securitiesconnect

Table of Contents

Introduction

Background

  • Developments Prior to 2002
    •
  • Developments In and After 2002
    •
  • Sarbanes-Oxley Act and SEC Rules Thereunder
    •
  • Additional provisions, outside this GUIDE’S scope
    •
  • Adoption of Revised Listing Standards for SROs
    •

Audit Committee Responsibilities, Authority, Charter; Related Proxy Statement Disclosures

  • SEC Rules Governing Audit Committees
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  • SRO Listing Standards
    •
  • New York Stock Exchange (NYSE)
    •
  • Nasdaq
    •
  • American Stock Exchange (Amex)
    •
  • Audit Committee Whistleblower Procedures
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  • Written Affirmation for Companies with Listed Securities
    •

Committee Composition; Member Independence

  • SEC Rules Generally
    •
  • SRO Listing Standards
    •
  • New York Stock Exchange (NYSE)
    •
  • Nasdaq and American Stock Exchange (Amex)
    •

Audit Committee Financial Expert

  • Definition
    •
  • Disclosure
    •

Audit Committee Discussions with the Auditor Regarding Annual and Quarterly Financial Statements

  • Annual Financial Statements
    •
  • Quarterly Financial Statements
    •

Auditor's Reports to the Audit Committee; Related Disclosures

  • Fraud and Illegal Acts
    •
  • Critical Accounting Policies and Estimates
    •
  • Off-Balance-Sheet Arrangements
    •
  • Non-GAAP Financial Disclosures
    •
  • Other Auditor Reports and Related Disclosures
    •

Annual Audit Committee Report

CEO and CFO Certification of SEC Periodic Reports; Code of Ethics

  • Certifications Required by Sarbanes-Oxley Section 302
    •
  • Certifications Required by Sarbanes-Oxley Section 906
    •
  • Code of Ethics for Principal Executive, Financial, and Accounting Officers
    •

Auditor Independence

  • General
    •
  • Financial Interests
    •
  • Employment Relationships
    •
  • Business Relationships
    •
  • Prohibition of Auditor Performance of Certain Non-Audit Consulting Services and Contingent Fees
    •
  • Audit Committee Pre-Approval of Auditing Services
    •
  • Partner Rotation and Compensation
    •
  • Underlying Auditor Independence Principles
    •
  • Proxy Statement Disclosure
    •
  • Exception for Inadvertent Independence Violations
    •

Director and Officer Treatment of the Auditor; Improper Influence on the Conduct of Audits

Receipt From Attorneys of Reports of Evidence of Possible Material Violations; SEC Rules of Professional Conduct for Attorneys

Internal Control Over Financial Reporting; Disclosure Controls and Procedures

Filing of SEC Periodic and Current Reports

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Public Company Accounting Oversight Board

Selected SEC Staff Accounting Bulletins and Sensitive Accounting Areas

  • SAB No. 99: Materiality
    •
  • SAB Nos. 101 and 104: Revenue Recognition
    •
  • FAS 5: Accounting For Contingencies
    •
  • Other Sensitive Accounting Areas
    •

Sample Questions for Audit Committees to Ask

The Audit Committee’s Responses to Indications of Possible Wrongdoing

Audit Committee Member Liability

Audit Committee Meetings and Agenda

Additional Sources of Guidance for Audit Committees

SEC Accommodations for Foreign Private Issuers

  • Exemption from the SEC’s Independence Requirements
    •
  • General Exemptions
    •
  • Other Accommodations
    •

Appendices

Recommendations of the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees (February 1999)

Guiding Principles for Audit Committee Best Practices, by the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees (February 1999)

Sarbanes-Oxley Act of 2002 (Selected Provisions)

  • Section 201. Services outside the scope of the practice of auditors
    •
  • Section 202. Preapproval requirements
    •
  • Section 203 Audit partner rotation
    •
  • Section 204. Auditor reports to audit committee
    •
  • Section 206. Conflicts of interest
    •
  • Section 301. Public company audit committees
    •
  • Section 302. Corporate responsibility for financial reports
    •
  • Section 303. Improper influence on conduct of audits
    •
  • Section 307. Rules of professional responsibility for attorneys
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  • Section 401. Disclosures in periodic reports
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  • Section 404. Management assessment of internal controls
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  • Section 406. Code of ethics for senior financial officers
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  • Section 407. Disclosure of audit committee financial expert
    •

Securities Exchange Act of 1934 (Selected Provisions)

  • Section 3(a)(58): Definition of audit committee
    •
  • Section 10A: Audit requirements
    •
  • Section 13(b)(2): Books and records and internal accounting controls
    •

Securities Exchange Act of 1934 (Selected Rules)

  • Rule 10A-1: Notice to the Commission pursuant to section 10A of the Act
    •
  • Rule 10A-2: Auditor independence
    •
  • Rule 10A-3: Listing standards relating to audit committees
    •
  • Rule 13a-14: Certification of disclosure in annual and quarterly reports
    •
  • Rule 13a-15: Controls and procedures . 138
    •
  • Rule 13b2-2: Representations and conduct in connection with the preparation of required reports and documents
    •
  • Regulation 14A - Schedule 14A - Item 7: Directors and executive officers [selected provisions]
    •
  • Regulation 14A - Schedule 14A - Item 9: Independent public accountants
    •

Regulation S-K (Selected Items)

  • Item 303: Management’s Discussion and Analysis of Financial Condition and Results of Operation
    •
  • Item 307: Disclosure controls and procedures
    •
  • Item 308 : Internal control over financial reporting
    •
  • Item 308T: Internal control over financial reporting
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  • Item 404: Transactions with related persons, promoters and certain control persons
    •
  • Item 406: Code of Ethics
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  • Item 407: Corporate governance [selected provisions]
    •
  • Item 407(a): Director independe
    •
  • Item 407(b): Board meetings and committees, annual meeting attendance
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  • Item 407(d): Audit committee
    •

SEC Regulation S-X (Selected Provisions)

  • S-X Rule 2-01: Qualification of accountants
    •
  • S-X Rule 2-02: Accountants’ reports and attestation reports
    •
  • S-X Rule 2-07: Communication with audit committees
    •

Public Company Accounting Oversight Board Rules [selected provisions]

  • PCAOB AS No. 5
    •
  • Rule 3501. Definitions of terms
    •
  • Rule 3520. Auditor independence
    •
  • Rule 3521. Contingent fees
    •
  • Rule 3522. Tax transactions
    •
  • Rule 3523. Tax services for persons in financial reporting oversight roles
    •
  • Rule 3524. Audit committee pre-approval of certain tax services
    •
  • Rule 3525. Audit committee pre-approval of non-audit services relating to internal control over financial reporting
    •

NEW YORK STOCK EXCHANGE LISTED COMPANY MANUAL Rules 303A and 307 [selected provisions]

NASDAQ STOCK MARKET QUALITATIVE LISTING REQUIREMENTS Rules 4200 and 4350 [selected provisions]

AMERICAN STOCK EXCHANGE COMPANY GUIDE Sections 120, 121, and 803

AICPA Statement of Auditing Standards No. 114: The Auditor’s Communication with Those Charged with Governance [selected provisions]

AICPA Statement of Auditing Standards No. 100: Interim Financial Information [selected provisions]

Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees

Report of the National Association of Corporate Directors Blue Ribbon Commission on Audit Committees: A Practical Guide (2000) (Selected Appendices)



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