What expertise should audit committee members possess?
Many recent corporate scandals were related to the quality of a company’s financial disclosure. Among other things, these events highlighted the problems that can occur when the company’s board of directors or audit committee does not provide adequate oversight of management and auditors. One of the most important qualities required to enable audit committee members to effectively carry out their oversight responsibilities is that of financial literacy. According to the Canadian Securities Administrators’ National Instrument 52-110, Audit Committees, all members of the audit committee must be financially literate. According to the instrument, a director is financially literate if he or she has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are reasonably comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the issuer’s financial statements. The in
