Audit Committees: What They Do? How To Make Them Work

An audit committee is an entity which is composed of individuals who work in an organization and are responsible for auditing the books of the company. There are many companies which have their own audit committees and these committees are in charge of conducting an audit on the accounts and financial statements of the organization. The audit committee is headed by the CEO of the company and he appoints the members of the audit committee. An audit committee is composed of a few members of the board and its job is to review and audit the accounts and the financial statements of the organization.

It is very important for a company to have an audit committee and it helps the company to protect itself from the financial risks. So, it is necessary for every organization to have their own audit committee. The board of directors will appoint the members of the audit committee and there are certain responsibilities which are associated with the audit committee.

To conduct a assessment and assess the financial risks of the company.

  • To make recommendations to the board of directors and the CEO on how to handle the financial risks.
  • To conduct an independent audit of the accounts and the financial statements of the company.
  • To carry out any other duties that may be assigned to it by the board of directors.
  • To make any recommendations to the board of directors and the CEO on the matters pertaining to the financial policies of the company.

How does the audit committee function?

The audit committee is an independent body which is constituted by the board of directors and it is responsible for conducting an audit of the accounts and the financial statements of the company. It is very important for the audit committee to conduct the audit on the accounts and the financial statements of the company and it is also necessary for the audit committee to conduct the audit independently. The audit committee consists of the following members:

  • The auditor general
  • The deputy auditor general
  • A few other members of the board
  • The CEO

The audit committee will conduct the audit on the accounts and the financial statements of the company and it will make recommendations to the board of directors and the CEO. The board of directors will then make the final decision regarding the financial policies of the company.

About Audit Quality 

The quality of an audit depends on the quality of the auditing process. The auditing process should be conducted in a professional and objective manner and should comply with Generally Accepted Auditing Standards (GAAS). The auditor should also have the necessary qualifications and experience to conduct the audit.

How to make the audit committee work?

1. Make sure that the members of the audit committee are experts in their field and they are independent.

2. Ensure that the audit committee has access to the information that is required for the audit.

3. Ensure that the audit committee has the necessary skills and abilities to conduct the audit.

4. Make sure that the audit committee has the necessary expertise to audit the accounts and the financial statements of the company.

Conclusion

As you have read in this blog, it is very important for the audit committee to be independent and it has to conduct the audit independently. So, it is important for the audit committee to be made up of people who are well-versed and knowledgeable in the field.

Julie Bell Lindsay

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