What are the roles the Audit Committee?

The Audit Committee is a vital component of corporate governance, typically found within publicly traded companies and some private organizations. Its primary responsibilities and roles include:

**Financial Reporting Oversight**: The Audit Committee reviews the company’s financial statements and disclosures to ensure accuracy and compliance with accounting standards and regulations.

**Internal Controls Assessment**: It evaluates the effectiveness of the organization’s internal control systems to safeguard assets and ensure the reliability of financial reporting.

**External Auditor Engagement**: The committee is responsible for selecting, appointing, and overseeing the external auditor, including evaluating their independence and performance. It also approves the auditor's fees and the scope of their audit work.

**Internal Audit Oversight**: The Audit Committee oversees the internal audit function by reviewing audit plans, schedules, and results. It ensures that the internal audit activities align with the organization’s risk management and compliance objectives.

**Risk Management**: The committee is involved in assessing the organization's risk management processes and strategies, ensuring that risks are identified, managed, and mitigated appropriately.

**Compliance and Ethics Oversight**: It monitors compliance with laws, regulations, and ethical standards, ensuring that the organization adheres to legal and regulatory requirements.

**Review of Related Party Transactions**: The committee examines any transactions between the organization and related parties to ensure they are fair and in the best interest of the company.

**Reporting to the Board**: The Audit Committee regularly reports its findings, assessments, and recommendations to the Board of Directors, ensuring that the board is informed about financial and operational risks, audit outcomes, and areas for improvement.

**Whistleblower Policies**: It may oversee the processes for reporting concerns, such as fraud or unethical behavior, reviewing the effectiveness of whistleblower mechanisms.

**Performance Evaluation**: The committee evaluates the performance of both internal and external auditors to ensure quality and effectiveness in auditing processes.

By executing these roles, the Audit Committee plays a critical part in ensuring the integrity, transparency, and accuracy of the organization’s financial practices, thereby fostering investor and stakeholder confidence.