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The System of Investor Protection
Your basis for making investing decisions is only as good as the information you receive about the financial position of a company. Financial reports must be audited by independent outside auditors. Their interface with the company is through an Audit committee.

An Audit committee is required for a stock to be listed on the NYSE, the NASDAQ and the AMEX. It is part of the board of directors. It oversees the company's accounting and financial reporting policies and practices. The audit committee must have at least 3 independent directors. They must not be employees or officers of the company nor have any other relationship that might impede their independence.

The members of the audit committee must be financially literate and at least one member must be a financial expert. The audit committee is responsible for the appointment, compensation and oversight of the auditors.

This short video, put out by the Center for Audit Quality, is short, easy to watch and gives you a nice overview of the role of the audit committee.

The Audit Committee

Laurie Frederiksen
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