The Audit Committee Handbook (Third Edition).

• Author: HERMANSON, DANA R.
• Position: Review

Published by John Wiley & Sons Inc., New York, 446 pages, $60.00

OVER THE PAST TWO YEARS, corporate audit committees have received nearly unprecedented attention from regulators and professional organizations. Recent initiatives include the publication of the Report and Recommendations of the BlueRibbon Committee on Improving the Effectiveness of Corporate Audit Committees, the issuance of new SEC disclosure rules related to audit committees, the adoption of new audit committee-related listing requirements by the national stock exchanges, the issuance of new external audit standards related to audit committee communications, the publication of the COSO-sponsored monograph, Fraudulent Financial Reporting: 1987-1997, An Analysis of U.S. Public Companies, and the release of the Report of the NACD Blue Ribbon Commission on Audit Committees.

The overall impact of these activities has been to highlight some concerns about audit committees and to "raise the bar" for acceptable audit committee performance. Audit committees today are expected to be independent, expert, and diligent as they seek to mitigate financial reporting problems and control failures. Clearly, this is not an easy role to perform.

Prof. Braiotta, who is a CPA and teaches at the School of Management at the State University of New York at Binghamton, has written a book that is a welcome entry to the rapidly changing audit committee marketplace. At a time when many committee members are struggling to understand and meet their rising expectations, The Audit Committee Handbook (Third Edition) provides an extensive description of audit committee responsibilities, the planning function of the audit committee, the monitoring and reviewing functions of the audit committee, and the reporting function of the audit committee.

This book has a number of excellent features. First, it is phenomenally comprehensive. Beyond the expected audit committee content, a host of related topics are addressed quite extensively, including users of financial information, auditing and accounting standards, audit planning, internal controls, the internal audit function, fraud, and independent auditors' reports. Audit committee members who lack significant experience in financial roles may find this material particularly helpful.

Second, the author integrates current research on audit committees, as well as current professional standards, throughout the book. The integration of research and standards into the...