The Audit Committee Handbook, Fifth Edition
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The Audit Committee Handbook, Fifth Edition

The Audit Committee Handbook, Fifth Edition guides you to: Understand the role and responsibilities of the audit committee with a general update and reality check on auditing cycle activitiesIdentify the developments that impact audit committee practices and the most current techniques and strategies for committee meetingsDevelop a repertoire of effective strategies to help the board of directors discharge its fiduciary responsibility to shareholdersPrepare a periodic assessment of professional development activities and an informed review of both audit processes and financial reporting processes

A must-have for all audit committee members, board directors, corporate secretaries, CEOs, CFOs, and auditors involved in the accounting practices of their firms, The Audit Committee Handbook, Fifth Edition is the most authoritative work on audit committees in the marketplace.


R. TRENT GAZZAWAY is the national managing partner of audit services for Grant Thornton LLP.

ROBERT H. COLSON, PHD, CPA, is a partner in the public policy and external affairs group of Grant Thornton LLP. He is responsible for the firm's engagement with academic researchers and a wide range of policy leaders associated with capital markets, accounting, auditing, financial regulation, and corporate governance.

SRIDHAR RAMAMOORTI, PHD, CPA/CITP/CFF, is a Principal with Infogix Advisory Services, Infogix, Inc., a software controls company. Previously, he was a corporate governance partner with Grant Thornton LLP.



Part One Getting Acquainted with Your Responsibilities.

1 Corporate Accountability: Focus on the Audit Committee.

Appropriate Accounting Skills.

Internal Control Oversight.

Auditor Oversight.

Audit Committee Resources.

Transactional Economics.

The Nature and Importance of Corporate Accountability.

Developments in Corporate Accountability.

Corporate Accountability and the Audit Committee.


Sources and Suggested Readings.

2 Audit Committees: Basic Roles and Responsibilities.

Organization of the Audit Committee.

The Audit Committee Functions.

The External and Internal Auditing Process.

Sources and Suggested Readings.

3 The External Users of Financial Reporting Information.


The Investors.

Credit Grantors.

Regulatory Agencies.

Other Outside Constituencies.

Important Developments in Business Reporting  and Assurance Services.


Sources and Suggested Readings.

4 The Legal Environment of the Audit Committee.

General Legal Responsibilities.

Other Federal Provisions Related to Fraud. 

Lessons for the Audit Committee from litigation.

Guidelines for Minimizing Legal Liability.

Sources and Suggested Readings.

5 Rules of the Road: Financial Reports and Their Audits.

An Overview of U.S.Generally Accepted Auditing Standards.

An Analysis of the Auditing Standards.

Integration of Auditing and Related Accounting Standards.

Attestation Engagements.

International Auditing Standards.

Sources and Suggested Readings.

Part Two The Planning Function of the Audit Committee.

6 Planning the External Audit.

Financial Statement Assertions.

The Relationship between Risk and the External Audit.

The Engagement Team.

Types of Audit Tests.

Evaluating the External Audit Plan.

Sources and Suggested Readings.

Appendix 6A: Qualitative Factors That May Influence the Determination of Materiality.

Appendix 6B: Example Audit Planning Schedule.

7 Planning the Internal Audit.

Components of the Internal Audit Plan.

Enterprise Risk Management.

Oversight and Reporting.

Sources and Suggested Readings.

Part Three The Monitoring and Reviewing Functions of the Audit Committee.

8 Monitoring the System of Internal Control.

Definition and Basic Concepts.

Responsibility for the System of Internal Control.

Reporting Requirements.

Audit Committee Expectations.

Sources and Suggested Readings.

9 Evaluating the Internal and External Audit Function.

Selecting and Staffing an Internal Audit Function.

Monitoring the Internal Audit Function.

Selecting and Evaluating an External Auditor.

Reporting by the External Auditor.

Sources and Suggested Readings.

10 Communications Between Auditors and Audit Committees.

Audit Committee's Review Objective.

Accounting Policy Disclosures.

Guidelines for Reviewing Accounting Policy Disclosures.

Sources and Suggested Readings.

11 A Perspective on Fraud and the Auditor.

Meaning of Fraud in a Financial Statement Audit.

The External Auditor's Responsibility.

The Internal Auditor's Responsibility.

Investigating Known Fraud.

The Audit Committee's Oversight Approach to Fraud Risk Assessment.

Sources and Suggested Readings.

12 The Audit Committee, Corporate Culture, and Tone at the Top.

Questionable Foreign Payments.

Corporate Perquisites and Executive Compensation.

Executive Compensation.

Corporate Contributions.


Sources and Suggested Readings.

Part Four The Reporting Function and the Audit Committee.

13 Independent Auditors' Reports.

The Auditors' Reports on Audited Financial Statements.

Other Auditing Opinions.

Other Reports of the Auditors.

Sources and Suggested Readings.

14 The Audit Committee's Report and Concluding Observations.

Purpose of the Audit Committee's Report.

Guidelines for Preparing the Report.

Concluding Observations.

Sources and Suggested Readings.


About the Authors.