Audit Committee Effectiveness: Ideas from the Front Line.

• Position: Brief Article

What's the single most important step that can be taken to improve the effectiveness of audit committees? This was a question asked of attendees at FEI's recent Current Financial Reporting Issues Conference. Here's a sampling of responses:

* The board and CEO should send the message that integrity and long-term goals will not be sacrificed for a quarter or year. In a small company (say, $50 million), the board (outside) and audit committee are same. Therefore, they know everything being discussed about all the issues.

* The focus of audit committees needs to remain at an oversight level. Audit committees would lose effectiveness if they're required to review GAAP compliance at a detailed management level.

* Apply the blue-ribbon recommendations to all public companies, large and small.

* Appoint members who...