Audits

The primary responsibility of the board of directors is to review the audits of the company's books to be certain that they're being done accurately by both the internal accounting team and the external auditors. Today, the Securities and Exchange Commission (SEC) requires that independent board members make up the audit committees. Prior to the Enron scandal, many audit committees weren't as independently run, which allowed company insiders to control not only how money was spent but also how it was recorded in the company's books and how the financial results were reported to outsiders. This insidious practice allowed top executives to more easily hide any misdeeds or misuse of funds.

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