There is some difference of opinion as to whether the audit committee of the board of directors of an organization (whether public, private, or nonprofit) needs independent counsel for the purpose of advising the audit committee and for the purpose of conducting internal investigations.

Those who advocate using internal personnel for these services argue that this is more cost efficient. Although it is true that there is a cost to using independent counsel, there is also a cost, which could be exorbitant, from the failure to properly advise the audit committee and to properly investigate accounting, auditing, or enterprise risk issues. Moreover, failure to use completely independent counsel for the investigation can create the appearance of a “cover-up” and deprive the organization of any “cooperation credit” with governmental authorities.

Originally published in the 2016 Third Quarter Issue of Directors & Boards.