Which of the following is MOST appropriate for review by an audit committee?

An audit committee is primarily responsible for overseeing the organization's financial reporting and internal control processes. Their main focus areas include ensuring compliance with legal and regulatory requirements, the effectiveness of internal controls, and the accuracy of financial reporting.

Paperwork needed to remain compliant with regulations: While important, this is more operational and administrative in nature.

Whether policy changes will optimize profits: This falls under strategic decision-making, which is typically outside the primary scope of an audit committee.

The existence of appropriate internal controls: This is a critical responsibility of the audit committee. They must ensure that there are adequate internal controls to prevent fraud, errors, and ensure accurate financial reporting.

Forecasted sales and revenues: This is more related to financial planning and analysis, not the direct focus of the audit committee.

Thus, the most appropriate for review by an audit committee is the existence of appropriate internal controls.

References:

Institute of Internal Auditors (IIA) standards on audit committee responsibilities.

Corporate governance literature on the role of audit committees.