History
Below are a few key milestones in the evolution of audit committees:
- 1939: The New York Stock Exchange (NYSE) first endorsed the audit committee concept.
- 1972: The U.S. Securities and Exchange Commission (SEC) first recommends that publicly held companies establish audit committees composed of outside (non-management) directors.
- 1977: NYSE adopts a listing requirement that audit committees be composed entirely of independent directors.
- 1988: AICPA issues SAS 61 "Communication with Audit Committees" addressing communications between the external auditor, audit committee and management of SEC reporting companies.
- 1999: NYSE, NASD, AMEX, SEC and AICPA finalize major rule changes based on Blue Ribbon Committee on Improving the Effectiveness of the Corporate Audit Committee.
- 2002: Sarbanes-Oxley Act is passed in the wake of corporate scandals and includes whistleblower and financial expert disclosure requirements for audit committees.
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