On February 20, 2013, NASDAQ released information on its proposed rule to require listed companies to establish and maintain an internal audit function.  Under the proposed rule, companies would have the option to outsource this function to a third party service provider other than its independent external auditor.  The audit committee would be required to meet regularly with the internal auditor and assist the Board of Directors in overseeing the performance of the internal audit function.  The audit committee should also discuss the responsibilities with the external auditor, budget, and staffing of the internal audit function.

The U.S. Securities and Exchange Commission is currently reviewing comments on the proposed rule, and a final decision is expected before the end of the second quarter.

If passed, companies listed on NASDAQ on or before June 30, 2013 will be required to establish an internal audit function by no later than December 31, 2013.  Companies listed after June 30, 2013 must establish this function prior to listing.

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Read the full SEC release at http://www.sec.gov/rules/sro/nasdaq/2013/34-69030.pdf