This thesis covers the creation and function of audit committees and its increasing utilization by companies that consequently increase their dependence on outside directors and the subsequent liability of non-committee board members. The first part of this article gives a general overview of the audit committee with a focus on the scope of its duties, its composition, its way of working, and the possible benefits and hazards for the corporation resulting from the establishment of such a committee. The second part will examine the impact of an audit committee on director’s liability under the federal securities law and state corporation law. This second section focuses on the standards of liability faced by a director of the audit committee compared to those of other board members and the liabilities of non-committee board members when they rely for their business decisions on audit committees' information which later turns out to be wrong.