While this may not seem to be revolutionary news, corporate analysts hail these changes as crucial developments in the effort to overhaul the often-neglected procedure of internal auditing. The new guidelines are a suite of practical measures that will ensure objective and organized audits, as well as help clarify the financial wisdom of corporate decision-making.

"You look at some of the changes that have been made, such as financial literacy requirements, and they seem like common-sense," said Edward O'Donnell, VP of Finance for ACTV, Inc. (NASDAQ: IATV), a leading digital media company headquartered in New York City. "But you cannot overemphasize the importance of these basic, core competencies."

"Many of the new dot-coms are running into complex financial issues that have not been explored before," he added. "They need to have a very high level of financial knowledge and sophistication."

At its best, a corporation's new Audit Committee will help funnel a huge volume of financial information from corporate boards to their shareholders. It will be an open pipeline of facts and figures, a tool for the creation of a transparent business model. It will ensure thorough financial reporting, as well as the proper identification and management of corporate risk. It will also add value to any business, as it provides an additional level of fiscal security. Thanks to an Audit Committee, investors sleep soundly at night, secure in the knowledge that a corporation's books are in order.

At its worst, however, an Audit Committee obscures the financial status of a corporation. It confuses or misleads investors, and prompts mismanagement lawsuits in the event of corporate failure.

So, how will Audit Committees change next year? The major alterations will be as follows:

1) New Audit Committees will consist of at least three independent directors, all of whom must be financially literate. At least one of these directors must have financial expertise, and none of them can be immediate family members of your corporation's past or current executive officers. This will limit conflicts of interest, and ensure that the audit process is an objective one from front to back.

2) The independent auditors must review financial documents on a quarterly basis. This practice falls into line with the requirements of the "Big Five" accounting firms, which have long-since implemented complete quarterly reviews. The frequency of these audits will ensure a constant flow of information to shareholders of publicly-held corporations.

3) Safe harbor - or the ability of a company to disclose certain facts about their operations in public domain documents - has been limited. The Securities and Exchange Commission (SEC) will now have expanded jurisdiction over the items that are contained in the communications between companies and investors. Ideally, this will expand the power of federal regulators, and allow them to ensure that fiscal transactions are free of all possible fraud.

4) A corporation's proxy statement will be required to include a copy of the charter for the Audit Committee. This way, shareholders can vote on the members of the committee, and can have a voice in the process of securing the financial future of the enterprise.

Other new audit committee rules are detailed in recent SEC, NYSE, NASDAQ, and AMEX reports. The new regulations will work to ensure that the auditing difficulties of the past decade are eliminated. Perhaps, with these new procedures, businesses will more closely follow Judge Samuel Putnum's famous Prudent Man Rule of 1830:

"Those with responsibility for the money of others, should act with prudence, discretion, intelligence, and regard for the safety of capital as well as income," he said.

These new audit committees will, with time, help ensure that businesses transition easily into the new, more-intricate world of the 21st century corporation.