to be composed of non-executive members of the administrative body and/or members of the supervisory body of the audited entity and/or members appointed by the general meeting of shareholders of the audited entity. At least one member of the audit committee shall be independent and shall have competence in accounting and/or auditing.” Institute of Internal Auditors best practice: “The audit committee will consist of at least three and no more than six members of the board of directors... Each committee member will be both independent and financially literate. At least one member shall be designated as the "financial expert" as defined by applicable legislation and regulation”. Responsibilities Boards of Directors and their committees rely on management to run the daily operations of the business. The Board's role is better described as oversight or monitoring, rather than execution. Responsibilities of the audit committee typically include: Overseeing the financial reporting and disclosure process. Monitoring choice of accounting policies and principles. Overseeing hiring, performance and independence of the external auditors. Oversight of regulatory compliance, ethics, and whistleblower hotlines. Monitoring the internal control process. Overseeing the performance of the internal audit function. Discussing risk management policies and practices with management. The duties of an audit committee are typically described in a committee charter, often available on the entity's website.× European Union: Directive 2006/43/EC, article 41.2: (...) the audit committee shall, inter alia: (a) Monitor the financial reporting process; (b) Monitor the effectiveness of the company's internal control, internal audit where applicable, and risk management systems; (c) Monitor the statutory audit of the annual and consolidated accounts; (d) Review and monitor the independence of the statutory auditor or audit firm, and in particular the provision of additional services to the audited entity. Public sector: Cf. Standard INTOSAI GOV #9100 Role in oversight of financial reporting and accounting Audit committees typically review financial statements quarterly and annually in public companies. In addition, members will often discuss complex accounting estimates and judgments made by management and the implementation of new accounting principles or regulations. Audit committees interact regularly with senior financial management such as the CFO and Controller and are in a position to comment on the capabilities of these managers. Should significant problems with accounting practices or personnel be identified or alleged, a special investigation may be directed by the audit committee, using outside consulting resources as deemed necessary. External auditors are also required to report