Question

(Corporate governance) How audit committee is related to external auditing, internal auditing and to management?

Answer 1

Answer :- An audit committee is defined as a committee consisting of a few people who are independent and non executive directors. The role of these independent non executive directors is to supervise the financial conduct of a company or an organisation with the help of external auditing and internal auditing .

External auditing is nothing but a field work on a company or any other financial organisation whether it is showing their fincial assets with in the corridors of law . They review the entity's performance and financial progress and whether the company complies with rules of law or not . If they find out any fraud they report it to the auditing committee ,they discuss the errors in financial statements and reports and decide their next step together.

Internal auditing is related to the independent reporting of financial risks ,management errors of an organisation ,they meant to be genuine in their reports as it is related to the organisation's future . It provides major information on the management risks and errors to the auditing committee . Auditing committee is responsible for the internal auditing's capability of doing the work perfectly.

The chief auditing director has the authority to oversee the performance of external auditors and internal auditors. Both the external audit report and internal audit reports are reviewed by the auditing committee. The audit committee acts as a bridge between the management and external and internal auditing. It shares the information from here to there in corporate governance.