Question

• Examine the importance of the audit committee oversight related to the quality of the internal controls of an organization. Analyze the audit committee’s responsibilities regarding risk assessment and internal control monitoring. Indicate whether the audit committee is the best entity to perform the function.
• Contrast the opinion provided by the independent auditor concerning management’s assessment of internal controls over the financial reporting system with the audit opinion on the financial statements in general. Argue for providing both a qualified opinion over the financial reporting system and an unqualified opinion on the financial statements.

Answer 1

Answer :-  An Audit Committee shapes a basic significant piece of management that enables the Board of Directors to play out the exercises to like sound and powerful internal controls and management of risk at different levels.

Along these lines, the Audit Committee isn't satisfying its duties of internal controls and its checking and risk management on the off chance that it oversight the quality kept up by workers of the worry.

A sound arrangement of internal controls just as evaluating the risk introduction focuses and management of these risks and take out the undesirable risk exercises which could bring about failure to accomplish business destinations. The Audit Committee of each worry is dealing with every one of these exercises and have absolute affirmation of mindful.

The entire procedure goes in tandom from Board to the targets of the Organization. The Audit Committee bolsters the Board in observing our risk exposures, the plan and working viability of the basic risk management and internal controls frameworks. Management evaluates and presents standard reports to the Audit Committee on its own appraisals of key risks, the qualities and shortcomings of the general internal controls frameworks, with activity intends to address the shortcomings.

Internal Audit routinely provides details regarding surveys of the business procedures and exercises, including activity intends to address any recognized control shortcomings.

External auditors additionally report on any control issues distinguished over the span of their work. Thinking about these, the Audit Committee surveys the viability of the Group's arrangement of internal controls and reports to the Board on such audits. Work and discoveries of the Committee are considered by the Board in shaping its own view on the adequacy of the framework.

• Control Environment :- The activities of management and its exhibited responsibility to successful administration and control are in this manner exceptionally straightforward to all. The Audit Committee needs to survey "The corporate administration and a corporate culture dependent on great business morals and responsibility". This framework is observed by a free outsider service supplier who have an immediate answering to the Audit Committee Chairman.

• Control Activities :- To have control on exercises of management and risk and obligation condition management it is fundamental based on top-level audits, isolation of obligations; and physical controls. Every single working unit set up their separate working plans as per corporate destinations for thought. In this procedure, they are required to recognize material risks that may affect the accomplishment of their business targets.

The Audit Committe consistently requiresa nitty gritty examination of expected risks and returns is submitted to working unit heads, with the goal that they can survey the advancement. There are scarcely any Audit Committee gatherings yearly to survey the unique risks things.

• Observing Activities :- The Board and Audit Committee supervise the procedure, helped by our Internal Audit group. Management has upgraded its update reports to the Audit Committee on developments of top risks and suitable relieving measures.

The duty of risk appraisal and internal control observing isn't the only one done by Audit Committee however it is a joined exertion of Board, management advisory group and internal audit panels alongwith the Corporate Governance Committee to have internal controls and deal with the risks which are related by the business destinations.

2):-

• In the event that the Independent Auditor gives Qualified Opinion :-

- A qualified report is one in which the auditor infers that most issues have been managed ampleness, with the exception of a couple of issues.

- A qualified audit report doesn't imply that your business is enduring, and it doesn't imply that your budget summary isn't straightforward.

- An auditor's report is qualified when there is either a restriction of extension in the auditor's work, or when there is a conflict with management in regards to application, worthiness or sufficiency of bookkeeping strategies.

- For auditors an issue must be material or monetarily worth thought to qualify a report.

- The issue ought not be unavoidable, that is, the issue ought not distort the real monetary position.

- On the off chance that issues are material and unavoidable, the auditor gives a disclaimer or antagonistic assessment

• In the event that the Independent Auditor gives Qualified Opinion:

- In an unqualified report, the auditors infer that the fiscal summaries of your business present reasonably its undertakings in every single material viewpoint.

- The conclusion exemplifies the presumptions that your business watched consistence with sound accounting standards and legal necessities.

- Otherwise called a spotless report, such a report infers, that any adjustments in the bookkeeping approaches, their application and impacts, are sufficiently decided and uncovered.

- This conclusion doesn't tell that your business is in acceptable economic wellbeing. It only expresses that your money related report is straightforward and exhaustive and has not shrouded significant realities.