Sarbanes-Oxley Act Update: SEC Adopts New Standards For Audit Committees Of Listed Companies

Overview: The significant public comment, the U.S. Securities and Exchange Commission (SEC) adopted on April 9, 2003 new Rule 10A-3 under the securities Exchange Act of 1934 (the Exchange Act.), as required by Section 301 of the Sarbanes-Oxley Act (the Sarbanes-Oxley Act.). Rule 10A-3 establishes specific requirements relating to the composition and function of audit committees or U.S. and non-U.S. companies that have a class of securities listed, or that are seeking to list a class of securities, on a U.S. national securities exchange or a U.S. national securities association (SROs). Importantly, Rule 10A-3 establishes only the minimum standards with which the audit committees of listed companies will need to comply and, as explained below, the SROs have announced proposed rule amendments that, in some areas, are more onerous than the audit committee requirements of Rule 10A-3. Thus, until the SROs adopt final rules, the exact nature of the new requirements for audit committees of listed companies’ remains to be seen. Rule 10A-3 focuses on the areas such as: the independence of audit committee members; the audit committee’s responsibilities regarding the external audit process; the audit committee’s duty to receive and address accounting complaints; the authority of the audit committee to engage advisors and receive necessary funds from the issuer; and public disclosure requirements about audit committees.

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Format: PDF | Size: 218KB | Date: May 2003 | Pages: 24