What are the roles of the Audit Committee?

The Audit Committee plays a crucial role in the governance structure of an organization, particularly in publicly traded companies. Its primary responsibilities include:

**Financial Reporting Oversight**: The committee reviews the financial statements and ensures that they are accurate, complete, and in compliance with applicable accounting standards (e.g., GAAP, IFRS).

**Internal Controls Monitoring**: It assesses the adequacy and effectiveness of internal controls over financial reporting to prevent fraud and ensure the integrity of financial statements.

**External Auditor Liaison**: The Audit Committee is responsible for the selection, appointment, and oversight of the external auditor. This includes reviewing the auditor's performance, independence, and fees.

**Review of Audit Findings**: The committee reviews findings and recommendations from external audits, internal audits, and regulatory inspections. It ensures that management addresses any noted deficiencies.

**Risk Management Oversight**: The committee is involved in identifying and assessing risks related to financial reporting and compliance, and it monitors the organization's risk management strategies.

**Compliance Oversight**: It ensures that the organization adheres to laws and regulations, including those related to financial reporting, disclosures, and corporate governance.

**Ethics and Whistleblower Policies**: The Audit Committee often oversees ethics programs and whistleblower policies, ensuring that there are mechanisms for reporting unethical behavior or financial improprieties.

**Internal Audit Function Oversight**: If the organization has an internal audit function, the Audit Committee is responsible for its oversight, including approving its budget, reviewing audit plans, and evaluating the performance of internal auditors.

**Reporting to the Board**: The Audit Committee regularly reports to the board of directors on its activities, findings, and recommendations. 

**Evaluation of Financial Risks**: It assesses how management is handling financial risks, including the adequacy of risk management processes and the actions taken to mitigate identified risks.

Overall, the Audit Committee aims to enhance transparency and accountability within the organization, thus helping to protect the interests of stakeholders, including shareholders, employees, and the public.