Jay Clayton is Chairman of the U.S. Securities and Exchange Commission. This post is based on a recent public statement by Chairman Clayton; Sagar Teotia; and William H. Himan, available here. The views expressed in this post are those of Messrs. Clayton, Teotia, and Hinman, and do not necessarily reflect those of the Securities and Exchange Commission or its staff.
Introduction [1]
The strength of our public company financial reporting system relies on many stakeholders playing different but interconnected roles in a process designed to provide investors and our markets with high-quality, reliable financial information. Audit committees play a vital role in the financial reporting system through their oversight of financial reporting, including the internal control over financial reporting (ICFR) and the external, independent audit process. [2]
In 2002, the Sarbanes-Oxley Act [3] introduced a number of requirements to increase and strengthen the role of audit committees in financial reporting, including the independent audit committee requirement. We believe the measures related to audit committees have proven to be some of the most effective financial reporting enhancements included in the Sarbanes-Oxley Act. [4] Effective oversight by strong, active, knowledgeable and independent audit committees significantly furthers the collective goal of providing high-quality, reliable financial information to investors and our markets.