On March 4, 2013, Nasdaq issued a proposed new rule that, if approved by the Securities and Exchange Commission ("SEC"), will require listed companies to establish and maintain an internal audit function. The proposed rule is open for public comment until 21 days after publication in the Federal Register, but it is expected to be approved by the SEC. It would make this Nasdaq listing requirement similar to that of the NYSE, which already has an internal audit function requirement.
By requiring an internal audit function, Nasdaq seeks to ensure that a company's management and audit committee receive ongoing assessments of the company's risk management processes and system of internal control that are provided independently from the company's routine accounting and financial reporting regimes. A company will be allowed to outsource the internal audit function to any third party (other than its independent auditor), but the audit committee must maintain sole responsibility for oversight, and it may not allocate or delegate that responsibility to another board committee.
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Source: W. Barkley, Randy Eaddy, David Eaton, Aaron M. Aslow, David Stockton, and Monica R. Richey. http://www.mondaq.com
