“Audit Committee” is a committee of the Board of Directors, which is responsible for the oversight of your company’s financial disclosures and reporting. A Public Company in the United States is required to have an Audit Committee, which must be made up of independent outside Directors who do not have a material or pecuniary interest in the company; and at least one member of the Audit Committee must qualify as a financial expert. Venture Capital investors sometimes require the formation of an Audit Committee, in order to enhance the Corporate Governance and financial reporting of their portfolio companies.
The primary purpose of an Audit Committee is to act as a check and balance on your company’s financial reporting system. Its duties and responsibilities include oversight of internal accounting policies, retention and management of internal and external auditors, regulatory compliance and risk management practices. These duties and responsibilities typically are outlined in a formal, written charter for the Audit Committee.