The NYSE listing standards require audit committees to perform an annual performance evaluation, and this responsibility must be set forth in the audit committee’s charter. The Sarbanes-Oxley Act does not require audit committees to assess their performance, but the legislation itself may be the strongest argument for a robust evaluation process.

For information and resources on board evaluations, see Board Evaluations, Education and Development.

Dig Deeper

Benefits Obtained from Performance Assessments

A well-crafted performance assessment process can provide a number of benefits to the audit committee,

  • Prioritizing the audit committee agendas and meeting structure to focus on the most critical issues
  • Shifting compliance oversight into the time between live meetings
  • Considering the committee’s composition in the context of current and future financial reporting challenges
  • Revisiting the timing, level of detail, and quality of materials provided by management
  • Identifying topics for continuing education.

The AICPA Audit Committee Toolkit: Public Company

Posted with permission. Copyright 2004 by the American Institute of Certified Public Accountants, Inc., New York, New York.