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Governance, Risk, Audit & Privacy · Foundational

Audit Committee

Board committee of independent directors overseeing financial reporting, internal control, and audit functions.

Definition

The audit committee oversees internal and external auditors, reviews audit findings, and monitors management's response. Internal audit should report functionally to it to preserve independence. SOX requires audit committees of public companies to consist of independent directors.

Example

The chief audit executive presents the annual audit plan to the audit committee for approval.

Exam tip

Internal audit reporting to the audit committee is the best answer for independence.

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