The Companies Act 2014: Audit committees

Following on from our overview of the Companies Act 2014 (the “Act”), in this publication we set out the new requirements for large companies to form an audit committee.

An audit committee is a committee of directors, appointed by the board to oversee financial reporting and related matters. Up until the commencement of the Act only ‘public interest entities’ needed to establish an audit committee. Public interest entities comprise of:

• companies with shares quoted on a stock exchange;
• banks and certain other credit institutions; and
• insurance companies.

The Act has extended the need to establish an audit committee to all large companies.