The Sarbanes-Oxley Act mandates that the audit committee of the board of directors of public companies be directly responsible for the appointment, compensation, and oversight of the external auditors. In addition, the audit committee must pre-approve all non-audit services that might be performed by the audit firm.

Discuss the rationale for this mandate as opposed to the alternative of letting the shareholders, CEO, or CFO have these responsibilities.

What factors should the audit committee consider in evaluating the independence of the external auditors?

Locate the proxy statement for a publicly traded company. Search for the disclosures pertaining to the audit committee members. Summarize and discuss your findings.