SEC Issues Statement on Audit Committee Roles and Responsibilities

In a recent public statement, SEC Chairman Jay Clayton, Chief Accountant Sagar Teotia, and Director of Corporation Finance William Hinman outlined key considerations for audit committees related to their role in financial reporting and oversight responsibilities.

The statement provides “observations and reminders on a number of potential areas of focus for audit committees,” including (1) “setting the tone for the company's financial reporting and the relationship with the independent auditor,” (2) auditor independence, (3) oversight related to the adoption of new accounting standards and internal control over financial reporting, (4) the independent auditor’s communications to the audit committee, (5) the use of non-GAAP measures, (6) the expected transition from LIBOR, and (7) critical audit matters.