According to the Sarbanes-Oxley Act, who has the sole responsibility for hiring external auditors?

The audit committee has the sole responsibility for hiring external auditors according to the Sarbanes-Oxley Act. This act was established to enhance corporate governance and strengthen the oversight of public accounting firms. By assigning the responsibility of hiring external auditors explicitly to the audit committee, the Act emphasizes the importance of independence and objectivity in the auditing process.

The audit committee, which is typically comprised of members of the board of directors who are independent from management, serves as a critical oversight mechanism. It is designed to ensure that any potential conflicts of interest are minimized and that the auditors can operate without undue influence from management. This structure promotes transparency and accountability in the financial reporting process, aligning with the overarching objectives of the Sarbanes-Oxley Act to protect investors and maintain market integrity.