Securities Advisory: Audit Committee Independence and the Responsibilities of Audit Committees
4/15/2003
The Securities and Exchange Commission recently issued final Rule 10A-3 under the Securities Exchange Act of 1934, as amended, implementing Section 10A(m) of the Exchange Act, which was added to the Exchange Act by Section 301 of the Sarbanes-Oxley Act of 2002.
This issue of Mintz Levin's Securities Advisory discusses Rule 10A-3 and how it requires audit committees of companies that are listed on a national securities exchange or national securities association to comply with certain independence, responsibility, conduct and other standards.
The Rule addresses the following topics:
- the independence of audit committee members;
- the audit committee's responsibility to select and oversee the issuer's independent accounts;
- procedures for handling complaints regarding the issuer's accounting practices;
- the authority of the audit committee to engage advisors; and
- funding for the independent auditor and any outside advisors engaged by the audit committee.
