The composition and roles of an audit committee are described in Section 301 of SOX. According to the SEC decree on April 9, 2003, all US stock exchanges should issue rules before July 23, 2005 so that foreign companies which are listed at US stock exchanges possess an audit committee.
According to Section 205 of SOX, the committee doesn’t have to be a separate one. The duties of an audit committee can be fulfilled by the board of directors.
The audit committee consists of independent members of the board of directors only (SOX 301).
The audit committee should consist one financial expert (SOX 407).
The duties of an audit committee comprise following tasks:
l Control the accountancy, the financial reporting and the audit of the financial statements;
- Approve audit services in advance;
- Approve audit fee and control auditors’ work according to SOX 301; and
- Act as the contact point for complaining about the accounting and reporting of this company.