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Instead of focusing on the independence of the entire board, Sarbanes-Oxley focuses on the Audit Committee. In addition, the Act addresses Audit Committee independence indirectly through exchange listing standards.
- Establishing procedures to deal with the receipt, retention and treatment of complaints or concerns regarding accounting matters.
- Paying particular attention to the process once a complaint is received to ensure the Audit Committee receive reports requiting their direct involvement in a timely manner.
- Re-directing complaints that are operational in nature and can be addressed by other members of management. Independence and qualifications are critical in the triage process. Typical hot line solutions contain both financial and operational risk.
- Ensuring that the Audit Committee meets legal requirements. Section 301 of Sarbanes-Oxley required the SEC to direct the securities exchanges to prohibit the listing by any issuer whose audit committee does not meet a specified list of criteria.
- Verifying that the company meets legal requirements.The NYSE and NASDAQ have issued final listing standards beyond those affecting the Audit Committee.
- Becoming proactive by asking probing questions of management and the auditors.
- Understanding the financials and key assumptions underlying them.
- Engaging independent counsel and other advisors as it deems necessary
- Determining funding required to carry out its duties, to be funded by the issuer
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