The Brazilian Audit Committee

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An Introduction to the Audit Committee

An audit committee is a subcommittee of the board of directors that oversees the financial reporting process of a company including its audit procedures. In general, the audit committee’s responsibilities are to monitor the financial reporting process, oversee the internal control systems and to oversee the internal audit and independent public accounting function (Doupnik & Perera, 2012). Another requirement for publicly traded companies in the United States is that the committee must be made up of independent directors, meaning that no committee member can work for the company, with one committee member being a financial expert in accounting and auditing.

A History of the Audit Committee in the United States

The history of audit committee legislation in the United States dates back to 1938, when the Securities and Exchange commission recommended that non-officer members of the client’s board nominate the auditors and that auditors be elected by and address their report to the shareholders (Clikeman, 2003). The recommendation came after it was found that the publicly traded McKesson, and Robbins Company was making payments to fake vendors and was also falsely inflating its assets. Years went by with only minor legislative changes being made to the audit committee until sweeping legislation called the Sarbanes-Oxley Act majorly changed the role of the audit committee and its responsibilities. The Sarbanes-Oxley Act has eleven sections, which include the establishment of the Public Company Accounting Oversight Board, the establishment of standards for external auditor independence, corporate responsibility, enhanced financial disclosures, analyst conflicts of interest, commission res...

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...009). Corporate governance in Brazil. Emerging Markets Review, 11. Retrieved from http://www.ppge.ufrgs.br/giacomo/arquivos/gov-corp/black-carvalho-gorga-2010.pdf

BM&F Bovespa. (2014). Rules & Regulations. Retrieved from

http://www.bmfbovespa.com.br/en-us/intros/intro-regulations.aspx?idioma=en-us

Central Intelligence Agency. (2014). The Word Factbook: Brazil. Retrieved from

https://www.cia.gov/library/publications/the-world-factbook/geos/br.html

Clikeman, P. M. (2003). The Greatest Frauds of the (Last) Century. Retrieved from

http://www.newaccountantusa.com/newsFeat/wealthManagement/Clikeman_Greatest_Fr auds.pdf

Doupnik, T. S., & Perera, H. B. (2012). International Accounting (3rd ed.). New York, NY: McGraw-Hill Irwin

Petrobras (2014). Investor Relations: Corporate Governance. Retrieved from http://www.investidorpetrobras.com.br/en/home.htm

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