Question

an audit committee must be comprised of "outside" members that sit on the board of directors, must be "financially literate" and have at least one "financial expert". With this in mind I want you to find a publicly traded company and review their audit committee. Pick whatever company you wish! Please report as your discussion topic the following:

Company you selected (along with company url)

Names of individuals on the audit committee

Which member of the audit committee would you consider to be the "financial expert", why?

Do you think the audit committee is "financially literate" - why or why not?  

Is the audit committee comprised of solely "outside" members? Why do you think this is important?

(OPTIONAL): Do you see any potential conflicts of interest or issues with the audit committee you reviewed?

Answer 1

Company Selected: General Motors (https://www.gm.com/)

Individuals on the Audit Committee:

1. Thomas M. Schoewe

2. Linda R. Gooden

3. Michael Mullen

I would consider Linda R. Gooden to be financial expert in the audit committee, since in the past she has worked at several critical leadership positions and has extensive background in IT, Cybersecurity, Operation & strategic planning, business restructuring, finance and risk management. She brings with herself, her expertise as a director in several Public limited companies in diversified areas including finance, audit and acquisitions. She truly deserves to be classified as a financial expert in the above audit committee ahead of the other two.

The audit committee is completely "financially literate". The three independent directors have extensive experience and they have atleast one financial expert in the committee.

In the case of GM, we can say that the audit committee is comprised of solely 'outside members' as they are not part of company management and they are in a position to provide an independent review and oversight of company performance, financial reporting and internal controls exercised.
It is important since the external parties make important decisions based on the audit committee review. Hence it is very important that the audit committee shoud be comprising 'outside' members, so that they can provide an unbiased and true review of financial statements and business operations.

I dont see any potential conflicts of interest since all the three directors are independent and not a part of company management and all the three have the same purpose of providing a fair review of financial statement and business operation.