Question

Under Sarbanes-Oxley, the majority of members of the audit committee must be independent directors?

1) True
2) False

Answer 1

True, the Sarbanes-Oxley Act mandates that the majority of members of the audit committee be independent directors to ensure objective financial reporting and protect stakeholders.

Step-by-step explanation:

True, according to the provisions of the Sarbanes-Oxley Act of 2002, the majority of members of the audit committee must be independent directors. This act was implemented in response to significant accounting scandals involving corporations like Enron, Tyco International, and WorldCom, which brought to light the need for improved corporate governance and financial oversight. The requirement that the majority of audit committee members are independent is intended to enhance the objectivity and reliability of financial reporting and to ensure that the interests of shareholders and other stakeholders are adequately safeguarded.