Audit committees

Your company must or wants to have an audit committee, and you need to define its composition, its rules and how it interacts with the board of directors and the supervisory body (sindicatura).

What an audit committee is and what it is for

The audit committee is a body that supports the board of directors, focused on overseeing the internal control system, accounting information and risk management. It contributes to transparency and to more robust oversight of management.

In companies that publicly offer their shares, capital markets regulations require the establishment of an audit committee with a majority of independent members. Outside that scope, many companies adopt one voluntarily as good governance practice.

Composition and operation

The composition should ensure suitability and, where possible, independence of judgment from executive management. The committee operates under rules that define its powers, meeting frequency and reporting channels to the board.

The committee does not replace the sindicatura or the consejo de vigilancia provided for under the LGS; it works alongside them. Precisely defining the boundaries of each body avoids overlap and gray areas of accountability.

Common mistakes

• Establishing the committee without rules that define its powers.
• Staffing it with people lacking real independence from executive management.
• Overlapping its functions with those of the sindicatura without delimiting them.
• Holding meetings without recording its recommendations to the board.
• Treating it as a mere formality without giving it access to relevant information.

Frequently asked questions