Audit Committee Essay

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Recommended: Conclusion on auditors independence

1.0 Introduction
The main objective of this report is to discuss about the effectiveness of Audit Committee in the private sector. Audit Committee, Remuneration Committee, and Nomination Committee are commonly seen in an organization which is appointed by The Board of Directors (BOD). BOD is a group or individuals that are nominated members who mutually manage the activities of an organization. The BOD’s power and authority is delegated by shareholder by whom the BOD decision making can be made on behalf of shareholder. BOD establishes corporate objectives management related comprehensive policies and to make decisions on significant company issues. As such, it is essential to have a BOD in an organization. However, Audit Committee is a key …show more content…

One of the responsibilities of Audit Committee in corporate governance is to ensure the quality of the company’s financial reporting. By doing so, Audit Committee should review significant financial reporting issues and judgment so as to ensure the integrity of the financial statements of the company and any formal announcements relating to the company’s financial performance. Besides, they have to review the financial statements and disclosures of notes in the financial statement, and annual and provisional remunerations news announcements before they are publicly disclosed. Additionally, the Audit Committee should review arrangements by which staff if the company may, in confidence, raise concerns about possible irregularity in matters of financial reporting or other matters to detect fraud. The Audit Committee objective is to ensure that arrangements are in place for the independent investigation of such matters for appropriate follow up action. Badolato et al. (2014) (BDE) examine the effectiveness of Audit Committee financial …show more content…

In the annual report, the BOD will disclose the names of the members of Audit Committee and details of the Committee’s activities in the company’s annual report. The disclosure of the existence, function and performance of the Audit Committee to shareholders is an important element of transparency and good corporate governance practice.

Furthermore, the Committee reviews the description of the main features of the internal control and risk management systems pertaining to the financial reporting process, monitors the statutory audit of the financial statements and consolidated financial statements, evaluates the independence of the statutory audit firm, and prepares the proposal for resolution on the election of the auditor.
In respect of other public disclosures of information that is extracted or derived from the financial statements, the audit committee must be satisfied that management has put appropriate procedures into place for reviewing such information, and the audit committee is required to assess the of those procedures on a periodic basis.

Disclosure of the existence, function and performance of the Audit Committee

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