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Audit Committee Financial Experts, One Year Later

Karr Susan Schott | September 21, 2004

A study released on Sept. 7 by GovernanceMetrics International reported that 95 percent of U.S. companies now say they have an independent audit committee financial expert on board, up from 65 percent as reported in 2002.

The increase shouldn't be a surprise, as on July 15
we hit the one-year anniversary for the SEC's “audit committee financial expert” rule, which was promulgated under Section 407 of The Sarbanes-Oxley Act.

According to the rule, public companies must disclose annually whether they have at least one audit committee financial expert on their audit committee. If so, a company must state the name of the audit committee financial expert and also whether this expert is independent of management.

A company that does not have an audit committee financial expert is required to disclose this fact and explain why it has no such expert.


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