Audit Committees. The city council members of Laurel City are considering establishing an audit committee as a subset of the council. Several members work for commercial businesses that have recently established such committees in response to the Sarbanes-Oxley Act of 2002. They have asked your advice as a partner in the public accounting firm that audits the city’s annual financial statements. They are especially interested in whether the benefits of such a committee outweigh any costs to establishing one.
Required
a. What resources are available to the city to help it use this audit committee efficiently and effectively?
b. Provide a short report to the council that lists the benefits and costs of establishing an audit committee. Explain what qualifications would be expected of council members who sit on this committee and the tasks in which they would be engaged.