What function does the audit committee serve in a corporation?

The function of the audit committee within a corporation is to oversee financial reporting and the activities of external auditors. This committee plays a critical role in ensuring the accuracy and integrity of the company’s financial statements. It is responsible for reviewing financial reports before they are published, maintaining compliance with legal and regulatory requirements, and monitoring the effectiveness of internal controls.

By overseeing external auditors, the audit committee ensures that the firm's financial practices are transparent and that audits are conducted in an objective manner. This includes assessing the auditors' qualifications, independence, and performance, as well as approving their fees. Such oversight helps to foster confidence among investors and stakeholders regarding the company's financial health and reporting practices.

In contrast, managing daily operations falls outside the remit of the audit committee, as this is typically handled by the management team. Similarly, developing corporate strategy is a broader function that usually involves the entire board of directors or senior management rather than the audit committee. Additionally, handling employee grievances is primarily a human resources function and not something typically addressed by the audit committee. Thus, the key role of the audit committee is centered on financial oversight, which is why the answer highlighting their responsibility for overseeing financial reporting and external auditors is accurate.