Why the audit committee leads
When allegations involve financial reporting, senior management, or accounting controls, the audit committee is often the right body to oversee the internal investigation, because it is made up of independent directors and works directly with the outside auditor. Running the work through the committee helps keep it independent of the people whose conduct may be examined. The committee typically retains outside counsel who has not represented the executives involved, and counsel may in turn engage forensic accountants. The independence of the committee and its advisers is often scrutinized later by auditors, regulators, and courts.
Running it so it holds up
Scope comes first: which allegations, which time period, and which entities, with room to expand if the facts lead elsewhere. Documents and email should be preserved promptly, including on personal devices and messaging apps where business was conducted. Interviewees are told that counsel represents the company or the committee rather than them, and that the company controls whether information is later shared. Privilege can protect the work, but it can be lost through careless sharing, including with auditors, so communications need structure from the outset.
Findings and what follows
The investigation ends in findings the committee has to act on. That can mean remediation, discipline, restatement analysis with the auditor, and a decision about whether to self-report to regulators or prosecutors, a decision with significant consequences in either direction. Whistleblower protections apply throughout, so the person who raised the concern should not face retaliation. In a first meeting with a committee chair or general counsel, we discuss the allegations, the company's disclosure obligations, the auditor's schedule, and how to staff an investigation that is credible but proportionate.
