Help audit committees draft a sound pre-approval policy and foster communication between the outside auditor and the audit committee.
The human resources ("HR") audit is a valuable tool in the in-house counsels risk management toolbox. It can help you to identify and correct weaknesses in HR practices and processes before someone mishandles or overlooks an employment situation, possibly giving rise to litigation. This article gives you practical pointers on how to launch an HR audit, specifically, how to make the business case to your company decision makers, how to select the people who will perform the audit, how to make the audit thorough and meaningful, and how to make effective use of what the audit reveals.
Your outside counsel has just called you in a panic. He has the company's outside auditor on hold on his other line. The auditor is demanding the law firm's evaluation of a very large and difficult lawsuit now pending against the company. The auditor won't accept the formulation from the ABA-AICPA treaty that allows counsel to decline to provide an evaluation unless the lawyer concludes that liability is either "probable" or "remote." The auditor claims that the lawyers can no longer "hide behind" the "treaty" and must provide a complete analysis because of Sarbanes-Oxley. You know that the law firm has a very negative evaluation of the case, which will result in a big reserve and a large hit to earnings if disclosed to the auditor. But you believe that it is too early to get a good estimate. So you tell the law firm auditor to "stick to the treaty." Your outside lawyer asks, "Have you read the Commission's new Rule 13b2-2 regulation"? No? Well, you had better do so.
Written in the wake of the Enron situation, this article examines the Sarbanes-Oxley Act as a means of reiterating the importance of honest accounting as a means of averting potential compliance crises before they have the chance to develop.
In the past several years, the SEC has substantially increased requirements for the audit committees of public companies. The NYSE, NASD and AMEX have also created requirements for audit committee members. Read this article to see how to navigate these requirements and reform your company's audit committee requirements in light of the Enron debacle.