Roles of Audit Committee

801 WordsJun 13, 20124 Pages
Roles of audit committee An Audit Committee does not focus solely on internal audit activities or on financial issues. Recent trends are for it to take on broader roles and responsibilities. The establishment of an Audit Committee affords the opportunity to set aside time to focus on governance, risk and control issues. The key responsibilities of an Audit Committee include: overseeing the risk management framework and processes; reviewing compliance related matters and internal controls; overseeing the relationship, appointment and work of the external and internal auditors; and reviewing the annual financial statements and recommending them for governing body approval. As it relates to oversight of the internal audit…show more content…
| Internal audit may not be privy to allsources of information throughout thecompany if seen as “outside” themanagement structure.The chairman of the audit committee maynot have allocated sufficient time, or haveadequate resources/capacity to deal withthe oversight of the internal auditfunction.It would be necessary to set up aspecific charter outlining the roles andresponsibilities of the board in relationto internal audit, as separate frommanagement. For example, who wouldlook after the HR administration, includingpersonnel evaluations, compensation andcareer planning for the head of internalaudit?The audit committee would be assumingmore responsibility and therefore,perhaps, more liability in relation to theadequacy of the internal control and risksystems of the organisation.Potentially restricts the ability of the CEOto use internal audit as a tool to reinforcecontrol principles, or in special projects. | prior to using IA work, what are the necessary steps that should be undertaken by external auditor when deciding whether to use or not to use the IA as
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