- 10 Marks
Question
An Audit Committee is a sub-group of a company’s Board of Directors responsible for the oversight of the financial reporting and disclosure process. The duties and responsibilities of the Audit Committee greatly contribute to good corporate governance practices of a company.
Required:
Explain FOUR roles of an Audit Committee in compliance with good corporate governance practices.
Answer
Roles of an Audit Committee in Good Corporate Governance
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Oversight of Financial Reporting Process
- The audit committee ensures the integrity and transparency of the company’s financial reporting process.
- It reviews quarterly and annual financial statements, ensuring compliance with accounting standards and legal requirements.
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External Audit Responsibilities
- The committee recommends the appointment, removal, and remuneration of external auditors.
- It ensures the independence of auditors and discusses the audit scope before commencement.
- It reviews the external auditor’s report and ensures management responds appropriately to audit findings.
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Internal Control and Risk Management
- The committee monitors the effectiveness of internal controls to safeguard company assets.
- It ensures an appropriate risk management framework is in place to identify and mitigate key business risks.
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Oversight of Internal Audit Function
- It ensures the internal audit department is independent and effective in performing its duties.
- The committee reviews internal audit reports, approves the internal audit plan, and ensures findings are addressed.
- Topic: Institutional Regulation and Standard-Setting
- Series: Nov 2024
- Uploader: Salamat Hamid