Nasdaq Proposes Requiring Listed Companies to Establish Internal Audit Function

The Securities and Exchange Commission is asking for public comments on a proposal from Nasdaq to require Nasdaq-listed companies to establish an internal audit function no later than Dec. 31.

Nasdaq said its proposal would ensure that companies have a mechanism in place to regularly review and assess internal controls, identify weaknesses, and develop appropriate remedial measures as well as ensure management and the audit committee receive ongoing information about risk management processes.

Under Nasdaq’s proposal, a listed company would be able to outsource its internal audit function to a third-party service provider other than its financial statement auditor.

The New York Stock Exchange adopted a similar rule soon after passage of the Sarbanes-Oxley Act of 2002.