Audit Committee Case Study

The Audit committee

Audit committees. Governance provides a governance element on the principles for the role of the audit committee in a company. The role of the audit committee as governed by the corporate governance on reporting are as follows.

PCW executive guide to King III .PWC (2009:19).

-The board of directors ensures that company has an effective and independent audit committee.

The audit committee should at least have three members these members should be independent non-executive directors. This means that the audit committee should not be chaired by a member of the board of directors of the company.

-The audit committee should be led by a non-executive director.

The chairman should participate and should be available

“Auditing serves as a monitoring device and is thus part of corporate governance mosaic”. Auditing aims to give assurance about the correspondence of the financial information against an established criteria and thus enhance the degree of confidence of the users of the financial information. Auditors are classified according to their activities as follows:

External Auditing

An external auditing is the independent evaluation of financial statements of a company, the audit is done by the third party in order to check if they comply with relevant principles and laws. The external auditor checks the financial statements and gives an opinion based on the findings to the shareholders of a company. They protect the interest of the shareholders since the audit is done by someone who has no stake in the company, so the auditor report the accuracy of the statements that have been issued by the business and thus enhance the credibility of financial information produced. They promote the accountability through holding the directors accountable for information they issued. Promote the corporate governance by risk assessment and mitigation planning where the assist in better us and implementation of ways to deal with unethical situations and fraud. They also does risk management and maintain the strong relationship with regulators by making the company to be transparent as possible

Internal auditors are obliged by their profession to provide an objective and neutral view about the financial state of affairs in the company. Internal auditing takes into account issues that are essentially important to the survival and prosperity of the organization. They consists of the board and senior management who are within the organization’s governance structure.

The Companies Act of 2008 describes certain minimum corporate governance requirement for all companies and additional enhances accountability and transparency requirement for public companies. King code of governance addresses aspects of good corporate governance which are not legislated, its focuses on leadership, sustainability and corporate citizenship. For the effective leadership there has to be good governance, the board should direct company strategies and operation with an aim of achieving sustainable economic, social and environmental performance. There is a necessary strategy, risk, performance and sustainability to be inseparable. Corporate citizenship derived from a fact that a company is a juristic person and should operate in a sustainable