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Appointing, assessing, and compensating the independent auditor
The role of the audit committee
Under the Sarbanes-Oxley Act of 2002, audit committees are “directly responsible for the appointment, compensation, and oversight of the work of any registered public accounting firm employed by that issuer.” This document provides some considerations, based on regulatory requirements and leading practices, that may help audit committees in executing these tasks.
The process of appointing, assessing, and compensating the independent auditor is an important activity for audit committees. It is subjective and varies from company to company. In general, these processes support the audit committee’s responsibility to oversee the work of the independent auditor and also contribute to an effective audit. It is the independent auditor’s responsibility to perform a high-quality audit; however, as part of their annual activities, audit committees should carefully consider and review the auditor’s work and take any steps that are appropriate in supporting audit quality and effectiveness.