Six points to ponder when invited to join an audit committee.

Audit committee membership can be an awesome responsibility. This is particularly true since the advent of Sarbanes-Oxley. Here are some suggestions from board members that CPAs should evaluate before accepting a company's invitation to join its audit committee.

1 Make sure you research the company well. CPAs should go far beyond the company's annual reports and other financial data, according to accountants who sit on audit committees today,. With cases like Enron, experts say the importance of firsthand, in-depth knowledge of the company's culture can't be overrated. "Is management straightforward and forthright?" asks CPA Michael Bernstein of Geller & Co. in New York City. "Does it set a positive tone in carrying out its responsibilities?" Bernstein, who manages Geller's finance and accounting outsourcing group, recently accepted an appointment as audit committee chairman of a $50 million drug company, Bradley Pharmaceuticals, in Fairfield, New Jersey.

If staffers hesitate to speak up when queried, Bernstein says a red light should go off: "I suspect a problem if I have difficulty getting candid responses," he says. Bernstein also suggests CPAs interview the prospective company's audit firm at length. Among the questions Bernstein asked Bradley's auditor, Grant Thornton, was its opinion of the capabilities of the corporation's top financial officers and staff and whether it knew of any reason why he shouldn't join the board's audit committee.

2 Don't be afraid to raise negative issues. CPAs should talk to outside professionals, directors and lawyers to see whether there are any reasons why they shouldn't join the audit committee. Don't be afraid to explore negative issues, although you may want to experiment with your choice of words, since even sensitive areas can be approached with diplomatic language. Candidates should do a thorough search to reveal any litigation issues the company is facing. This information is available by contacting the company's legal counsel or its independent auditors, who should have a confirmation from management as of the latest audit date about any legal issues the company faces. Edwin H. Ruzinsky, CPA, urges accountants to "question the motivation of other directors for joining (or leaving) the board, examine their backgrounds, analyze where they fit in, and their integrity and quality. If that attitude had prevailed in the past in corporate America," Ruzinsky says, "we wouldn't be in this state." It's fair game for the prospective director not only to respond to questions at any interview session but also to ask them of the company's existing directors.

CPA Robert Waxman says prospective board members should listen for "pat phrases" when employees respond to questions. "If everything is centered on 'Mr. Big', you may have a virtual dictatorship. Are there cronies, cousins or other related parties on the board? Do some dominate and others cower?" One board member told Waxman during an interview, "If you're going to challenge the president, they don't want you on the board." Waxman says he had to ask himself, "Does anyone ever challenge the president?" Perhaps more important, he had to ask himself whether he wanted to serve on that company's board of directors. In this case, the answer was no; Waxman didn't join the company's board.

3 Familiarize yourself with the company's industry. Despite 45 years in accounting (15 in positions of financial responsibility in the publishing industry and almost 30 years in public practice), Ruzinsky stuck to the fields he was most familiar with--medicine and publishing--in choosing the three boards he agreed to sit on after he retired from Deloitte & Touche in 1996. Ruzinsky says to be fully committed to all, he wouldn't agree to sit on more than four at one time.

In addition to two not-for-profit groups (which don't currently come under Sarbanes-Oxley), Ruzinsky sits on the board of Media Sciences International Inc., a public company that manufactures consumables for color workgroup printers and is traded on the American Stock Exchange. As past president of the New Jersey state board of accountancy, Ruzinsky feels confident enough to be the sole member of Media Sciences' audit committee who meets the Sarbanes-Oxley requirements for a financial expert.

Ruzinsky cautions that prospective directors can never be too careful in checking out a company. Despite previously serving as a consultant to Dowden Health Media, a small private medical publisher, Ruzinsky still met with Dowden's CEO at least four or five times before taking on the chairmanship of its audit committee.

4 Examine the company's directors & officers (D&O) insurance. Gerry S. Weidema, CPA, says site felt a higher degree of comfort in weighing the risk of sitting on a bank board, as opposed to a nonbank public company, since banks are subject to a higher level of scrutiny, coming under the watchful eye of bank regulators and the Comptroller of the Currency. Yet, she still considered the liability protection offered by the bank's D&O insurance a vital area of concern before deciding to serve as a director.

Weidema says prospective directors should study a variety of factors that go beyond whether the board is properly insured, including a company's internal policies. She recently traveled to New York City for a seminar for audit committee members conducted by New York University's Directors Institute at the New York Stock Exchange. Weidema says she found the trip worthwhile because of the case histories and panel discussions the seminar included. "I learned the most important thing a director can do is to keep probing and asking questions," she says. "If you don't understand something, ask, don't assume. That word should be out of your vocabulary. That advice really stood out."

She notes that at Banknorth, a regional bank in Portland, Maitre where she is a director, "no one is ever made to feel stupid. It's my job to ask questions. If management doesn't have the answers, it gets them for me. The company has a terrific internal audit department that follows up and gets back to us quickly."

5 Make sure you are up to the job. CPAs who are considering accepting offers of corporate directorships should have

* Both an accounting and a finance background.

* The energy to execute the responsibilities.

* The ability to deal with the heightened risk of knowing the SEC and the public hold all board members--especially those on the audit committee--to a higher standard of conduct.

* The tenacity to confront senior management and directors on difficult issues.

Time is a big factor that many novices underestimate Weidema is cofounder and partner in Weidema & Lavin, a two-person accounting firm in Hampton, New Hampshire, that specializes in tax services for small businesses She became Banknorth's first female audit committee chairperson in April and estimates the demand on her time without meetings--at a minimum of 5 to 10 hours a month. In addition, the committee meets six to eight times a year for about three to four hours, not including her travel time to the company's Maine headquarters.

Weidema had served as a nonvoting ad hoc member of the audit committees of several banks that were predecessors to the $26 billion Banknorth. As a result, she says, she was "very comfortable" about joining Banknorth's audit committee when it extended the invitation to her.

6 Evaluate the downside--and the opportunities. While Ralph Ward of boardroominsider.com and author of Saving the Corporate Board says there aren't yet any statistics available on the number of CPAs serving on audit committees, most experts agree that large accounting firms do not actively offer their partners for audit committee scats. "Even where the board position is with a nonaudit client, you want your partners to spend 100% of their time on firm matters," says Robert Waxman, founding partner of Corporate Finance Advisory in New York City and chairman of the New York State society of CPA's global accounting and auditing committee. Plus, Waxman adds, "there are bound to be conflicts of interest with the firm. And why have your partners be subject to possible litigation?"

Waxman expects that, since section 301 of Sarbanes-Oxley now provides for the funding of outside advisers, more audit committees will engage experienced CPAs to offer advice on financial accounting and audit matters. Also, notes Waxman, NPO audit committees are expressing an interest in complying with several Sarbanes-Oxley requirements, and some expect pressure on state regulators to require certain NPOs to comply with some Sarbanes-Oxley-like requirements. Already sitting on one NPO's board and another's audit committee, Waxman says he has begun to actively seek election as a director of a public company. With experience in a CPA practice focusing on investment banking, mergers and acquisitions, accounting for derivatives and hedging, SEC filings and compliance and foreign GAAP, Waxman believes he is ready to serve on an audit committee.

--Maureen Nevin Duffy is a freelance business writer in New Jersey. She is the editor and publisher of the Corporate Governance Fund Report, www.cgfreport.com, and the newly launched CG Rate Monitor.