Director FAQ: Oversight of the Independent Auditor

In brief: Boards rely on independent auditors to give an unbiased opinion on the company’s financial statements. The audit committee plays a key role in ensuring the quality of work done by the independent auditor, especially in public companies. This Director FAQ provides a general overview of the oversight role of the audit committee in relation to role of the independent auditor in public companies, followed by specifics on this oversight role with respect to hiring and compensating the independent auditor and reviewing the auditor’s work. Closing sections cover the use of independent auditors by private companies and nonprofits.

This resource can help your board to

• learn about the role of the audit committee in providing oversight of the independent auditor;
• hire, compensate, and evaluate the independent auditor; and
• determine whether or not to hire an independent auditor at private companies and nonprofits.

Most relevant audiences: audit committee members