Question

Explain the role of the audit committee in an organisation

Answer 1

As we know that an audit committee is very important intregal part for smooth functioning of the organization, it is necessary that functions of the audit committee should be clearly defined.

Followings are the role of the audit committee in an organisation;

1. Audit committee give suggestions regarding appointment of indepndent auditors.

2. Regular review of practices & policies of the organization, so that top management can be informed about any loopholes.

3. Regular monitoring of the functioning of the organization so that it can be assured that there is proper compliance with legal and regulatory matters.

4. Maintaing proper communication between board of directors and independent auditors.

5. Monitoring financial reporting of the organization, so that any fault can be immediately spot out and reported to the top management.

6. Continous monitoring & check of internal control.

7. Making recommendations about creating and maintaining effective anti-fraud programs for the organization.

8. To see that organization is upto date with the corporate governance requirement or not. If there is any variation then informing top management.

9. Checking & monitoring of financial disclosure process of the organization.

10. Continous monitoring & checking of risk management policies & practices and make communication with management in this regards for any possible improvement etc.