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LOS f: State the key areas of responsibility for which board committees are typically created and explain the criteria for assessing whether each committee is able to adequately represent shareowner interests.

Investors have a duty to determine whether the board has properly established committees of independent board members to help carry out various board functions. Which of the following statements about the “audit committee” is least accurate?

A)	The audit committee should ensure that the audit is conducted consistent with generally accepted auditing standards (GAAS).

B)	The audit committee should ensure that the independent auditors have authority over the audit of the entire corporate group, which includes foreign subs and affiliates.

C)	Firm management is responsible for hiring and supervising the independent external auditors, but the audit committee has strict oversight responsibilities.

The audit committee is responsible for hiring and supervising the independent external auditors, in order to ensure that the auditors’ priorities are consistent with the best interests of shareholders. Both remaining statements are correct.

A special-purpose board committee with which of the following responsibilities would be least likely to act in the best interests of the shareholders?

A committee responsible for takeover defense would most likely be acting in the interests of the company's current management rather than in the interests of shareholders.

Which of the following statements concerning Board committees is least accurate?

A)	The nominations committee is responsible for recruiting qualified board members and preparing an executive management succession plan.

B)	Members of the audit committee should be independent experts in accounting and finance.

C)	The audit committee has authority over the procedures used to audit the entire corporate group including subsidiaries and affiliates.

The independent auditor has authority over the audit procedures. The audit committee is responsible for hiring and supervising the independent auditor.