What is an essential characteristic of audit committee members as stipulated by regulations?

An essential characteristic of audit committee members, as outlined by various regulatory frameworks such as the Sarbanes-Oxley Act, is that they must be independent and not receive compensation for consulting services. This independence is crucial to ensure that audit committees can perform their oversight functions without any conflicts of interest. By being independent, committee members can objectively evaluate the financial reporting process, the effectiveness of internal controls, and the performance of external auditors without being influenced by management or external parties.

The requirement for independence helps uphold the integrity of the audit process and promotes trust among stakeholders. An audit committee composed of independent members is better positioned to carry out its responsibilities, including overseeing the financial reporting process and ensuring compliance with legal and regulatory standards. This independence ultimately contributes to the overall effectiveness of corporate governance and safeguards against the potential for fraud or misrepresentation in financial statements.