Who Qualifies as an Audit Committee Financial Expert Under SEC Regulations and NYSE Rules?

During recent years, heightened standards for board audit committee membership have been imposed by the SEC, NYSE, and others. Sarbanes-Oxley requires that the audit committee will be comprised solely of independent directors and that the company must disclose whether at least one of the members of the audit committee is a "financial expert" and if not, why not. Many seasoned audit committee chairmen hold the view that audit committee financial experts should be experienced in performing financial accounting functions themselves, rather than simply having supervisory experience over the function. Indicative of this view is that if accounting is the language of business, an audit committee financial expert needs to fluently "speak GAAP and GAAS" to understand the nuances of sophisticated and complex accounting, auditing, internal controls, and SEC regulations. Many seasoned audit committee chairmen hold the view that ACFEs should be experienced in performing financial accounting functions themselves rather than simply have supervisory experience over the function.