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Audit Committee Annual Evaluation of the External Auditor

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Audit committees of public companies and registered investment companies have direct responsibility to oversee the integrity of a company’s financial statements and to hire, compensate and oversee the external auditor. Public focus on how audit committees discharge their responsibilities, including their oversight of the external auditor, has increased significantly. Each year, audit committees should evaluate the external auditor in fulfilling their duty to make an informed recommendation to the Board whether to retain the auditor. The evaluation should encompass an assessment of the qualifications and performance of the auditor; the quality and candor of the auditor’s communications with the audit committee.

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