Certification in Supplier Diversity Practice Exam

What roles do audit committees serve in relation to the Board of Directors?

1. Oversee employee performance and productivity

2. Monitor accounting policies and financial reporting processes

3. Implement marketing strategies and customer outreach

4. Manage day-to-day operational tasks

The correct answer is: Monitor accounting policies and financial reporting processes

The correct response highlights the role of audit committees in focusing on financial integrity and transparency within an organization. Audit committees are primarily responsible for monitoring accounting policies, overseeing financial reporting processes, and ensuring compliance with applicable laws and regulations. They act as a vital link between the Board of Directors and the financial operations of the organization by reviewing financial statements, assessing the effectiveness of internal controls, and coordinating with external auditors. This emphasis on financial oversight helps build trust with stakeholders, including investors and regulatory bodies, by ensuring that financial reports accurately reflect the organization's position and performance. By monitoring these processes, audit committees contribute to good governance and help prevent financial mismanagement or fraud, making them essential components of the overall board structure. The other options focus on areas outside the audit committee's typical responsibilities, such as employee performance, marketing strategies, or daily operations, which do not align with the primary functions of audit committees.