Question

Section 301 of the Sarbanes-Oxley Act requires that public companies have an audit committee. Independent auditors are increasingly involved with audit committees.

Select all of the following that are functions of the audit committee: (Select all that apply.)

• Selection of the independent auditor, discussion of audit fee with the auditor, and review of the auditor's engagement letter.

• Review of the independent auditor's overall audit plan (scope, purpose, and general audit procedures).

• Review of the annual financial statements before submission to the full board of directors for approval.

• Review of the results of the auditor's examination including experiences, restrictions, cooperation received, findings, and recommendations. Matters that the auditor believes should be brought to the attention of the directors or shareholders should be considered.

• Review of the independent auditor's evaluation of the company's internal control systems.

• Review of the company's accounting, financial, and operating controls.

• Review of the reports of internal audit staff.

• Review of interim financial reports to shareholders before the board of directors approves them.

• Review of the audit workpapers to ensure that the audit was conducted properly.

• Review of the makeup of the board of directors to ensure that they are qualified to oversee the audit process.

• Review of the qualifications of the audit staff to ensure that they are qualified to conduct the audit.

• Review of the applicable audit standards to ensure that they apply to the audited company.

Answer 1

Following are the functions of the audit conmitte

1)Selection (appointment) of the independent auditor, discussion of audit fee with the auditor, and review of the auditor's engagement letter.

2)Review of the independent auditor's overall audit plan (scope, purpose, and general audit procedures).

3)Review of the annual financial statements before submission to the full board of directors for approval.

4)Review of the results of the auditor's examination including experiences, restrictions, cooperation received, findings, and recommendations. Matters that the auditor believes should be brought to the attention of the directors or shareholders should be considered.

5)Review of the company's accounting, financial, and operating controls.

6)Review of the reports of internal audit staff.

7)Review of the qualifications of the audit staff to ensure that they are qualified to conduct the audit.

8)Review of the applicable audit standards to ensure that they apply to the audited company.

Kindly leave a comment for queries,if any.