Audit committees have taken on much more responsibility in the past few years. However, it must also be remembered that an audit committee appointment is not a full-time appointment.

Required

a. (Research). Search annual reports via Edgar, or via looking up the home page of selected companies. Look up five companies (preferably in different industries) and prepare a report that describes the following:

• An analysis of the audit committee charters that identify the commonalities in all the charters, as well as any differences.

• The characteristics of audit committee members, e.g., whether a CPA, other experience, etc.

• The individual identified as the "financial expert."

• The number of times and amount of time the audit committee met during the year.

b. (Group Discussion).To what extent should the audit committee act as a referee between management and the external auditor on accounting issues? Discuss and present a conclusion to the class. Consider a specific example, e.g., a determination of whether inventory is appropriately written down to net realizable value.