing “whistleblower” complaints received by the issuer as to possible accounting irregularities, fraud, internal controls, and the audit process, and by that date the SEC is directed to order all national securities exchanges to prohibit the listing of securities of any reporting issuer the audit committee of which has not established such procedures. • All audit services (including comfort letters, consents, statutory audits for insurance companies, etc.) must be preapproved by the audit committee, and the audit committee is now exclusively responsible for the retention, compensation and oversight of the external auditor (to the exclusion of management, the full board and the stockholders) and the resolution of all disagreements between management and the external auditor regarding financial reporting. The preapproval of non-audit services can be delegated to
