Frequently Asked Questions

What rules does the SOX Act establish for audit committee members?

The Sarbanes-Oxley (SOX) Act has established several rules for audit committee members to ensure transparency, accountability, and independence in their roles. One of the key rules is that audit committee members should have no affiliation with the company they are auditing, except as an independent director. This rule is designed to prevent conflicts of interest and ensure impartiality in the audit process. The SOX Act also gives the audit committee full responsibility for the oversight, compensation, and appointment of each auditor. This means that the committee has the authority to hire, fire, and determine the pay of auditors, further enhancing their independence from the company's management. Another rule allows audit committee members to question and interview company auditors without any corporate leadership present. This provision ensures that auditors can speak freely and honestly about their findings without fear of reprisal from company executives. The SOX Act also mandates that the audit committee creates guidelines to follow if there are complaints about the audit process. This rule ensures that there is a clear process for addressing any concerns or issues that may arise during the audit.