What is Audit Committee?
An audit committee is a subcommittee of the board of directors responsible for overseeing financial reporting, internal controls, external auditors and risk management. Saudi CMA corporate governance rules require listed companies to have an audit committee with mostly independent members.
How It Works
- Composition: at least three members, mostly independent, with one financial expert.
- Reviews financial statements before board approval.
- Recommends appointment, fees and scope of external auditor.
- Oversees internal audit function and internal control framework.
Saudi Context
Saudi CMA corporate governance regulations require Tadawul-listed companies to have an audit committee meeting at least four times per year, with detailed minutes filed with the regulator.
Example
An audit committee meets with both internal and external auditors to review a material weakness in revenue controls before signing off on the annual report.