audit committee

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In public companies, a committee of non-executive directors that is responsible for oversight of financial reporting, internal and external audit, compliance with regulatory codes, and risk management. The UK’s Combined Code on Corporate Governance now recommends that all public companies establish audit committees to encourage accountability and public confidence. Such committees enhance the independence of auditors by enabling them to report to a body that is independent of the executive directors. In the USA the role of audit committees was strengthened by the Sarbanes–Oxley Act 2002, passed in the wake of the Enron scandal. See also remuneration committee.

Subjects: Accounting.

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