What are the Audit Committees Responsibilities for the Relationship with Outside Accountants under the Act?
One of the primary functions of the audit committee is to enhance the independence of the outside accounting firm in the audit function. Leaving management the power to hire, compensate, supervise and fire the outside accountant risks making them too subservient to management who may be more preoccupied with short-term profitability goals than with the integrity of the audit process. Accordingly, the April 9th Final Rules shift the responsibility for the relationship with the outside accountants from the company’s management to the audit committee. Now it is the audit committee that is responsible for appointing, compensating, overseeing and terminating the outside accountants. Included in these new audit committee functions is the requirement that the audit committee resolve accounting disagreements between management and the outside accountants. The outside accountants must report directly to the audit committee which must grill them regarding any differences of opinion they may have
