1938McKesson & Robbins fraud 1939NYSE recommends the establishment of audit committees 1940SEC recommends that companies form audit committees—Accounting Series Release (ASR) No AICPA Executive Committee Statement on Audit Committees of Board of Directors recommends the establishment of audit committees 1970Penn Central bankruptcy 1972ASR Nos. 123 and NYSE White Paper opines that audit committees are a necessity 1974ASR No Committees chaired by Senator Lee Metcalf and Congressman John Moss complete their investigations into the accounting profession AICPA forms Commission on Auditors’ Responsibilities (Cohen Commission) 1977Metcalf Committee Staff Report, The Accounting Establishment, is issued. 1978Foreign Corrupt Practices Act (FCPA) 1985AICPA Cohen Commission issues Commission on Auditors’ Responsibilities: Report, Conclusions, and Recommendations. AICPA forms a special committee to consider the adoption of an audit committee requirement. NYSE requires companies with common stock issues registered on NYSE to have an audit committee 1987Congressman John D. Dingell convenes the first of a series of hearings into the effectiveness of independent auditors 1988National Commission on Fraudulent Financial Reporting (NCFRR/the Treadway Commission) 1989SEC’s five commissioners, by a narrow vote, decide not to require all public companies to have audit committees, but encourage their formation. Statement on Auditing Standards (SAS) No. 61, Communication with the Audit Committees.

1989The National Association of Securities Dealers (NASD) approves a requirement that National Market System companies (a subset of the over-the-counter market) must have audit committees. Statement on Internal Auditing Standards No. 7 (SAIS No. 7) Communication with the Board of Directors 1991Federal Deposit Insurance Corporation Improvement Act 1992Committee of Sponsoring Organizations of the Treadway Commission (COSO) issues Internal Control- Integrated Framework 1993Public Oversight Board of the AICPA’s SEC Practices Section releases In the Public Interest 1994Kirk Panel (Public Oversight Board of the AICPA’s SEC Practices Section) releases Strengthening the Professionalism of the Independent Auditor 1995Public Oversight Board of the AICPA’s SEC Practices Section releases Allies in Protecting Shareholder Interests 1998SEC Chairman Arthur Levitt delivers speech at the NYU Center for Business and Law in which he calls for the NYSE and Nasdaq to form a “blue ribbon committee” to study the role of the audit committee 1999Report and Recommendations of the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees. SAS No. 90, Audit Committee Communications. SEC Release No : Audit Committee Disclosure. NYSE and Nasdaq adopt new listing requirements, mandating the existence, composition, director qualifications, and duties of an audit committee 2000POB’s Panel on Audit Effectiveness releases Report and Recommendations 2001Arthur Levitt, SEC Chairman, issues letter to audit committee chairmen 2002Sarbanes-Oxley Act 2003SEC Release Nos and : Disclosure Required by Sections 406 and 407 of the Sarbanes-Oxley Act of SEC Release Nos and : Standards Relating to Listed Company Audit Committees. SEC approved amendments to NYSE and the Nasdaq corporate governance listing standards. 2004NYSE submitted to the SEC for approval amendments to its corporate governance listing standards

Public companies may form other standing or special committees to deal with issues requiring particular expertise. Examples: 1. Finance committee to oversee financial activities 2. Outside directors committee to maintain board independence 3. Executive committee to approve managements decision, plans, and actions on a behalf of entire board.