Audit Committees' Responsibilities and Liability

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In the wake of Enron’s collapse, audit committee members are subject to enhanced responsibilities and liabilities, and the SEC and other regulators are conducting more investigations of the actions of directors and officers. Nevertheless, serving as an audit committee member can be a rewarding experience and provides an opportunity to make a difference for a public company, its shareholders, and the investing public. This article provides a brief history of audit committees, their evolving composition, their changing roles and responsibilities, and their enhanced exposure to liability, along with suggestions on how to minimize that liability.

Kristin L. Yokomoto and Stuart Buchalter won the 2003 Max Block Distinguished Article Award for this cover article, which each year recognizes the most outstanding work published in The CPA Journal.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Kristin Yokomoto, Kristin L. Yokomoto | Attorney Advertising

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