What does audit committee mean on the CPA exam?
Last reviewed
Audit committee. A subcommittee of the board of directors that oversees financial reporting and the external audit. The auditor reports to it rather than to management, which is what stops management grading its own work.
Defined against AU-C 260.
Which CPA exam sections use audit committee?
Audit committee appears in the AUD section of the CPA exam.
Other terms defined against AU-C 260
- senior management: The people who direct and control the entity day to day, as distinct from those charged with governance, whose job is to oversee them.
- those charged with governance: The people responsible for overseeing the entity's strategic direction and its accountability, including the financial reporting process.
Related terms
- internal audit: An in-house function that evaluates controls and processes and reports to those charged with governance.
- management's specialist: An expert management uses to help prepare the financial statements, such as an actuary or an appraiser.
- audit sampling: Selecting and evaluating less than 100% of a population of audit relevance so the sample is expected to be representative, giving a reasonable basis for conclusions about the whole population.
- management override: Management using its authority to bypass controls that otherwise work.
- written representations: Statements the auditor requires from management to confirm matters or support other evidence.
- single audit: The combined financial statement and federal compliance audit required of an entity spending above a threshold in federal awards.